Not too long ago the Nanaimo market resembled a bar brawl more than a housing market.
Before the market here cooled in latter 2017, some fatigued often heart broken, desperate feeling Buyers, tired of falling in love with houses only to lose out in bidding wars, started to do things that were contrary to their own best interest.
When multiple offers are the norm and prices are rising rapidly, we humans tend to believe that the market will always be like that. That a rising market keeps rising. That if we can only get that house for 10% above ask, it will certainly rise 20% more once we own it.
We buy and sell like a herd. And we often buy at the top and sell at the bottom. Why? Becomes being contrarian is extremely difficult. You literally have to do what everyone else is not.
The first mistake some made was to overpay for homes that in a more normal market would be relatively unappealing and thus harder to sell as a result. Interestingly sometimes the home would not appraise high enough causing the Buyer’s lender to back out. (Remember, the house must qualify for financing, same as the people buying it).
Desperate Buyers looking to buy anything decent, in the midst of a very strong Seller’s market, started to make some common mistakes, as they always do in similar circumstances, mistakes such as these:
- Forego a home inspection. Always a really bad idea. No home is worth risking your financial well being.
- Pay too much. As humans we get caught up in the heat of the moment and forget that we may need to sell that house in a Buyer’s market. Not only did we pay top dollar but the home itself, hot in a Seller’s market, may languish in a slow market.
- Make offers with no subject to financing. A Buyer should only use this subject when legit, in case they had to prove to the Seller that in fact they had made a real effort to acquire financing. That being said this is clause often used as a way out of a deal if the Buyer suffers real remorse.
- Make their dates too tight. Some people have squeezed their subject removal and completion dates so as to satisfy the Seller, unable as a result to meet those dates, thus loosing the deal and their deposit as a result.
In the end I believe the single most dangerous mistake a Buyer can make in a multiple offer environment is to forego the inspection.
As a case in point, watch this recent News Story from CHEK TV showcasing a Nanaimo family who bought their Nanaimo home in 2016 during a frenzied market. They did not get an inspection and are paying the price…