Over the last two years, the real estate market has had a major shift, and a new normal was created in real estate. That “new normal” meant low inventory, multiple offers, crazy asking prices, pie-in-the-sky offers and sellers calling the shots on their time and terms.
As we transition into 2022, what will sellers want to know when they are considering putting their home on the market? What concerns and questions will they have? Here are seven questions agents should expect when talking to sellers about selling in the 2022 market.
1. We would consider selling, but where do we go?
Hence, the mega-million-dollar question in just about every market these days. There are plenty of people that, if they knew with certainty where they would move to, they would put their home on the market in a New York minute.
But that’s the challenge today. They aren’t worried about selling and cashing out. With prices climbing and very little choices available in many markets, plus long delays for new construction, these are all hesitation points that are holding sellers back from moving forward.
When a client or prospect reaches out to discuss selling their property — whether it is simply a happy thought at this point or they have a timeframe in mind — it is best to start getting them familiar with what choices may look like for both finding something to buy or rent.
You may have to reach far and wide, and it may require a lot of digging in the dirt, including working your agent network as well as that of your sphere for any options that aren’t officially for sale (but could be under the right circumstances), as well as anything that could be coming up in the future.
Rentals may not just mean diving into existing homes but also understanding apartment complexes and what options may be possible there, whether short term or long term. Having contacts that manage short-term rentals will also prove highly valuable, particularly if they have access to properties that might be exciting to stay in, even for a short period of time.
Many newer apartment complexes are quite luxurious and have a lot of amenities — something like this may assuage a would-be seller as a comfortable temporary solution while they work to find something more permanent to relocate to.
It’s also important to explain various options available as far as negotiating a timeframe whereby the seller can occupy their property past closing with a post-closing, short-term occupancy agreement or lease for a certain amount of time, but also explain how that could impact the buyer audience for their property.
For example, if the price point is likely to attract buyers getting mortgages, post-closing occupancy by a seller longer than 60 days may cause the property to be viewed as investment property and trigger a higher interest rate from the lender.
2. Will I be able to get a price as high as what comparable homes sold for in 2021?
It depends on a lot of factors, such as when you will be coming on the market and what you might be competing with. While low inventory is projected to remain, today’s buyers still want turn-key, and given the prices they are paying and likely stretching themselves, they don’t have the financial bandwidth or the time to take on major renovation projects.
So, if the property is not updated, has deferred maintenance and in need a lot of prep for sale, they may not get as much as they could have six or 12 months ago, depending on where the property is located as people were clamoring to just get a house.
Some buyers have put the brakes on, and after looking at crappy home after crappy home, they might not be inclined to pull the trigger at just anything.
The crazy overpricing that has taken place in the last two years might be knocked back a bit, depending on the property, where it is located and who the buyer audience is.
3. Do I have to do any prep for sale since inventory is so low?
This is a perfect question to follow the pricing discussion. Today’s buyers want turnkey, and since many buyers may be making decisions from afar — because, say, they aren’t able to come in town fast enough before a home may sell — they are basing their decisions on how a property looks online or perhaps a virtual showing by their agent.
That being said, this is not the time to skimp on taking the time to properly prepare a home for sale. The basic rules still apply from decluttering, cleaning, pressure washing, window cleaning, painting, freshening up landscaping and taking care of any needed repairs or deferred maintenance from caulking, torn screens, wood rot, corroded hardware, etc.
Some upgrades or improvements may be necessary, such as new appliances, updating countertops to today’s design trends and expectations along with cabinet hardware. Consider replacing old sinks, plumbing and lighting fixtures as well.
Time spent preparing your home for sale will translate into a better appearance online as well as in person — and help to justify your asking price.
4. Even if I do prepare my home for sale, can I just sell ‘as is’?
This question really depends on what is being done in your market and what expectation (or not) contract documents create. In some markets, the property is presumed to be sold “as is” except for any health and safety issues.
In other markets, the way the inspection and repair paragraphs read, it is almost inviting the buyer to create a repair list. Of course, a seller can always negotiate selling “as is,” but a variety of factors go into this.
If the property has structural components that are near end of life — roof, air conditioning and heating systems, water heater, plumbing, etc., it may be difficult to sell “as is” if the buyer will have difficulty obtaining property insurance or if it is extremely costly without replacing these items before closing, which in turn could cause a snag if buyer is obtaining financing.
Trying to pass off a home with an old roof or heating and air conditioning system while asking beyond top dollar could be difficult. These kinds of items are often cause for concern for many buyers who are already going well over asking price to buy a home and don’t want to have to spend money replacing a lot of big ticket items.
A seller may have to consider replacing some of these things to make the home more sellable and the transaction go that much smoother. Alternatively, obtaining estimates and being prepared to take care of this prior to closing once a buyer is found can also be an option, but since contractors and timelines can be challenging, this can cause unnecessary delays and frustration by all involved, so it is often better to deal with this before putting the home on the market.
5. What about selling ‘off market’?
With so many potential sellers hesitant to formally list their property due to the uncertainty of where to go, along with the pressure of having to uproot and potentially commit to another living arrangement they may be less than thrilled about, coupled with the unknown of how long it might take to find something they would want to buy, sellers may ask if there is a way to sell without having to formally list and go through the pomp and circumstance of photos, videos, broker opens, public open houses, etc.
In addition, as more information is forthcoming regarding the COVID omicron variant and rising cases in the U.S., sellers may have some concerns and want to look for a less intrusive way of selling their home.
Off-market sales have been the topic of a tremendous amount of controversy, and private networks promoting them have been in violation of the National Association of Realtors’ Clear Cooperation policy.
While agents haven’t really had to get into the weeds with a lot of the rules and regulations affecting our business in the past when meeting with a seller, the plethora of changes over the last two years is causing the tide to change.
Most sellers have no idea about the rules of the road when it comes to wanting to sell “off market” and the potential ramifications that could affect the agent and broker. They may not understand why you can’t post a few photos and spread the word on social media or have an invitation-only open house if you aren’t formally listed.
So, it is more important than ever to explain to a seller about what “off market” means and how it could impact their ability to sell. While “Coming Soon” status is not a new thing, it may be to consumer that haven’t been in the real estate market in awhile, thus it is also important to explain the difference between what “Coming Soon” means and what activities can be done in that status vs. “Off Market.”
While many MLSs throughout the country have some version of a “Seller Exclusion from MLS” form or allow a listing to be registered with the MLS but not formally listed on the market (which means no marketing can be done), the seller needs to understand what an agent can and cannot do if they choose to not list in MLS and how that may impact them and their bottom line.
Often wrapped in this discussion is, “I don’t want to formally list, so can’t you just find me a buyer who will pay my price and close when I want?” It will be important to discuss all of the above as it is not as simple as just that, hence less people with the ability to know about the property which may not result in finding the buyer who is the best puzzle piece to match with the seller in terms of price, terms, expectations, flexibility and so on.
6. What about iBuyers?
Despite the demise of Zillow Offers, there are still a myriad of companies out there promoting that they will buy a seller’s home without them having to formally go on the market.
Agents need to take the time to educate themselves about these various companies to be able to explain the potential hitches and “gotchas” involved that a seller won’t know about until they get to the closing table.
The actual costs may be quite eye-opening for a seller and end up costing more, plus leaving money on the table due to lack of leverage. Many large real estate brokerages have programs to generate an offer for a seller before coming on the market that can be used as leverage, if nothing else.
It may be helpful to walk through that exercise with the seller so they can see what they might be preliminarily giving up if they went that route.
7. What can you do on the commission?
Questions about commission have rarely escaped any listing appointment. Several powerful pieces have recently been written in Inman about this very topic. The empowered and informed consumer has likely consulted their armchair expert “Google,” who has given them information that can be taken out of context.
That being said, sellers may be asking if their house is going to sell so fast, why do they need to pay x amount. It is crucial that agents refine their response to account for this question.
Three or four years ago, homes may have taken three to six months to sell or even longer in many markets, and it was easy to justify all the visible time you were going to have to put into the listing from being present at showings, multiple open houses, broker opens, fancy luncheons or broker events, following up on all the feedback, etc.
With some of the luxury price points, signing a listing agreement was almost like getting married to a property as you didn’t know how many months or years it might take to get it sold.
Furthermore, it is also important for sellers to understand the new NAR rules regarding display of buyer agent commissions on websites. While most sellers don’t care what the buyer or seller side get commission-wise (as they are just focused on the total amount being paid to the agent(s) involved in the transaction), it is important for sellers to understand that this information is no longer confined to the MLS system.
When they want to do the Texas two-step when it comes to trying to reduce the listing fee, they also need to know how that may impact the selling-side commission offering, along with how it stacks up relative to the competition.
While agents can’t intentionally omit showing a property due to the commission being offered if a client wants to see it, it is harder to police internal choices an agent makes when putting a property tour together of what to show a client (if they aren’t asking about a certain home) while omitting others.
Thus the endless circular debate ensues that agents don’t work for free and can choose where they want to spend their time and effort to get paid and for how much.
Selling a home is like a game of chess, and trying to play the game with minimal help or insight is like working against yourself. Demonstrate to a seller that besides marketing and all the hype you can create for a new listing, intentional strategy, attention to detail and knowing the contract and all addendums inside and out is crucial in anticipating and mitigating things from going wrong by being proactive in the first place.
Ensuring all negotiated terms are clear, providing a timeline of events, actively monitoring each milestone and being able to explain how the contract addresses the umpteen scenarios that can arise along with how you would handle them can make you a shining star to the seller. When you show them your value, they will feel bad for asking you to discount in the first place.
Shower them with so much knowledge and professionalism they will be absolutely blown away. Walk in the door with all the potential contract forms well organized in a binder or folder, indexed and tabbed so they understand what they could be dealing with.
Highlight provisions that they need to pay extra close attention to and how you will be hovering over all to ensure there are no hiccups. In California for example, the Residential Purchase Agreement (RPA) has undergone an overhaul and a new purchase agreement form and approximately 90 addendums have been updated.
The first page of the RPA is a very detailed chart of all contract timelines for every potential contingency and milestone. That chart alone when shown to a seller (or buyer for that matter) can look quite daunting when they don’t really know what they should be looking for, but you do.
While some questions stay the same from year to year, others change based on market conditions and the tools and technology that the consumer is aware of, such as iBuying. When the market was at its low point during the real estate market crash and shortly thereafter, sellers used to want to know how much money they would have to bring to closing before the listed, or if they owed much more than they could sell for, what a short sale was and all the ramifications involved.
The agents in the business during the heyday of that distressed market got very good at doing cost sheets for a seller before ever setting foot in the door along with having their title company or short sale attorney on speed dial to consult with the seller on procedure and process.
While those days are gladly in the rearview mirror, hopefully to never return again, we must continue to evolve in strengthening our ability to answer our sellers questions with confidence and substance versus surface-level answers and saying “I’ll look into that,” but never following through.
Educating and empowering our clients will lead sellers to being comfortable with making good decisions and hopefully generating some more inventory in this challenging market.