5 Costly Buyer Mistakes in DC, Maryland & Virginia

Homebuyers make mistakes all the time. You’re probably thinking, “Wait! Not me! I’ve done a ton of research, and I know what’s what. I won’t make those silly mistakes like not shopping around for a mortgage or not doing a home inspection.” I’m not talking about those mistakes. I’m talking about mistakes that are less common they will trip up even the most experienced buyers. One of them is so widely touted as an awesome strategy for a buyer but it’s really a slap in a buyer’s face.

Buyer mistakes in seller-markets are different than mistakes buyers make in more level markets.

The Chameleon

The Chameleon assumes the market will always be like this – whatever “this” is. If the market is crazy with 10 offers per property, the chameleon believes that’s going to be the case for every property. If the market is more sluggish, the chameleon thinks every property is sitting on the market and that lowball offers will be accepted.

First, I want you to repeat after me: Just because the news says it, doesn’t make it true. Again for those in the back.

Second, there are nuances to every market. Seriously. When interest rates were 3% and there were a dozen offers per property, yes, that was the case for most properties. But there were always nuances and those nuances were what I call the art of timing. Sometimes there were a few days of torrential rain and no one went out to see homes. Sometimes it seemed like everyone, and their mother went out of town Mother’s Day weekend. If you kept at it, eventually an offer would stick. 

In the wildest year of real estate to date, 2021, I sold over twice as many homes as I normally do – and it wasn’t because I advised everyone to just bid higher. Many of my clients secured their home thanks to some excellent timing. 

The same goes for now. Yes, the market is slower as interest rates shot up into the 7’s. But don’t assume that no one is getting multiple offers or that you can send over a super lowball offer. These are the same sellers who have those 3% interest rates, so many of them aren’t going to sell for less than market value. 

You have to know your market. It’s not enough to know the town or the city. Sometimes there’s a difference on one side of town or the other. Don’t assume because the headlines say real estate is dead that there aren’t still multiple offers. I’ve had a few clients engaged in multiple offers even in the dead of summer, when the headlines screamed about it being a “soft-market.”

The Loyalist

Your friend is a lender. Great! Sometimes this can work out well if you have the kind of friend who is going to give it to you straight. I can appreciate loyalty to those you enlist to help you with large life decisions. 

But sometimes loyalty can be a detriment. If the type of property you are purchasing or the location where you are looking is something the lender isn’t familiar with, this could impact you in significant ways. For example, there has recently been a ton of change with respect to the financing of condos. The areas where the condo financing guidelines have been most impacted are resort areas and coastal areas because of the condo building collapse in Florida – Surfside. Navigating the changes for even what seems to be the most low-risk condo is something you need the right lender for. 

What if the property you are buying isn’t a regular condo. What if you are buying one of those coastal properties. We own a property on the beach in Delaware. A buyer is under contract on a condo next door to the condo we own. The buyer insisted on using a lender from a faraway place called Arlington Virginia. The lender sent a basic condo questionnaire to the manager, asking about how many units are rented. 

That’s not how this building works. It’s not quite a “condo-tel” which is a condo where you can rent units for a few nights. The building requires a minimum of a 1-week rental. Most lenders won’t touch the condo-tel. But there are lenders who will do the resort / weekly rental buildings. This is a specialized loan product though, and there are only a couple lenders who will do these loans. And guess what? They are all in Delaware. 

I’ve had clients use their friend who is a lender and sometimes it works out well and sometimes it doesn’t. You must be prepared to pivot quickly if it starts to go awry. You also must make sure your deposit isn’t at risk if you waste your contingency time with the wrong lender before you get to the right one.

The Blindspot

Some of you all are funny. I’ve seen wickedly smart, experienced buyers not even acknowledge potential life changes in store for them in the near future. People get married and they buy a 2-bedroom condo without a thought about an exit plan. It’s not really my place to ask you if you plan to have kids but I’m nosy and I also want to ensure you make the right choice for the foreseeable future. I’m going to mention that if you outgrow this place in three years, you may not break even. A lot of agents probably won’t mention that, because they think they will get the buy now, the sale in a few years, and the buy of the next house.

I don’t want that. I want you to be happy for as long as possible and to tell all your friends how Melissa got all up in your business and pointed things out you didn’t even think of.

Some people will say, “Oh we’re not having kids.”

Okay. But you know what makes someone want something they said they don’t want? When it’s being taken away from them. We all know that once you get older, the chance for kids diminishes – eventually to zero. When people face that reality, some of them do a complete 180.

Other ways people don’t consider how their lives will evolve – retirement needs, kids coming back home, accessibility as they age or parents needing to move in. Some smart choices new home builders are making right now is with their main level floorplans. Many builders had an option for a main floor bedroom. But now they have a full primary suite they call a “guest quarters” that is more separate and private from the rest of the main level. And the icing on the cake is that there’s another half-bath on the same level, so guests don’t intrude on that primary bathroom space. 

The Incompatible

Remember how I said some of you all are funny? Well, some of you all are REALLY funny. When it’s just one person buying a home without any money from parentals, there’s really not much internal negotiating. They see it, they like it, they want it, they buy it.

Then you have the couples. They are both going to live there and they both have opinions. Sometimes they are very strong opinions. Sometimes couples are on completely on the same page and it’s not a struggle. Other times, they aren’t on the same page at all. And occasionally, they aren’t even in the same book. You will often hear the joke that we become de facto marriage counselors. This is accurate.

I learned something about myself from selling real estate. I approached it with what I think is a valid assumption – married people talk to each other. And most times they do. But sometimes they talk at each other, or they aren’t listening to each other. And they end up with me, sitting with them in the living room of the 39th house they’ve seen, wondering why they haven’t found “the one.” 

This is a very delicate place for me to find myself. I don’t want to have to tell you all to talk to each other. But you must talk to each other. And you must listen to each other. And your “must have” list must be from both of you, not from one of you. Otherwise, you will waste a lot of time looking at houses that won’t work.

The Slap Heard Round the World

No, this isn’t the Will Smith/Chris Rock slap. This one is a slap that stings because when it happens, you thought you were doing everything right. 

You just found out you were outbid on your dream house. Or your offer was a few minutes too late and they already ratified a contract. The listing agent tells your buyer’s agent, “We still have inspections and financing to get through. Have your client write a backup offer and if things fall apart, they can slide into first place.”

Sounds good, right? Sliding into first place kind of sounds like sliding into home plate, doesn’t it?

NO! STOP THAT! NEVER EVER agree to be the backup offer. I know you want the house, but never do this! 

In theory, the backup offer should hold your spot in line. In practice? It functions like a threat to the current buyer to keep them on the straight and narrow. If they want to ask for repairs on the home inspection, the seller can push back with the confidence of “hey, we don’t need you, we have a backup offer!” And what did we say about telling people they can’t have something? They want it more. Suddenly that buyer is agreeing to practically rebuild the whole house. Just because they don’t want you to get it. And the reality is, sellers almost always prefer to proceed with the devil they know than the devil they don’t. 

The only thing a backup offer does is make the seller’s life better.

The better path forward here is for the buyer’s agent to stay in constant contact with the listing agent for the home. I want to be all over that agent like Taylor on Travis. But in between my stalkerish phone calls to the listing agent, the buyer should continue their home search.