In the crazy market that exists today, there are plenty of poor ideas on both the buying and selling sides of the equation. The following is an explanation of how to dispel those common misunderstandings so that everyone may receive what they want. Because of the way the market is now functioning, sellers are acting as if they have won the lotto and are willing to pay out on their time and on their terms. However, they are at a loss as to which direction to pursue in this predicament. On the other hand, purchasers get the impression that they have already lost several times over before they even begin. Some people have made so many bids that they have become exhausted. As a result, they have either stopped looking or put their search on hold while they wait for the market to become less competitive, whenever that may be. The current market presents several complications that are difficult to overcome for both purchasers and vendors. Here are the most common fallacies that both buyers and sellers believe:
Seller myth no. 1: There is no need for seller preparation.
When it comes to preparing their home for sale, today’s sellers believe they do not need to do anything. A couple of days of back-to-back open houses should do the trick, according to them. What is the point when they do not even have much of a competition? Wrong! Clean and well-presented homes are still important to buyers because they provide them the assurance that they are not purchasing a money hole. Because buyers are less likely to make an offer on properties that look to be in disrepair or in need of extensive repair, sellers may lose money if their properties are in disrepair or need extensive repair. If a property is not a hot item the first day it goes on the market, it may take longer to sell. Currently, a house that has been on the market for many days may seem to have significant flaws. This is not necessarily the case. It is also possible that the buyer will need to renegotiate their purchase price after signing an agreement because the same problems will arise with the next buyer.
Seller myth no. 2: There is no such thing as a crazy asking price.
Sellers thrive on defying the odds and establishing an absurdly high asking price, in addition to not having to prepare their house for sale. It does not matter if their asking price is $50,000 more than the one next door, which is considerably finer and renovated and has been on the market for two weeks. Sometimes it sticks in a market like this, and sometimes it does not. Given the rapid rate at which homes are selling, we will rapidly see if a high volume of showing traffic and several offers will entice buyers. Even though we seldom see price reductions, a few listings are languishing on the market because of being overvalued and needing to make price concessions. In such a market, decreasing your pricing increases customer interest and may send the sense that you are more adaptable.
Seller myth no. 3: Free and guaranteed post-closing occupancy.
You, as the seller, have unquestionably been successful in convincing a buyer to continue living in your house beyond the closing date and according to your terms and conditions. Some vendors anticipate being allowed to remain for little or no money. It may not be so straightforward. With interest rates rising, purchasers are paying much more for the same loan amount they were considering a month or two ago. Furthermore, if a buyer is acquiring a mortgage, permitting a seller to continue in possession beyond closing might cause issues. Lenders usually allow sellers to remain in their house for up to 60 days after the closing date. Anything more than that might make the home investment property, resulting in a higher interest rate for the buyer. Therefore, there may be additional challenges in getting homes insurance for the buyer, as well as the possible hazards posed by a seller occupier in terms of damage, repairs, wear, and tear. When acquiring a property, buyers have already taken considerable risks in terms of their offer price and other criteria; nevertheless, enabling a seller to stay in their old home for several months at little or no cost to them may be a difficult sell when the market moves.
Seller myth no. 4: Selling as-is is easy-peasy.
Given the current economic climate, sellers think they should be able to sell their home “as-is,” that is, without any repairs. It is easier said than done at times. Even if there is not anything wrong, the phrase “as-is” might frighten a prospective buyer into believing there is. Structural difficulties, as well as older systems such as cooling, heating, plumbing, and electrical systems that are reaching the end of their useful lives. Indications of previous moisture leaks, termite damage, and older roofs may all be deal breakers for purchasers. Prior to putting their home on the market, a seller should remedy any known serious concerns.
Seller myth no. 5: Buyers must waive contingencies.
In this market, many sellers are used to buyers not meeting their requirements. Different purchasers have varying risk thresholds when it comes to this. The single biggest purchase a person will ever complete may be stressful enough without adding the danger of waiving inspection, appraisal, and finance conditions. This attitude may turn off potential buyers and disqualify them from consideration. Buyers are unlikely to agree to waive an inspection contingency, at the very least, so sellers should be aware of this. They may agree to shorten the timetable for inspections and other conditions but expecting them to waive all of them is unusual, and purchasers may be less willing to do so if prices and interest rates rise. In the current market, purchasing a house may be a difficult experience, and buyers sometimes feel as if the process is an insurmountable mountain to scale. With every house that comes on the market, it is easy to feed your misconceptions and talk yourself out of even attempting.
Buyer myth no. 6: I will wait until prices come down.
Many purchasers opted to wait out the global real estate bubble even as early as a year ago because prices were growing too expensive and unachievable, and they anticipated prices would fall. Mortgage rates have risen by one to one and a half percent in the last year, and the same buyers are paying more for the same properties. What purchasers do not realize is that the problem is not only inflated costs; it is also a lack of inventory, which has lasted far into 2022. Inventory levels have become worse in several circumstances. The limited inventory situation is unlikely to alter soon. New building availability is still limited, and prices have climbed dramatically, pricing purchasers out of certain price ranges. Continuing to adopt a “wait and see” approach would most certainly widen the gap between affordability and real possibilities. Meanwhile, rents are at their highest level ever, trapping many would-be purchasers between owning and renting, both of which are becoming increasingly costly. There are also not enough rental homes because more people who have lived in their homes for a long time are selling to take advantage of the market.
Buyer myth no. 7: The real estate market is going to crash.
Many purchasers believe that the market is about to crash because of the quick rise in prices. During the Great Real Estate Crash of 2008, several of these purchasers were not yet adults. It is critical to inform purchasers about how and why this occurred, as well as what caused such a sharp drop. As a result of lenient lending requirements, armchair investors, and first and second mortgages that encouraged folks with little financial security to risk on everything from new construction to condominium conversions, the perfect storm was created. The difference now is that a lot of money is flooding into the real estate market, and buyers’ power is higher than it has ever been. People have elected to migrate on their own time and terms because of the epidemic, rather than being forced by a life or employment catastrophe. The surge in real estate inventory over the previous two years has resulted in inventory being devoured at a rate that would not have occurred under normal conditions. Employers are discovering methods to work with the great relocation rather than against it to retain and recruit top employees. Buyers who anticipate a market catastrophe may find themselves waiting for a train that never arrives. Meanwhile, prices and interest rates continue to increase, and many individuals have been unable to afford to buy the houses they had planned on in the last year.
Buyer myth no. 8: It is important for me to waive all contingencies.
In today’s market, many buyers believe that they must waive all their conditions to make a competitive offer. Surely not! Having conditions in an offer is permissible, but buyers must exercise caution when putting them in place. Before beginning the hunt for a new house, a borrower must be pre-approved by a lender. The buyer will be able to shorten both their finance and appraisal contingencies because of this. If the property does not appraise, buyers should think about and include a price guarantee in their offer to the seller. The length of the inspection period should also be restricted to give the seller confidence that nothing will be dragged out in vain. An offer that demonstrates a buyer’s ability to close quickly – using the services of a reliable lender that will contact the selling agent and reassure them regarding the buyer as well as their process– may be more attractive to a seller than one that is less specific or does not demonstrate a buyer’s proactivity.
Buyer myth no. 9: Properties that are priced too high cannot be negotiated.
It is tempting to imagine that today’s properties are not up for negotiation. It is possible to find a good deal if you are prepared to look at properties that are expensive and have been on the market for some time or have fallen out of contract a few times. If you want to make an offer that will be desirable to the seller, do not go in with an extreme lowball offer. Instead, offer something realistic while also keeping contingency periods short.
Buyer myth no. 10: It is better to buy an off-market property.
There are some buyers who believe that by finding something that is not on the market, they might obtain a better value. In their minds, many purchasers believe that the owner is only waiting to offer them a bargain that is unavailable to anybody else. To discover these properties, agents spend many hours and a significant amount of money. The only way off-market agreements may work is if they are done on the seller’s schedule and terms, which most buyers fail to grasp. In the absence of a buyer, a seller is unlikely to make many concessions, and they are likely to demand a premium price since they have no intention of putting their property up for sale if they cannot find a buyer. Sellers are well-versed in the real estate market and have a good sense of what comparable homes are selling for in the area. To avoid being noticed, they will not put money on the table.
Off-market houses might also be riper for things to go wrong. It is possible that the seller will not follow the same regulations as if they were advertised, and they may stall their steps or even threaten to back out of the deal. For buyers, certain performance requirements still exist if the seller has previously signed a contract for the sale of their property to another party, but they may not be worth the time, price, and trouble of fighting that versus attempting to locate another home to purchase.
With each movement in the real estate market, there are myths and misconceptions that both buyers and sellers have about what the future holds. One of the great advantages of working with us as your advisers and trusted confidants is that we can help you navigate the difficult seas so that you may reach your objectives on the other side. Call us Today (210) 897-2070 or (210) 418-0067.