Three Tips to Avoid ‘Buyer Fatigue’
Limited inventory leads to hyper-competitive markets, which sends many homebuyers into a frustrating experience with buyer fatigue. This new term in real estate circles refers to buyers who’ve been through the ringer so many times they’re just plain exhausted. The search for a home feels endless. After countless offers, buyers wonder, “Is it worth it to keep trying?”
Buyer fatigue occurs when house hunters take time “warming up” to a hot market. In competitive markets, sellers have the leverage. When you’re unwilling to take time to craft a winning offer in the beginning, you waste valuable weeks (sometimes months) in a cycle of submitting offers, getting rejected, modifying offers, getting rejected again, then starting all over with the next property.
Sometimes when buyers are advised to bid high on the first offer, new homebuyers feel their agent is looking out for the seller’s interests. The truth is, sellers in a competitive market have the freedom to choose a buyer who will pay the highest price in the shortest amount of time — and with the fewest contingencies.
Buyer fatigue sets in when you are slow to adopt a winning strategy. Sometimes this looks like a cautious offer (with a plan to “up your game” if it’s rejected), usually at the suggestion of family and friends who are not familiar with the market of your choice.
The typical buyer’s progression in today’s market looks like this:
The first offer
Buyers Susie and Joe offer full price on the house of their dreams. Their offer includes a traditional contract with home inspection, appraisal and financing contingencies — though after a conversation with their agent, they do agree to shorten the timeline to make their offer more attractive.
After a stressful weekend of choosing a home, drafting the offer and submitting it, they sit back and wait. Soon, the phone rings.
The buyer agent says, “Though you made a solid offer, the homeowners received several others; they decided to work with someone else.” If Susie and Joe are lucky, they might also find out what made someone else’s offer stand out. But maybe not. Most listing agents will not share the final sale price or offer terms. Why? Because if something goes amiss and the transaction falls through, they don’t want to jeopardize their client’s position when returning to the market.
The second offer
Susie and Joe fall in love with another property. They decide to offer 5% more than the list price. They also do a pre-offer inspection to move things along, but choose to keep the appraisal and financing contingencies in the contract. After all, they wonder, what happens if the appraisal comes in low or the lender rejects their loan?
A few anxiety-filled days pass as they wait. Finally, their agent calls: “I’m so sorry but, despite the strong offer, the seller chose someone else.”
The third offer
Weeks pass, then Susie and Joe find another house. It’s perfect for their family. And third time’s the charm, right? They decide to do everything in their power to win this bid. They offer 7% more than the list price, complete a pre-offer inspection and waive the financing contingencies.
You probably know what happens. Someone made a better offer, and Susie and Joe feel the sting of rejection yet again.
The final offer
Susie and Joe are emotionally drained. They’ve fallen for three beautiful homes, made several offers and have nothing to show for it but lost time, voided EMD checks and inspection bills to pay. The couple is also tired of spending weekends trawling through open houses. Desperate, they expand their search to include other neighborhoods.
Finally, Susie and Joe see a house that checks all the boxes. It doesn’t have the bells and whistles of the first home, and it’s not in their ideal neighborhood. But it will do the job, and at this point, they’re worried about where they will live when their current lease ends.
Following their agent’s advice, Susie and Joe offer full price with an escalation agreement. They also complete a pre-offer inspection and waive both the financing and appraisal contingencies. Their agent calls at 11 p.m. the same night and finally says, “You’ve bought a house!”
Exhausted yet? Imagine how Susie and Joe feel. And now they’re considering renovations to transform the “acceptable” home into something they will love.
Trite as it sounds, buyer fatigue can be avoided in three simple steps:
- Hire an experienced buyer agent you can trust. Whether it’s your first time buying a home or your first time buying in this particular market, you need an agent who will advocate for you. Choose an agent who can strike the delicate balance between writing a winning offer and protecting your interests as a buyer. Look for someone who is transparent and clear about the risks involved with waiving contingencies.
- Get fully pre-approved for a mortgage with your desired lender. You need to choose a lender before you make an offer, then complete all the paperwork you can beforehand. The mortgage approval should only be dependent on a clear title and successful appraisal. When tight contingency deadlines come into play, you want to be ready.
- Dive all the way in with your first offer. Remember Susie and Joe’s exhausting house hunt? Please don’t hold back on your first offer if you truly love the property. If you’ve followed the first step, and have an experienced agent at your side, you can trust their advice about what it takes to win.
Remember, buyer fatigue happens when you’re not prepared. With all your paperwork in order and a great buyer agent to guide you, our hope is you’ll find the home of your dreams before the process drains your energy and excitement.