Right now, early June 2021, home buyers around the northern Atlanta market have no hand. No hand, and for the vast majority, no chance. We’re on both sides of this market; the chasm between buyer and seller could not be wider. List price is often a suggestion and home buyers have to concede just about everything – immediately and without reservation. We’re seeing buyers move down to gain strength; 500K-600K buyers move to 400K-500K. This allows for higher offers and larger down payments. We look for very specific concessions and terms when representing sellers, fast and clean rule the day right now. These are 7 brutal truths buyers must consider…

Cash is King

Cash buyers move to the front of the line. Why would a seller deal with a buyer that may not close? That preapproval letter – even the current ones that imply “enhanced approval” require the buyer to fully qualify; what if they can’t? Then toss in underwriting, mortgage delays, appraisal, credit…..no. In the absence of cash, conventional loans with the lowest loan amount rule. FHA, VA and USDA loans…..tough tough sledding for those buyers in most cases. In the first time buyer category, the field is mobbed and investors are rampant usually tossing cash around.

Earnest Money – A lot, right away

In typical markets, 1% of purchase price deposited within 3 or so days was fine for earnest money, not now. With our listings, we take at least 3% of purchase, deposited not more than 24 hours after binding and by wire or ACHI. Oh, and WE hold it, not the buyer’s agency. If a buyer walks away, they risk losing earnest money; we want buyers to think hard before walking especially since the seller’s only recourse is chasing the earnest money. If a buyer genuinely wants the home, the earnest money is credited; pile it on and show legitimacy.

Due Diligence -You Feel Lucky?

frustrated atlanta home buyer

A significant number of buyers are waiving due diligence in its entirety, effectively buying the home “as is”. There can be tactical work arounds to mitigate risk; we use them for our buyers on properties they are enamored with. Common sense applies; a townhome built in 2015 is less risky “as is” than a stucco and LP sided home from the ‘90’s. Don’t forget things like HOA regs, schools, surveys, financial statements with condos, well and septics….When due diligence is waived, everything is. Georgia is a buyer beware state – do not rely on the seller’s disclosure, buyers are expected to do their own research. Buyer’s remorse is a real issue as well, why would a seller risk even a day of due diligence and have a buyer bail out?

Right to Inspect - Please?

The right to inspect is a nice work around; sometimes. Here a buyer puts zero due diligence but has the right to inspect the home and a period of time to ask the seller to repair “defects”. The dance begins immediately as “defect” is broadly defined as infestation by termites or other wood boring inspects, an item noted by the inspector that is an imminent health or safety risk, is a code violation (unless grand fathered) or is not present or working as designed. If the seller noted issues on the disclosure, the buyer is assumed to have been made aware. Is peeling paint, soft wood, aged systems a patched roof a defect? Is synthetic stucco, PB pipe and LP siding a defective product? How many days are needed for the inspection, how many more for resolution? This allows a modicum of protection for the buyer but why would a seller do this unless absolutely needed? Most won’t.

Option Money? We'll Pay

Georgia is a buyer beware state, the due diligence period is the buyer’s sole chance to have a “free look” at the home. But when the competition is going in with no due diligence, what’s the move? It might be to toss option money at the seller. In this case, you pay additional money for the chance to either have a due diligence period or have the right to inspect. That money can be applied as a credit at closing or given to the seller if the contract is terminated. While it might not be as appealing as an “as is” offer, it can sway some sellers.

Waive the Appraisal, But Really Waive It

Going with zero days on the finance contingency and anticipating appraisal issues is pretty much standard now. It’s popular for buyers to add “will add $XXXX to the appraised value up to $YYYY”.  Wow, so the seller is going to still be on the hook when the appraisal falls short of the contract price? Our listings have attracted buyers paying 20%+ OVER list, why accept an offer that still leaves our seller on the hook? For this to matter the appraisal has to be waived – completely – AND the buyer needs to show proof of funds that they can cover the shortfall. All loopholes and back doors need to be welded shut to lock the buyer in.

Who is the Buyer’s Broker?

Yes that matters…to smart listing agents anyway. There are more agents now than ever before, which is encouraged by the industry because more agents equal more fees. Yet half will never do a deal and be gone in under two years. Of course the cycle doesn’t stop, because this industry lives on the agent fees. Working with an experienced, skilled agent is a huge benefit to everyone. We research the other agent and their firm; check production, education, ratings and more. If our sellers have to decide based upon what an agent brings to the table, the nod will always go to the veteran agent.   

Some home buyers are making major financial mistakes, completely illogical offers are being presented. Sometimes you win by losing, every one of these homes will have to be sold again...

Buyers have no hand, sellers own the day right now. Many would do well to ride this out; every market is fluid and this will even up, but not all can wait. If a purchase is necessary, work with experienced agents (this advice is in every post); buyers are make massive financial mistakes right now and their agents are too incompetent or indifferent to save them. Avoid gimmicks like escalation clauses; come into any deal quickly and with the best offer up front. Keep it competitive, simple and above all, THINK! Remember that this home will be sold one day.  

The Hank Miller Team puts 30+ years of full time sales & appraisal experience to work for you. Act with complete confidence & make sound, decisive real estate decisions. 678-428-8276 and info@hmtatlanta.com

Posted by Hank Miller on


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