Rules of Thumb in a Sellers Market
All of the statistics available to us along with anecdotal experience leads us to believe that we are currently experiencing a seller’s market. The number of new listings and the time on the market is down significantly, also most listings and the last 3 offers I have written have been multiple offer situations. So what does this mean to you as a potential seller. Here are a few tips for sellers in this type of market.
1. Don’t wait for the market to get HOTTER! It may not get HOTTER and you may miss an opportunity to maximize the price you can get for your home. Our market is very cyclical and just 4 months ago it was completely a buyers market.
2. Don’t look for pie in the sky. Just because the market is really good doesn’t mean that you can instantly ask $20,000 more than your home is worth or not pay any concessions.
3. Don’t be greedy. We do an excellent job of maximizing the sales net of our clients but there are still limiting factors that dictate how fast and how much a home can go up over time.
4. Don’t assume that there will be bidding wars for your home. Condition issues still affect how a buyer sees your home and in many cases these repairs will have to be performed to appease an appraiser. Bidding wars often lead to homes being put under contract way over what they will appraise for and even in the hottest market, buyers do not feel comfortable paying significantly over appraised value.
5. Pick the right agent. It would seem that in a hot market, any agent will work but negotiating is still negotiating and many agents are inexperienced in pricing a home or getting it to appraise as high as possible. Many agents are also inexperienced at negotiating in the event that the home does not appraise other than simply taking the stance that the seller must sell the property for the appraised value. This is not to say that a seller should stick to their price regardless of where the appraisal comes in but the seller does not necessarily have to take the entire loss.
6. An area expert can accurately predict what a home will sell for and what it will appraise for. I recently reviewed an appraisal in one of our subdivisions which was completely wrong. It used homes with substantial differences and minimized the differences while ignoring model matches (exactly the same model) that would have led to a much lower appraised value. Since it was for a refinance, the artificially high appraisal didn’t matter but the appraisers word is not always the final answer.
1. The market being really hot means that the market will eventually start to go up. It is 1. in buyers best interest to get in the market and get a property as soon as possible. This may require extra diligence and availability because homes are not staying on the market long.
2. Don’t over negotiate. The seller may be looking at 4 offers including yours. That home warranty or a little bit of closing costs might be the difference in deciding on your offer versus another.
3. Write the best offer you can! Leaving room to negotiate or anticipating a counter is just not a good strategy in today’s market. Many offers are accepted as written.
4. Don’t assume that you will find a seller willing to pay your closing costs. If you need the assistance then, of course you have no choice, but if you don’t need it, try to minimize asking for closing costs or other assistance.
5. Don’t get hung up in the personal property. We are here to buy a home not fight over the value of a very used refrigerator, washer and dryer.
6. Don’t obsess over the repairs. Most repairs found in an inspection report are minor deferred maintenance issues. Before you walk away from a home based on the seller’s unwillingness to do a minor repair, remember how tough it is to get a home under contract right now.
7. Don’t get to the point that you are bidding on everything just to get a home. If the home fits you and suits your needs, then you can be less picky but don’t completely throw away your criteria. Some compromises are of course always necessary but try to stick to your important criteria.
8. Pick the right agent for all of these reasons.