When a home hits the market, it’s a whirlwind for not only the listing agent but the seller as well. The onslaught of showings within hours, along with numerous offers that stack up, can leave a seller overwhelmed, confused and unsure of what to do.
Reality sets in, and they may find themselves rethinking the entire process. Did they price their home high enough? Should they have pushed back on certain terms? Is the closing date too soon, and should they have been able to stay in their home for a longer period of time past closing?
After all, they’ve heard all the stories from neighbors and friends of friends. They may find themselves comparing their experience to that of people they don’t even know and have no way of verifying if their stories are even true or inflated a bit for effect.
Before putting their home up for sale, it’s critically important that sellers are educated on the current realities, along with setting and managing proper expectations in today’s fast-moving and ever-changing market. Here are eight things sellers need from their agents right now.
1. Prep-for-sale advice
Although the market is crazy, the rules don’t change about properly preparing a home for sale. Sellers may be inclined to think it doesn’t really matter and want to skip this process entirely, but the reality is that a little bit of preparation translates into a faster and higher sales price — no matter the market.
Buyers don’t want to walk into a cluttered and dirty home that shows signs of wear and tear, and be expected to pay top dollar (and then some) for it. Do the work, or bring in help to clean, stage, organize and address any repairs that need attention. Then, watch the money pour in.
2. Market data literacy
There seems to be a home (or homes) in just about every neighborhood these days that has sold for some outrageous number over asking price, sometimes to the tune of $100,000. Therefore, some sellers may expect the same situation to happen for them.
It’s important for a seller to understand that market data is changing so fast, and it depends on supply and demand at the time the seller plugs into the available buyer pool. Although inventory is tremendously low throughout the country, buyers have also started to grow weary of the multiple-offer game after offering to overpay by excessive amounts and still not winning the bid.
Each new listing that comes on the market appears to push the price much higher than the last one sold. Some buyers have become increasingly aggressive with their offers, which in part explains why some homes have sold for significantly over their asking price.
If a home sells for substantially higher than others in the neighborhood, it’s important to understand why. For example, if a comparable property has a highly sought-after feature that’s hard to replicate in their current neighborhood (such as a view, pool, special lot or highly desirable location in close proximity to a beach, lake, shopping, dining, etc.), that’s likely why a buyer would be willing to pay much more than some other recent sales.
However, in a rapidly changing market like the one we’re experiencing, an agent needs to get into the weeds on all of the comps and talk to the listing or selling agents to understand the dynamics of each transaction.
It’s important to share as much information as possible with the sellers on each comparable sale — things you can’t get from reading a MLS sheet, like a general idea of the number of showings and offers received. It’s also worth knowing: Out of the offers received, how many were over asking price and by how much?
The numbers involved may actually be more underwhelming than overwhelming, such as just five or six offers versus 30. All of this intel will be good in toning down seller expectations and hopefully preventing them from feeling like they did not get enough offers.
Armed with a 360-degree view of each comparable sale, they can better understand why the homes sold for what they did and how that plays into the asking price they decide to come on the market with. It’s also important for the seller to have a breakdown of how many sales involved were cash purchases or subject to financing and the kind involved such as conventional, FHA or VA, etc.
Prepare the seller that no matter how high they may sell for, they could feel a bit of remorse depending on what may be coming on the market after they’ve gone under contract or sold. It’s impossible to predict with 100 percent certainty who the next seller will be in a neighborhood or area and what their asking price will be.
3. Buyer audience direction
Working in tandem with market data, it’s important for the seller to understand who the potential buyer audience for the home may be because it will likely have a direct impact on the price they are willing and can afford to pay.
It’s also important to know if the buyer pool for the property is likely local or out of the area or perhaps a mix of both. If they are from out of town, where are they coming from? If they are relocating from a more expensive area, their financial picture may be stronger with a higher down payment, for example.
4. Contract terms
Camping onto item No. 3 and 4, depending on the kind of buyer audience and financing that’s used to purchase homes in the seller’s neighborhood, this information can be used to educate the seller on what kinds of contract terms they are likely to see and how to navigate through them.
For example, if most buyers are obtaining mortgage loans, depending on the price range of homes in the neighborhood, most could be contingent on obtaining financing as well as an appraisal.
Therefore, sellers expecting to counter these kinds of buyers, asking them to waive appraisal contingencies or asking for unrealistic timelines to do the appraisal (given market realities) might not be successful. In fact, this can ultimately result in alienating buyers, which leads to fewer offers and longer days on market.
If it’s customary for buyers not to waive inspection contingencies in your local marketplace, it’s important for a seller to understand that instead of having unrealistic expectations that every buyer making an offer will be OK with not doing inspections.
The same goes for closing costs. Sellers need to be educated on what costs a buyer typically pays as well as those that are their responsibility. Otherwise, sellers may want to get “cute” when it comes to trying to negotiate these charges and think they can push some of their costs onto the buyer because of this low-inventory market.
In a crazy market, the notion of a seller having to make repairs or give any concessions as a result of inspections may seem far-fetched as far as a seller is concerned. However, sellers need to understand that any major looming issues — think: an old roof, structural concerns, leaks, termites, etc. — could be deal-killers.
The sellers may not only lose potential buyers, they might also lose leverage as their home lingers on the market while others around it sell at lightning speed.
Prepare your sellers and have them deal with serious issues before going on the market. They should be willing to either have those concerns addressed or obtain estimates and provide buyers with a credit in lieu of repairs.
Some issues like a roof that needs to be replaced or an active termite infestation are typically nonnegotiable and have to be taken care of in order for a buyer to close — especially when it comes to financing and insurance purposes.
6. Closing dates and post-closing occupancy
The sellers may say they absolutely have to stay in their home up to 90 days past closing — no matter what. After all, a friend of theirs was able to negotiate that kind of arrangement.
Sellers need to understand that time of year may have a huge impact on post-closing occupancy. For example, if the sellers are selling their home around school is getting out, many buyers will need to secure an address to be able to register for the local schools in time for the start of the new school year.
What’s more, buyers obtaining a loan may not be allowed to let a seller stay in their home for more than 60 days past closing. Prolonged occupancies can become problematic for all involved when it comes to insurance as well as the maintenance and upkeep of the home.
Although written agreements are typically put in place, the seller needs to understand that in some cases, a lease may need to be implemented versus a post-occupancy closing agreement. At that point, sellers are simply less motivated to really care about keeping up with a home they no longer own, and that kind of risk may not sit well with potential buyers.
Given high buyer demand, sellers need education and preparation on handling showings. Discuss various options to determine what will work best for their situation and schedule.
For example, would they prefer showings during a one- or two-day open house, with offers due by that evening or the next day? Or would they rather have appointment-only showings scheduled over the course of a day or two with offers to follow?
They may not be prepared for the sheer volume of people lining up to see their home. Everything from parking and visitor management should be discussed. They should have a plan mapped out so they don’t end up with parking jam in the neighborhood.
As we move out of the pandemic, it’s also important to discuss safety protocols that may be in effect in your particular marketplace. If none exist, sellers should consider implementing some basic practices that include requiring masks while indoors, limiting the number of people coming through the property at one time, providing hand sanitizer, etc.
8. Multiple offers
Multiple offers are typically what sellers dream of (as do agents). However, some agents who have gone through multiple-offer situations before may think otherwise. Before launching the listing, discuss some different strategies for dealing with multiple offers and how they are typically handled in your marketplace.
For example, if sellers don’t typically do multiple counteroffers in your market, having a seller who wants to handle them that way may not go over so well. This could backfire, and your sellers might end up losing multiple buyers.
Explain to them that just as buyers are fast to pull the trigger on a home that fits their needs, they may also be putting in offers on other homes in the market to increase their chances of winning. They may not really love your sellers’ house, and they can be fickle and change their mind on a dime.
Sellers also need to understand that the highest offer isn’t necessarily the best offer, and you have to really drill into the terms behind it. Is it cash, or will they need financing? How much is the buyer putting down relative to the amount being borrowed if they are obtaining a mortgage? What is the closing date? What are the time frames written in the contract for loan application, financing, inspections, etc.?
Also, explain to them that if the buyer is obtaining financing, understanding who the lender is can also impact how smoothly the transaction will go. Sometimes, a buyer’s choice of lender may affect whether their offer is chosen for consideration, and the same can be said of their agent.
If an offer is hastily written, full of incomplete and incorrect information, that can indicate some red flags — even if the offer price is far and above the others.
In fact, sellers need to understand that some buyers and agents will coach their clients to do anything to lock in the deal because they can always use the inspection period to get out of it anyway. There is always more to the story as far as offers are concerned — and sellers need to be aware of that.
In today’s market, sellers need to have realistic expectations of what’s to come. Agents who make the effort to educate their sellers will ultimately ensure the transaction flows as smoothly as possible.