By Celeste M. Smucker–
Everyone is excited about today’s real estate market, the best we’ve experienced in years. Buyers who have been on the fence are out looking in order to take advantage of today’s prices and interest rates before they climb out of reach, while many sellers are choosing from multiple offers on their homes, especially those who live in popular neighborhoods.
Lack of inventory is a huge concern as available homes get snapped up quickly and the average number of days homes stay on the market is rapidly declining. It’s definitely a good time to be a seller while buyers need to be prequalified and ready to make quick decisions or lose out.
In active markets like this one some sellers may be tempted to sell their home without a REALTOR® reasoning they can advertise it online and save money. In reality, though, there are compelling reasons in any market for sellers to list their home with a professional, but especially so today.
Don’t Lose Out
In a recent article summarizing the highlights of the current market, Michael Guthrie, CEO and Managing Broker with Roy Wheeler Realty Co. suggests that sellers who attempt to sell privately may leave money on the table.
There are a number of reasons for this starting with pricing.
Agents base price recommendations on several factors starting with a Comparative Market Analysis (CMA) that shows what other similar homes in the area have sold for and how long they were on the market. The figures also take into consideration current homes for sale as well as pendings (homes sold but not closed).
If a home has green updates they may refer the seller to a company like Virginia-based Pearl that can certify the value of these upgrades so they are correctly included in the price and ultimately the appraisal.
Agents also rely on their considerable knowledge of the condition of homes currently on the market or that have recently sold, information not available to individual home owners. They can also advise on what needs to be done to get a house ready for a quick sale, such as de-cluttering, painting, trimming the landscaping and staging effectively.
Not only do most sellers lack sufficient knowledge to arrive at a realistic price for their home, they are also unable to be objective about its condition, overlooking its flaws such as outdated appliances, cracks in the driveway, a doorbell that doesn’t work, dings in the walls or woodwork, or a crowded kitchen countertop.
Most then overprice their home which means it may not be shown at all or does not fare well when buyers compare it to others similarly priced. The result is often a home that sits on the market and eventually sells for much less than would have been the case had it been properly priced and staged from the start.
Negotiation Skills Critical
While the market has picked up everywhere, in popular areas it is not uncommon for a seller to receive multiple offers on their home as agents effectively get the word out about new listings and those coming on the market.
With multiple offers the final price may well be above what the home is listed for netting the seller a lot more at closing. Sellers who attempt to market on their own are less likely to receive multiple offers and even if they do, the negotiations are almost always stressful and time sensitive. Experience with real estate contracts as well as objectivity are essential for negotiating a favorable price and terms— ones that benefit all parties and assure a smooth closing— under this kind of pressure.
Experienced agents can help a seller objectively evaluate the contracts and avoid the many potential pitfalls such as, are the buyers well-qualified and how do you know? How long do they have to do an inspection if any? Do they have a house to sell? Are there other contingencies that could cause problems at the last minute? When is closing and how soon do the sellers need to be moved out?
Understanding contractual issues like this is routine for an agent, but potentially overwhelming for an inexperienced home owner with no experience negotiating a complex real estate transaction and who lacks objectivity about the outcome. Long experience shows that failure to be on top of things can be very costly.
Managing the Transaction
Most buyers and sellers have no idea how much work agents do to effectively manage a transaction and facilitate getting everyone and everything to closing on schedule.
A big step along the way is the home inspection, which must be completed within an agreed upon time frame. If issues are uncovered (and they always are) sellers must decide if they can make the required repairs on time. If they don’t handle things correctly the buyer can walk away, a potentially costly problem for sellers especially if they have already made an offer on another home, started moving out, or enrolled their children in school in another district.
Even if home inspection repairs are negotiated successfully there are a myriad of other ways sales contracts can get off track from failure to order and manage termite inspections (or well and septic inspections if the house is in a rural area), or a last minute issue with the buyers’ loan process. Agents are experienced with these kinds of issues and can be proactive about preventing them as well as managing them when they do come up. And given the complexity of the process, something always does.
Whether you are a buyer or a seller, it pays to use a REALTOR® especially in today’s market. Failure to do so could be one of the most costly mistakes of your life.
Celeste Smucker is a writer and blogger who lives near Charlottesville.