Pitfalls To Watch for When Selling a Home in a Hot Market
A "hot" market may lead home sellers to believe that their home will sell quickly and easily. After all, a strong market means low inventory and a slew of buyers on the hunt for the ideal home. In many cases, a hot market means a quicker sale at or over the asking price. However, before watching the money roll in, a Waterloo Region home seller in a hot market must be mindful of potential risks they'll still need to be careful to avoid.
Prepare your home and property for a showing.
One of the "fortunate" elements of a hot market is that homes that are outdated or unusual sell faster than they would otherwise. As buyers become more anxious for a property, they are more prepared to overlook minor problems and even accept significant repair costs, such as replacing an old roof or replacing leaking windows.
In a strong market, a seller has a better chance of selling a home "as-is," without the need for costly renovations. A discussion with your Realtor to examine comparable houses in your neighborhood is the best way to determine whether you, as a seller, should make any significant repairs to the property before marketing it.
Even in a hot market, though, home staging is recommended. If you want to get multiple offers on your home shortly after you list it, staging is probably the most effective way to do so. Buyers in a hot market must act quickly and are influenced by first impressions and emotions. Staging your home is the most effective approach to make someone fall in love with it. Giving it a "wow" factor will set it apart from the competition and give it a leg up on any other properties that may come on the market at the same time.
If you don't want to stage, the property should at the very least be decluttered and professionally cleaned before showings.
Prepare your disclosure and other paperwork.
Because homes in a hot market often sell quickly and contracts have shorter deadlines, you must be ready to present all required papers to potential buyers immediately. Consider having your house inspected before marketing it so that you can give a clear picture to potential buyers right away.
Before the house goes on the market, make sure you have all of your disclosure documentation ready to go. A buyer will be more confident in making a quick-closing offer if you, the seller, appear entirely prepared to sell.
Don't ignore the experts when selling your home
In a hot market, many sellers will contemplate selling for sale by owner (FSBO). In a hot market, the perception is that purchasers are eager to buy the first home that comes up for sale, and that no marketing is required. So, why pay a commission to anyone if the house will practically sell itself? Despite the fact that there are many buyers, sellers should not forgo the expertise of an expert local real estate agent.
Buyers are likely to hire an agent to locate houses for sale before they come on the market or immediately after they are listed if inventory is low. The most of the time, agents are searching the Multiple Listing Service (MLS) or conversing with other agents in order to find fresh listings for their buyers. Some ambitious agents may look for jobs through classified advertisements or on Craigslist, but this is the exception rather than the rule. You'll still want to hire an agent to publicize your home so that you can take advantage of the various buyers who are out looking.
Prepare to evaluate and choose between purchase offers.
As soon as the property is listed, make sure you will be present or able to assess all offers within a short period of time. It is often a good idea to announce a deadline by which all offers must be submitted. This will let you know when you'll need to be available to evaluate and analyze all the offers (this can be a lengthy process, so don't be surprised!).
Plan to reply to offers within 24 hours of receiving them/ the offer deadline. If you know you won't be taking specific offers, inform those buyers as soon as possible, so they can continue their search. If you intend to counteroffer, do it as soon as possible. The bargaining process can take anything from 24 to 48 hours.
Also, be wary of the "ideal" deal. Pressured buyers will make promises in their bids that they may or may not be able to follow up on just to "grab" your home and put it under contract. If it sounds too good to be true, be warned that as the deal proceeds, the buyer may have unexpected challenges in adhering to the contract's terms.
The only way to avoid this is for the parties' agents to communicate openly. By speaking with the buyer's agent, a skilled seller's agent should be able to get a sense of the buyer's abilities and stability. You can also ask for a lender's preapproval and vetting of the buyer. Even if the buyers ultimately engage with another lender, some sellers in a hot market require that purchasers be preapproved by the lender of their choice.
Make sure you're ready to move quickly.
Buyers in hot markets are more likely to pay cash or take out a smaller loan than in other markets. If you're lucky, your buyer won't need a loan approval, which will cut down on the period of time your home is under contract. If you choose to accept an all-cash offer, you will most likely close quickly.
Before you put your house on the market, psychologically prepare yourself for this possibility. If you don't find another property to buy straight away, it could be a good idea to have a rental set up.
Be on the lookout for appraisal issues.
The emergence of hot markets often happens fast. Appraisers may be comparing your home to homes that have been on the market for at least a year. If no homes in your neighborhood have recently sold, an appraiser may have to go back several years to identify comparable sales; ones that will almost certainly be much lower than your current offer.
As a seller, this can be detrimental. If a home does not appraise for the offer price, the buyer will have a tough time obtaining financing at the present offer price. You might be obliged to drop your asking price or look for buyers who are willing to pay cash and don't require an appraiser's clearance to close the deal.
Most of the time, if a home fails to appraise and the seller refuses to decrease the price, the deal is dead, as the buyer has no other options for financing than a traditional lender.
Take advantage of the currently active market to get more concessions
Use the hot market to your advantage if you have unusual circumstances surrounding your sale, such as needing to find another property before moving out or a renter whose lease won't end for a few months.
When inventory is short, buyers are more willing to meet sellers' requests. When offers come in on your Waterloo Region home, you'll have more negotiating power to meet particular moving requirements. Negotiation is not something to be terrified of, as long as you have a great Realtor on your side.
Getting ready to sell a Waterloo Region home, or buy a property in the KW area? Let Team Pinto use their huge local real estate experience and expertise to help you. Contact the award-winning Team Pinto here, or book a free Zoom consultation to discuss your unique Waterloo Region real estate needs here.