5 Things Every Austin Seller Should Know
By Jeff Stewart, CCIM
We are living in crazy times. The median days on market for new listings has been down to four days. It would seem that the only things needed to sell a house in Austin is a sign and a post on FaceBook. Actually, that might be partially true. A sign and a post on FaceBook are all it takes to get offers. To get from verbal offers to closing can be a convoluted path in this market. So, lets take a closer look at five very important things every seller needs to know.
First is the strategy of pricing. A risky tactic we occasionally see is to under price a property and create a feeding frenzy. While that might be an ego boost for the sellers, this just encourages low-ball offers from the bottom feeders. On the other hand, an unrealistically high price risks losing the momentum of that first burst of buyer enthusiasm. In a hot market such as ours, it is obvious within mere days if a property is over-priced.
The second important point is the need to establish a process for dealing with multiple offers. Multiple offers are now the rule rather than the exception, and while nothing is set in stone, most listing agents have slowly adopted a process that garners the seller their best deal while treating all interested parties in a reasonable and honest manner. No one likes to lose, but there is much less animus when all parties feel they had a fair shake. If the number of offers becomes unmanageable, it becomes very difficult to communicate with all the buyer agents. Currently, a common strategy for multiple offers is: 1) put the home in the MLS on Thursday night or Friday morning. Once it becomes clear that several offers are on the way, suggest to the sellers that they consider all the offers on Monday morning and require all offers to be delivered by Sunday evening. Many agents change the remarks in the MLS to reflect this.
Many buyers are surprised to learn that sellers are not required to respond to offers in a timely manner . . . or at all, for that matter. Someday, when the pendulum swings back to a buyers’ market, it will be very interesting to see if sellers dare to sit on offers for several days as they do now.
Third, I want sellers to know is that the offer with the highest price might ultimately be the wrong choice. Many factors should be considered in addition to price. Yes, the net proceeds are of primary importance, but it is pointless if the transaction does not close and fund. The financial strength of the buyer, the expertise of the buyer’s agent, and the motivation of the buyer should all come into play. It is not uncommon for the most inexperienced buyers and their newly minted agent to submit the highest offer, only to fail to get to the finish line when complicated issues come up.
The fourth thing on my list is awareness. Sellers get dollar signs in their eyes when the contracts get bid up to incredible amounts. I always warn my sellers of two things: 1) when people pay exorbitant prices, they expect the product to be flawless. Those expectations may be unrealistic. Buyers may either be very disappointed with the inspection results or may expect the sellers to provide repairs and improvements that seem excessive. 2) Some buyers’ agents are well-known for their approach of having their clients offer outrageous prices to win in the bidding wars, with the promise that they will claw a large portion of that back in demanding repair dollars from an excessively harsh inspection. One excellent idea in combatting this strategy is to have a “pre-inspection.” Pre-inspections are becoming more common since they help sellers affordably address problems ahead of time. Plus, if the inspection is made available with the sellers’ disclosure, it is much more difficult for buyers to claim they were unaware of these items when they made their offer.
Finally, every seller needs to know the contract is just the beginning. Getting to the closing table is the goal, but challenges may arise, and it is best to expect a few. Appraisers are not meeting their promised deadlines and lenders have been swamped with both sales and refinance deals. Also, due to the severe shortage of homes, buyers are rushed into impulse buying. When three other groups are waiting outside on the sidewalk of the home you are viewing, it is extremely difficult to give your purchase the careful consideration it deserves. No wonder so many transactions are falling to the wayside. Enough sales fail at the last minute that I have changed my philosophy. I was always against seller leasebacks. It is unquestionably the best practice if the closing is the time of physical transfer. I get that, but sellers might want to think about a two-week leaseback just so they do not move out for a cancelled closing. I had a lender back out the day before closing once.
Different times call for different strategies, but we adapt. My best advice? Remain calm and carry on. I think I heard that somewhere.
PLEASE READ: Texas law requires all real estate licensees provide the Information About Brokerage Services (IABS) to prospective buyers, tenants, sellers and landlords. Please see the link above. Consumer Protection Notice
Jeff Stewart, CCIM Broker Associate
Stanberry REALTORS firstname.lastname@example.org