It’s rough out there for homebuyers. Sky-high prices, rising mortgage rates, fewer homes on the market, and bidding wars are all part of most buyers’ journeys these days. The cost of buying a house is up 50% from a year ago, and beating out all-cash buyers and real estate investors can feel next to impossible, especially for first-timers.
“This has been so disheartening for many,” says Rachel DiSalvo, broker associate and design consultant at Keller Williams Park Views. “Some house hunters can’t seem to win.”
Here are some of the most common hurdles homebuyers are facing today, with advice from experts on how to navigate each conundrum and finally make an offer that sticks.
1. Not being able to compete with all-cash offers
If you’ve finally found the perfect home but don’t have the cash to beat the competition, it doesn’t mean game over.
“In this business, there is a saying: Cash is king,” says DiSalvo. But “truth is, most everyday people don’t have hundreds of thousands or even millions of dollars in cash just sitting around in the bank.”
Samuel Olson, team lead of the Olson Group with Re/Max Gold in Reno, NV, says some lenders are offering programs that make a financed offer as “good” as cash. But there are other solutions, too.
“I tell my buyer clients all the time: Just because the seller wants highest and best, doesn’t mean the best offer is the highest offer,” says Olson. “Let’s look at what we can control.”
“See if the seller would like some assistance with their closing costs—a few grand and an easier transaction can really set you apart,” says Olson. “It doesn’t always work, but when it does, you can really hit a home run.”
And writing an offer tailor-made for the seller can really increase the odds of acceptance when competing with cash.
“When you can’t control the money, control the terms,” says Olson.
2. Having an unrealistic list of nonnegotiables
No one should settle when they buy a house. But in this tight market, you should take a hard look at your amenities wish list or your list of nonnegotiables and determine what you can and can’t live without. While a homeowner might be pining for a Pinterest-perfect dream home, it might not exist in that neighborhood or price range.
“Don’t be picky about the small stuff! It’s great to have a fenced yard for the kids and dog, walk-in closets, and a tiled bathroom shower, but insisting on those items will certainly keep you out of competition,” says Carol Bullock-Puckett of Re/Max Advanced Realty in Greenwood, IN.
A real estate agent can offer advice on how to prioritize your list of nonnegotiable amenities to help you level the playing field. Olson suggests starting with a “wants” versus “needs” list and really exploring the needs.
“A three-car garage can sometimes mean two-car garage and a large shed,” says Olson. “It’s so important that the real estate agent gets to the why behind the need, because there might be an out-of-the-box solution.”
Olson has found that peoples’ lists of nonnegotiables are, in fact, usually negotiable.
“That fourth bedroom that the buyer absolutely needs could be fulfilled by a den, or even a nook for a work-from-home space,” he says.
3. Being unwilling to waive contingencies
A contingency is a contractual escape clause buyers write into their offers. Two of the most common ones are the loan contingency and the inspection contingency. In a hot market, waiving contingencies can make your offer more attractive to a seller (because there are fewer hoops to jump through to get the home sold), but it can be risky for the buyer. Still, if you’re determined to make your offer stand out, consider speaking with your real estate agent about removing contingencies in a responsible way.
Homebuyers can waive the inspection contingency but still have an inspection done on the house, Olson says. They can even cancel the contract based on the inspections, but should not expect to get their deposit back.
“Same with the appraisal contingency,” he says. “A buyer can waive that contingency, but if there’s a loan, the lender will require an appraisal.”
But be careful—if the home appraisal comes in low, your lender might agree to give you only that amount, leaving you to pay for the remaining cost of the home.