By Tyler Harman
When homes sell in minutes and accept offers way over list price, how do you stand a chance?
I work in one of the most competitive markets in the country and have seen how frustrated buyers can become. After seeing a few horror stories myself, here are five tips that will help manage expectations (for both buyers and agents) and make their journey smoother and more enjoyable.
The Learning Curve
In this new age of technology, buyers are drowning in information and starving for wisdom. The majority of buyers I work with today have done their homework, but unfortunately, they did all the work before the first day of class. As a buyer, you need to learn how to utilize your agent, your lender, your inspectors, etc., to get the information and guidance you need. Now, this isn’t to say you can’t get to the finish line all by yourself, but you’re going to wind up with a lot more gray hairs.
Obsession with Comps
In the market where I work (Los Angeles), I separate my buyer clients into two categories: New buyers and veteran buyers. A new buyer will ask questions like, “What are the comparable sales in this area?” “Isn’t that house overpriced?” “What do you think it will sell for?” New buyers want to know the exact “fair market value” of a home and not pay a penny over that amount.
A veteran buyer will ask questions like, “What do the sellers need from us?” and “What will it take to get this home?” They’ve gone through the romance of the process, written offers, and lost many times before. They’re tired of playing “arts and crafts” (writing offers) and ready to actually buy a home.
At the end of the day, one of these people will end up with a new house. The other will end up with an appraisal. Which one would you rather have?
Leverage Your Agent
As a buyer, your agent might know the listing agent and have insight about how they operate. Even though the seller is calling the shots, the agent will find ways to add their flavor to the negotiations. Every agent has his strong suit, so make sure you leverage it as a buyer.
For example: Are they good at numbers and finance? Have them use that skill when writing offers and communicating that value with the other side. Are they funny and likeable? Make sure they’re on the phone with the other side as much as possible building a relationship. It really isn’t about “playing hardball.” All things being equal, people do business with people they like.
Oh, and let’s talk about the “Listing Agent Groupies.” These are buyers who go straight to the listing agent. It sounds good because the agent gets a big incentive to “double end” the deal and increase their income. But just so you know, the agent’s allegiance is to their seller. Also, in a competitive market, you’ll find fewer and fewer listing agents who want to represent a buyer.
My advice: Find an agent you trust and would like to represent you throughout the entire process.
The Disappearing Price Range
In a very hot market, you can almost see the prices moving upwards. For example, in 2014, Redfin named Eagle Rock, Los Angeles the No. 2 most popular neighborhood in the entire country. Later that year, we heard people say things like, “One of the last homes under $500,000.” As you might imagine, that home didn’t stay on the market very long and probably sold for well over $500,000.
If that was your budget, you were an “endangered species” and would soon find yourself completely priced out of the market. When that happens, you either raise your budget or you find a new place to look.
Expect Issues During Your Transaction
When it comes to buying and selling real estate, there is one thing that I am sure of: there will be issues. I can almost guarantee that at one point of the transaction, the whole thing will be hanging by a thread. This is very common and is almost expected. (You’ve been warned.) Just like on an airplane, keep your seatbelt buckled because there will be turbulence. When things get bumpy, look to your agent for advice or even to simply hear someone say that everything is going to be OK.
Now, you might hear other agents talk about a smooth transaction, but just know that phrase is relative. A smooth transaction to a real estate agent might be a deal that closes and the house is still standing afterwards. Your definition might be a little different.
Obviously there are a million other tips that we could go into about buying in a competitive market, but the main takeaways here are to be reasonable, roll with the punches, and work together with your agent. Most agents live and breathe real estate, so hold them close as your most valuable resource.
For more tips and tricks, read my latest article about Eagle Rock real estate and learn how buyers & sellers are dealing with one of the hottest markets in the country.
Tyler Harman is a Los Angeles real estate agent focusing on the hottest and busiest areas of Los Angeles including Highland Park, Eagle Rock, Los Feliz, etc. Tyler follows city-wide real estate trends and writes about the popular neighborhoods in L.A. on his website. His newest fascination is following the Hipsters through L.A., blazing new trails into areas where first-time home buyers can afford to buy.
Tyler, what great insights! I think homebuyers, especially first-time, underestimate how tricky it can be to buy a home, let alone one in a super competitive market.
We recently pulled together a list on the Contactually blog of articles and resources that are awesome for agents to have on hand to help educate their clients – this definitely should be added to it. Check it out here: http://contactual.ly/1td47LU
Being a homebuyer, This suggests you need to leap through the hoops speedier to fulfill the contractual stipulations. As an example, In case your lender needs an explanation about your revenue or needs a lender assertion, proactively supplying regardless of what condition is needed for underwriting from the lender within a 24-hour timeframe will dramatically assist your lender in assisting you close quicker.
Great article. One tip I give my buyers is to write the strongest offer possible from the get go.
Very wise words
Wow this is an excellent blog! thanks for sharing! very informative & helpful
Very insightful piece. This will surely be put in use. Thanks so much for sharing
Must say the article is really informative!
This is a nice guide for millennial to buy a high pricing house.. useful article..
Thank you for this article, it was very useful to me.
At this time I’m a writer and I’m going to buy myself a cozy house.
I spent a long time looking for a house in a quiet neighborhood, but could not find what I was looking for.
You can not even imagine how much time it took. Thanks to your advice, I finally found what I was looking for, thank you for that.
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Obviously there are a million other tips that we could go into about buying in a competitive market, but the main takeaways here are to be reasonable, roll with the punches, and work together with your agent. Most agents live and breathe real estate, so hold them close as your most valuable resource. http://blog.rismedia.com/