Lessons for First Time Homebuyers in this insane, crazy, wacky, greedy, lunatic-fringe “Seller’s Market:”
You will feel pushed around and rushed. Get used to the feeling. There’s seemingly no time to breathe before you’re putting your signature on binders, calling lawyers, engineers and mortgage bankers, and whoooooosh you’re in the middle of it.
Your first reaction as a buyer will be to pull back and demand some time for caution. This is the biggest decision of your life and you’re expected to decide, respond and sign in a few hours? Yes!
It’s a Seller’s market and these homeowners are calling all the shots.
Here’s a snapshot of my and my wife’s experiences over the past seven days with a buyer we’re working with:
-Tuesday last week, offer, counter-offer, new higher offer from buyer, firm answer on counter offer from seller, buyer agrees to counter offer price. This all happened over the course of the afternoon, five hours tops. You can bet the buyer felt rushed.
-Wednesday, last week: 9a.m. and the Buyer’s attorney receives the contracts of sale via fax. There’s a clause in the contract that NO buyer anywhere wants to see, “Time is of the essence.” This means if the buyer signs and doesn’t close by the close date (October 13th, less than a month!) the buyer could lose her downpayment!
-Sunday, the buyer’s only day off from work (she’s a nanny), she meets with the attorney and signs the contract. We agree our strategy will be to have her attorney hold the contract until the engineer’s inspection is satisfactorily completed (won’t even wait for the report, just the verbal okay on the day of inspection!).
-Monday, Lorraine, my wife spends the entire day trying to schedule an appointment for the engineer. The listing agent doesn’t return her call until 6 in the evening! Appointment set for Wednesday at 1:30pm
-Wednesday: engineer’s report goes off perfectly. Engineer calls the house excellent and sturdy. Minor problems to be addressed.
-Wednesday: at the very same moment the engineer is inspecting the house, the Seller’s attorney calls the Buyer’s attorney and cancels the deal! They’re taking another offer because the buyer is just moving too slowly! Holy Cow!
-Thursday, today: Buyer increases her offer by $4,000 after Seller’s attorney tell’s her attorney they’ll sign if the new, higher offer is faxed over this afternoon.
To be sure, the Buyer’s head is whirling.
It didn’t used to be this way; it’s nuts, it’s crazy, but it is what it is. Buyers are completely at the mercy of the Seller’s and the market conditions driving buyers against buyers.
UPDATE: October 20, 2005
The Buyer has been approved and ready to close since October 7th. At this moment we await the Seller. Mind you, when the contract was received, the Seller’s attorney made it clear this loan had to close by October 13th.
Apparently they are waiting for an updated payoff letter from their bank (they are in foreclosure).
We closed on October 28th!
The closing proved to be as much of a nightmare as the rest of the transaction. My clients were on time and had finished reviewing and signing all their documents within thirty five minutes.
We proceeded to sit at the closing table for another 5 hours. The Sellers and their attorney were thoroughly unprepared for closing. There were judgments and tax liens without up to date payoff information. Then the Sellers’ attorney miscalculated his proceeds and claimed he was short monies to close.
It closed; that’s all I can say.