Today we bring you the eleventh of an anonymous weekly column about real estate by one of the most experienced agents in Brooklyn:
With short inventory now the norm in all of our brownstone neighborhoods, it is very difficult to be a buyer. I’ve started to advise buyers I’m just beginning to work with to expect a tortuous process. They need to expect bidding wars, reneging by the sellers, unpleasant financial scrutiny and more.
A young couple with a new baby wanted to move from their one bedroom apartment in Soho to one of several Brooklyn neighborhoods. Over the course of a year they submitted offers on five properties, mostly houses in need of restoration. After the first one failed, they started making offers above the asking price in ever larger increments. Their mortgage approval was sound and the jobs were solid. They were outbid all five times. As their broker, I failed in two ways: I counseled caution on the ever increasing offers, and I did not help them get a house. Finally, in disgust, they bought a coop in Soho where they faced no competition at all.
In another instance, the owner of a house I had listed in Park Slope had accepted an offer on their home. It was disclosed to everyone that I represented the seller only. After the inspection was completed and lawyers were engaged, another buyer who had seen the house weeks earlier called and wanted to put in a bid. Since it was in the sellers’ interest, I, of course, presented it. The offer was higher and all cash. The sellers wanted the new deal and wouldn’t even allow their first buyer to match or better it. The original buyers were crushed and will hate me forever. I don’t blame them.
Another high-level stress regularly inflicted on buyers is the demand to waive a mortgage contingency. Sellers feel, correctly, that they will be insulated from a low appraisal if there is no contingency. Buyers know that if they waive it, their 10 percent deposit is very much at risk should anything go wrong. But when competing with all cash offers, the pressure is strong to waive it. Very often after taking the plunge and making a non-contingent offer, the buyers’ attorney will try to talk them out of it. Or, the buyers will attempt to get an appraisal done during the contract negotiation period to assure themselves of the value before actually signing. In any case, a non-contingent offer is risky and highly stress-producing for the buyer.
At the outset, I try to prepare buyers for all of this and tell them not to take these things personally. It never works — there are always tears and recriminations when bad results occur. The popular belief is that brokers heartlessly inflict this pain on buyers, but it is not so. Unfulfilled clients are never good for business. However, there will be lots of them until there are more houses and apartments on offer. The best we can do is to prepare them for the oncoming storm.