Over the last few months I’ve talked about the pressure that home buyers are facing in our current housing market. Clients trying to buy homes are facing situations where there are multiple offers presented to the sellers, and the only way their offer will be even considered is if they go in subject-free.
As a broker, and a relatively cautious one at that, again and again I discuss the potential consequences with my clients if for some reason they are not able to find financing once they have an accepted offer with no financing subject.
I’ve had three conversations this week about what I call “buyer fatigue” – clients who are so frustrated and stressed about the process of finding a suitable home that they are ready to throw their hands in the air and walk away.
I’ve been working with an amazing young couple for over a year now. I think I may have talked about them before. They are hard workers and diligent savers. Their price point is right on the bottom end for the type of home that they need to find.
In their case, they can’t even get in fast enough to look at suitable properties before there is an accepted offer. They have written multiple strong offers on four properties this year and have been beaten out by offers that are usually $20,000 or more over the list price. There is no wiggle room for them in terms of what they need and what they can borrow.
The irony is that if they do find a suitable property their monthly mortgage payment will be almost $1,000 less than what they are currently paying for monthly rent.
The second conversation was with a senior who is looking to downsize. She is concerned that if she lists her home and it sells quickly she might have difficulty finding a suitable home to purchase and she is also concerned that if she finds a suitable new property, her current home might not sell quickly.
This is the situation many clients find themselves in. If they do find a something they’d like to buy, how can they write an offer if their current home is not already sold?
In this case, I asked if the client has family she could stay with temporarily if her home sells before she finds something to buy. I think this may be the route she chooses for now.
The third conversation was similar to the second, except this client listed his condo for sale anticipating it might take a month or so to sell due to the location. But his condo sold in a week after multiple offers. Interestingly, he did not accept the highest offer (which was subject-free) but instead went with an offer that had a subject to financing clause. This decision was based on the flexibility of the potential purchaser.
They set a closing date in February to allow my client time to find a suitable home, with the understanding they could move the closing date up if he found something sooner.
Now my client is trying to find something that checks all the boxes. He does have close friends to stay with in case he doesn’t find something right away which takes away the pressure of making a snap decision.
What if you are thinking about selling and concerned about financing a new home, never mind finding one? Can you move forward with a purchase if your current home hasn’t sold?
If your current home is mortgage-free, or even has a relatively small mortgage, there are options available to you (depending on your overall financial picture).
Sometimes having a conversation with your mortgage person to discuss options available to you can put your mind at ease and help you move forward while all of the pieces fall into place.
And sometimes taking the right offer as opposed to the highest one may be what you need to do to buy yourself a little peace of mind.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.