For many years, sellers’ expectations have been that they would go on the market, entertain multiple offers in days or, at the most a week, receive over asking price and even better, for more than what their neighbor sold their home. There would be no contingencies for loan, appraisal or inspections and buyers would not negotiate anything along the way. Add in quick closing dates, no contingency on the sale of the buyer’s home and buyers paying cash differences over appraisal if the property sold higher than appraised value. That was then, this is now.
Now the market has balance. Buyers are writing offers, often the only offer a seller might see, making the offer contingent upon getting an offer on their own home. Some buyers will just walk away if given a counteroffer. The property might be on the market for one to three months. In addition, the property is expected to appraise for as much as the offer, which is often 10-20% less than list price. Fixed interest rates have surpassed 7%, which raises payments by hundreds of dollars over what they would have been six months ago.
They are getting inspections for roof, chimney, drainage, sewer, home inspection, termite, pool inspections, even if you already got inspections done. Then they will negotiate from what is in the inspections. The closing dates may be longer or shorter and the offer withdrawn if those terms are not met. Recently I had an agent tell me a buyer backed out the day before the scheduled close. Yikes!
What does all this mean? It means this is your reality if you need to sell your home today. Everyone wants to think their home is better than their neighbors, that it has more features and buyers will be willing to pay them more. It is not likely that the buyer will be as attached to your home as you are. The smallest thing can be the reason they do not make an offer.
The buyer we showed homes to a couple of weekends ago, saw three homes in their price range, similar models that they are looking for, and their reasons for declining were that one was too windy, another had a floor color they did not like, and the third home had more yard on the side vs. the back. Other reasons a buyer might not buy or make an offer may be that they wanted gas, but your range is electric, or they do not like the color of the countertop or appliances. Six months ago, buyers would have clamored for these homes. They are all already priced under what the last sales were of their model, and they are on the market for anywhere from two to five weeks.
If you are entering todays’ market and nothing changes, your buyer is more nervous than before over affordability of payments, not being able to refi at a reasonable rate within a few years, and will have no money left for improvements or upkeep. They are also worried that they may be paying too much if the market continues to drop.
The Realtor “reality” consultation is more important than ever. They will tell you the reality of the market, the terms and time frames. Then you can decide if you want to jump into the market or wait, taking the chance on whether it will be better or worse a few months from now.
If you must sell, be realistic with pricing. You do not want to chase the market down. It wastes time and in a declining market, costs you money and extra mortgage payments. Be ruthless. Get presale inspections and complete any recommendations. Prepare your home, allow staging, and leave as little undone as possible to limit, or avoid objections when that buyer comes through. It is more important than ever that buyers do not have repairs to do in addition to the high payment these interest rates bring with the purchase.
