Possible seller issues to consider in a hot market
Though homes in the Bay Area are selling in exceedingly short times frames – oftentimes receiving multiple offers – there are still transaction concerns to consider. This is especially true for sellers, which despite looking at perhaps a handsome profit, will need to plan and be proactive.
The following is a list of a few circumstances in which a sale in a hot market can actually be potentially troublesome for sellers. Suggestions to alleviate potential issues are also included.
1. The property sells in “record time.”
So, you are a homeowner looking over very generous offers for your highly desirable property. Now, what? Are you ready to move out in as little as 45 days? And more importantly, have you had time to find a replacement house at a reasonable price in a desirable neighborhood. Unless you simply want to divest of the property, why else would you want to move out of a perfectly comfortable home without having another property picked out? Ultimately, it stands to reason that you the seller now become the buyer – and you may well have to compete against all of those choice offers being made on the property you will be hoping to obtain. At the very least, have a backup plan detailing a temporary living situation, such as living with a family member or relative.
2. The appraisal comes in low.
As noted, a hot seller’s market equates to multiple offers, often over asking price. But what happens if the property is appraised below the asking price. Certainly, cash buyers will have few issues, other than deciding if the property is truly worth the heightened, premium price. But, the majority of potential buyers will no doubt have a major issue and neither solution to the problem is desirable for the seller. In one case, the buyer will require their agent to request a price reduction. In the other worst case, if the buyer’s agent does not get a concession, the buyer will back out of the deal citing an unreasonable asking price. In either case, the seller also has two options, try to renegotiate proactively or offer to pay for a second appraisal.
3. A seller’s over confidence in the market.
In a hot market, expecting full offers with few concessions is one thing. Expecting very generous offers thousands over the asking price simply because of a so-called seller’s market is another consideration altogether. If a reasonable offer from a well-qualified buyer comes in, the seller should take care to honestly evaluate the details of the official transaction proposal. Declining a strong offer in the hopes of getting another more lucrative agreement may ultimately backfire. Certainly there is the possibility of “seller’s remorse” – taking a lower offer when another would have come through – but, the downside is quite precarious. Declining a legitimate offer may lead to few offers from other buyers, and in the worst case, the property remains of the market for an extended period of time and the perception of value declines with each passing week. Ultimately, the final sales price may be far lower than the legitimate offer than was turned down due to over-zealous expectations.