I have often been asked this question by clients when should you walk away from making an offer on a home. Now of course, being the know-it-all that I am, I was eager to jump right in and take on this question many times. And of course I can’t count how many times I have actually answered that question. But as time has passed by, I realized, I am not the expert, my Real Estate Agents are! Yes believe it or not, I did get smarter with age. So I reached out to a group of smart, beautiful, knowledgeable Real Estate Agents from across the country to get their take on when you should walk away from making an offer on a home, and I wanted to share with you their thoughts. I absolutely love Real Estate Agents, and I am proud to know, like, and trust each and every one of them.
So without further ado, here are your responses……………………..
As an agent it is our job to find them a home they want which they are not settling for. For example, if the home is over priced, it is our duty to let our client know that we can find something better out there at a better price if the seller doesn’t take the offer we present.
When I know they do not have the money to pay for repairs and make their down payment. I don’t care what kind of deal they think they are getting.
I would say at the point where the seller holds so much of an upper hand that the buyer has to settle and is no longer comfortable with the transaction. There is always another house.
The most often that I advise a buyer to walk away is when I see them “biting off more than they can chew”. Normally when they are trying to buy a property at the higher end of what they qualify for, and the property is being sold “AS-IS” and requires obvious repairs, and they do not have adequate reserves (money saved up) to cover them. Remember the movie The Money Pit? That is a real life scenario. Especially with first time homebuyers, their eyes are wide with excitement, and my eyes are looking at the big stain in the ceiling, the fogged windows, the old A/C unit and the rotted wood around the side of the house. They are screaming “Yes”! And I’m thinking $30,000 in repairs? No!! For me buying and selling real estate is not about getting people to “sign here” and sometimes you can lose a sale, but I sleep better at night know that I told you all the pros and cons of your decision.
For an Investor who is looking to Buy and Hold— If the project exceeds the ARV, I would suggest them to walk away. For an Investor who is looking to FLIP– If the project exceeds the 80% of the ARV, I would suggest them to walk away. For an FHA buyer not looking to do a 203k Loan — If the property appears as if it doesn’t meet the current FHA property standards guidelines. For a Condo buyer— If the association is not in the Black or for FHA, if the association hasn’t been FHA approved. For a buyer that is cash strapped— Steer them clear away from Auction properties, as they require 5%-10% buyers premium. For ANY buyer—If you don’t absolutely LOVE the property—WALK… Because the HARD part about buying a home is sticking with the PROCESS of the purchase. The anxiety of the home inspection and of the loan process, the waiting for a short sale, all the paperwork, letters of explanation, etc…YOU HAVE TO LOVE IT! Don’t Settle, otherwise, at the 1st sign of ANYTHING… you want to cancel.
When it doesn’t align with the goals and desires of my clients.
My usual answer to every client is a “emotional intelligence, gut check, 6th sense, intuitive core” combined with some actualization role play when we are at the crux of determining whether to move forward with an offer. Example: imagine yourself on closing getting the keys? How do you feel? OR imagine this property “pending” tomorrow? Again how do you feel? Regarding feeling I see it a couple ways – 1. the butterflies mixed with anxiety but adventure lingers in the future OR 2. The airplane bag – it’s just going to be a long day. Number 1 is great in my book – Number 2 will usually only get worse over time and most often signals underlying issues that may not be immediately seen on that specific home but are felt. I also run my feeling meter after we have submitted an offer, after it is accepted, after inspection and all the way through the final document signing. The last thing I want is a buyer that is Meh at the time we record and pass keys. That’s why for my team we are diligent about exploring the emotional process when buying a home. Sometimes a home may seem perfect on paper but it’s just not the right fit for some reason either tangible or intangible.
I had one where the property is a FSBO and there were no disclosures or they were very vague… Also, the seller is very vague in his intent to honor buyer agency… In a case like that I don’t feel I can fully represent my Buyer client if I support them in their decision to make an offer on the property…
If you know the offer is out of your budget or will put you in a financial bind (if accepted)… walk away. Making your dream a reality should not include discomfort over making a mortgage payment for your dream home.
Don’t make an offer on a property based emotions, other people’s influence, or to solve a short term problem if you plan on leaving there long term.
Can you smell that? That’s mold. Walk away. Actually run!
Karen Y Copeland-Q Williams Real Estate Associates La Plata, Maryland
Showing buyers the intense repairs on a house that is being sold as is because seller doesn’t want to fix their own problems.. Big concern for any buyer that doesn’t have the capabilities fixing the repairs!!
I believe it’s very important to know what they are approved for on purchase price so the buyer doesn’t cut themselves short or fall in love over their budget. Even once they feel they have a price range they are approved for they them need to be comfortable w/ their budget & payment. Then when looking they should walk away if the house will make them house poor & make them resent their decision. This makes an exciting experience go south!
Establish your main objective and stick to it- eg. to buy a home in X school district and spend no more than Y dollars. Also have a Plan B in place as far as living arrangements go if you are in a time crunch. Before making an offer, the question you must ask yourself is whether your primary objective has been met. If it has not, be prepared to walk away, regardless of how hot a property might be, how perfect it is if only you could move it a few blocks over, or if your lease is running out soon. Ultimately, you will be dissatisfied if you end up in a school district that is less than favorable to you, or you feel like you were pressured into paying more than you were comfortable spending in order to secure a particular home in a multiple bid situation. Stay the course!
This really depends on the property, the client and the scenario we are in. In most cases, you need to go with your gut. Take your pocketbook and your emotions out of the equation and listen to what your gut is trying to tell you. If you have to talk yourself into a deal, it’s not the right deal. If you truly allow your intuition to take over, you’ll be able to make the best decision. If the deal in front of you isn’t the right one, that just means the right one is still out there. Listen to your inner self when it speaks to you!
It depends on the condition of the property, response from the seller and or his agent more importantly the status of the loan application . And It depends on the inspection report and what the seller is willing to repair or replace.
Often buyers set a price cap on search criteria, get frustrated that they’re not finding what they’re looking for in their budget, so they start looking outside of their budget, even though they can’t afford it. I am seeing buyers lately want to low-ball homes out of their price range that are already priced competitively. I suggest against it because its an emotional process to write offers and wait, and I don’t want to spin their wheels or mine wasting energy and anticipation on something that’s not going anywhere.
Well there you have it ladies and gentlemen. These are some great answers to the question when should you walk away from making an offer on a home, from some fantastic Real Estate Agents across the country. Definitely better than I could ever come up with. Thank you to all that participated, and a major shout out to Dave Holland for being brave enough to be the lone male giving his view. If you are looking for a home in any of these areas, or know of someone moving to any of the areas these outstanding Agents are located in, please contact me to get their information. Also if you have questions about this or any other Real Estate related information, you can contact me as well. Thank you for reading and as always MAKE IT A GREAT DAY!