Tuesday, February 2, 2021 / by Teresa Dipeso
It may be winter, but the temperature of many real estate markets around the country is 100 degrees, with a heat index that feels more like 120. Homes are selling as fast as you can fry an egg on the sidewalk on a ultra-hot day.
With the pandemic housing boom, multiple upon multiple offers, bidding wars and people selling their homes on their time and terms, working with an agent may be the furthest thing from a potential seller’s mind.
The mere utterance to a neighbor that they are thinking of selling may result in a flurry of “whisper down the lane” kind of activity that can appear to make selling on their own a dangerously easy process.
“Dangerously” and “easy” are two words that don’t exactly go hand in hand. Both carry risk that is typically unknown. Now more then ever, sellers need skilled agents by their side. Here are seven things sellers risk when they try to go it alone — and what agents can warn them about.
1. Availability and accessibility for showings
The old-school argument against selling your home yourself was that it would be a hit-and-miss experience if you didn’t have a way for agents to easily show your property based on their and the buyer’s schedule, not yours. No lockbox, no access, and let’s throw a dart with trying to coordinate schedules to haphazardly try another day.
Not now. A listing that has some degree of salability — whether that’s due to price point, location, view, condition or some combination of those things — is likely to have more showing requests than there are hours in the day.
How do sellers plan on managing the onslaught of showing requests? Do they have a showing management system? Can they keep track of numerous agents blowing up their phones with calls and text scheduling times? Do they really know that the people calling them are truly agents and not someone with other motives at play?
With an overwhelming amount of showing requests, sellers may be inclined to just leave their front door unlocked and tell everyone to show up between certain times. Not such a good idea. There is an art to scheduling and managing showing appointments. A skilled listing agent knows how to manage this dance while being respectful of everyone involved.
When you handle appointments the right way, you can allow buyers to have their dedicated time to look at the home and thoughtfully consider if it’s right for them. When you handle them the wrong way, you can have people stepping all over each other and quickly getting turned off from the process.
What’s more, sellers need to think: Do you really want multiple buyers and agents discussing your home in front of each other? It’s possible they may all agree the home isn’t worth what you are asking.
2. Safety protocols
Speaking of showings, depending on what state, county or region within that state the property is located, there may be variations of some sort of stay-at-home order. Regardless of whether there is or isn’t a shelter-in-place situation, we are still in the middle of a pandemic.
As a seller, you have to ask yourself if having a free-for-all when it comes to showings is truly a wise idea. Can you manage those coming through your home when it comes to responsible interactions with scheduling? (Think: minimizing overlapping appointments, social distancing, wearing masks, people touching things, sanitizing surfaces, etc.)
If the home is in a cold-weather climate, having 10 people come look on Sunday afternoon and step into your toasty warm house may not be a good idea. Even if your state is looser on restrictions or has no restrictions at all, it doesn’t take much for several strangers to gather in one place for the potential of COVID-19 to spread.
Agents are educated and trained on implementing COVID-19 safety protocols. They serve as gatekeepers to the seller’s home to ensure safe and responsible showing activity and that those physically coming through the home are truly the decision makers versus an entourage of family and friends or nosy neighbors who are looking for something to do.
3. Multiple offers and bidding wars
Selling a home today can be perceived as winning the lottery or hitting the jackpot in Las Vegas. Just put the for-sale sign out, and have people throw offers at you. When you go it alone, that’s exactly what might happen.
However, do you know how to make sense of those offers and truly understand each one? You may receive them in many ways — someone writing it on a piece of paper or someone else saying their attorney will be in touch.
Depending where you’re located, you could receive offers on various contract forms based on what is in use by agents in your area. It could be forms used by the local or state association of Realtors, which may have different provisions, contract timelines and vary as to who pays what in closing costs, etc.
If you think you can sift through a maze of confusion, then go right ahead. You just might agree to something that you would have never wanted to had you known and fully understood the process.
This is where the best listing agents shine. They know how to aptly sort through multiple offers and formulate a strategy to bring you the best price and terms, balancing what’s important to you with how the market is responding to your home.
Having an agent in place helps ensure that people who are interested in making an offer will actually come through, as those buyers tend to work with agents instead of telling you that they will be in touch only to never be heard from again. It will also ensure some uniformity to the process when it comes to what forms that offer is submitted on, which the listing agent can request.
They can manage the timeframes with which offers can be submitted and how to respond — whether that’s with a multiple-offer notice or deciding to work with a particular one, etc. If escalatory clauses are used, knowing how to flesh all of that out so the seller understands what the numbers mean is extremely important.
Most importantly, agents know how to negotiate the details beyond just price — things like the size of the escrow deposit, due-diligence periods, limiting repair amounts upfront or negotiating “as is.” Other details include: contingencies like the appraisal, which is becomingly increasingly waived today, as well as the ability of the seller to occupy the home post-closing for a predetermined period of time.
Because there are so many offers being received today, agents may need to prepare a spreadsheet or offer matrix to lay everything out so that they and the seller can review side-by-side comparisons and make sure they don’t miss any details.
4. Accepting a new offer is only the beginning
In a hot market, the challenge is not receiving offers, but ensuring that the one the seller goes with makes it to the finish line. Despite the low inventory, this is often more difficult than a seller may realize.
Frenetic markets can create impulsive decision-making based on the fear of missing out. It can be easy for buyers to get sucked into the cycle of putting offers on every property that comes on the market that’s a remote possibility because they don’t know if there will be another one available, and something is better than nothing.
Many buyers are doing this from afar, so they are taking a big gamble each and every time, even if they’ve had a live video tour with their agent and done a lot of their own research using Google Earth and everything else.
The problem with this approach is the buyers were never all-in from the beginning. Suddenly, being the winning bid can make them think: Were they the suckers who paid too much?
During the inspection period — even if nothing major is wrong and buyers may be seeing it in person for the first time — the home might suddenly look too small, too dark or not really where the buyers want to be. They might look for every reason to get out of the transaction.
Any sort of condition or repair raised from the home inspection can be interpreted as major, and if there are truly major items of concern found, do sellers know how to keep the buyers in the game on their own?
When a buyer backs out, critical marketing time is lost, and the perception of the house is never what it initially was. Right now, there are always a handful of homes coming back on market after abruptly going under contract.
When agents and their buyers receive an email notification of a back-on market listing, they might think: What happened? That’s regardless of whether or not something actually went wrong. Did the inspection yield hidden issues? Did the property not appraise? Did the buyers feel the home wasn’t worth it?
These perceptions can become reality, and they’re difficult to overcome. The next buyers may be leery, and as for the 20 people who had put offers in? Don’t count on all of them being there. Some will have gone on to make offers on other homes; others may have decided to change their direction entirely.
Some may want to take a “real estate time out.” They might decide to buy new construction if it’s an option. The rest of the buyers who didn’t get your home had more time to think about things, and probably realized it wasn’t all that and then some.
5. Disconnect disease
Sellers who sell without an agent tend to have less awareness of everything they need to do when it comes to properly preparing a home for sale — as well as presenting and marketing it. That lack of awareness or indifference can result in costly mistakes.
It can cause them to lag on the market or leave money on the table because they haven’t been properly coached on what they need to do and don’t have a professional positioning the listing correctly.
Because the market is red hot, they may think they don’t have to do anything to their home to sell it, but what they don’t realize is that while many homes are selling very quickly, not all are. Every market has some properties that are sitting for various reasons, which usually has to do with price, condition or both. The seller is usually unrealistic in these scenarios and won’t adjust the price or address the condition in some way to generate buyers.
With so many buyers conducting their property search from afar today, a few poorly taken photos aren’t going to cut it when enticing buyers to jump on it when a home hits the market.
Sure, their agents can arrange to see it and take some video or do a live remote showing with the buyers, but they may choose to not waste their time and focus on properties that have painted a more complete picture. Ignorance may be bliss, but knowledge is power — and information is priceless.
6. Transaction complications
A myriad of things can go wrong when a property goes under contract. A buyer’s financing can go sideways, as underwriters continue to scrutinize files very closely. This is especially true as more buyers want to relocate and work remotely.
Does a seller know how to handle lender extensions and unforeseen delays? With an active housing market also comes a high volume of loans in the pipeline, which can lead to prolonged processing and completion times. This can have a contagion effect on the closing process, as both the buyer and seller are making plans with vendors, movers, etc.
A lot of what goes on during the financing process sounds like a foreign language to the everyday consumer. If you’ve ever asked someone what’s going on with their home sale or purchase, you probably know that oftentimes, they can’t articulate all of the details for this very reason. A seller needs an agent who can skillfully speak the language of real estate to decipher the delays and escalate issues to get resolution when needed.
Delays can also happen when it comes to repairs, like if something major needs to be addressed, such as a roof replacement or termite damage. This is especially true in today’s market.
Experienced agents have relationships with a myriad of lenders, title, escrow, contractors and other service providers to get more insight or provide alternative solutions when needed.
7. Post-occupancy issues
In today’s market, the likelihood of sellers wanting to stay in their homes post-closing is becoming increasingly common. Does a seller know how to structure a post-closing occupancy agreement that spells out the rules of the road with regard to liability, repairs and damage once the seller no longer owns the house?
Depending on the length of the occupancy, is an actual lease needed? Should an issue arise, do they know how to resolve it? This is where an agent comes in to help facilitate as both parties need a third party/intermediary to work out the details.
Sellers trying to work something out verbally with their buyers could leave a lot of unknowns and gray areas on the table. As always, it seems “fine” until there is a problem.
The dynamics of buying and selling have dramatically changed since COVID-19. Low inventory and record movement across the country is creating a new set of challenges for buyers and sellers to navigate through heated real estate markets across the country.
The stakes are high, decisions are swift, and there is immense pressure on everyone in the transaction. Now more than ever, sellers need professional advisers by their side to put all the pieces of the puzzle together to maximize their value — while protecting their interests and managing risk at the same time.