2021 is definitely a great year for home sellers. Everything seems to be going their way. Homes are selling for well over the listed price and are usually only on the market for a few days. But there are still things sellers need to be aware of in this kind of whirlwind real estate market. Keep in mind the buyers haven’t changed—only the conditions under which they now have to compete in the market. Once a home is under contract the seller still has a long way to go before getting to the closing table. In this article, we will discuss a few things to look out for and how to properly examine each offer to choose the stickiest one. So, let’s dive right in.
Probably the most unpredictable aspect of this market is the buyers that are competing for the few homes that are on the market. In a typical transaction, the seller and the listing agent don’t know very much personally about the buyer other than what the buyer’s agent is telling them. The seller has to take every offer at face value. They will get a pre-approval letter and access to the buyer’s lender for more in-depth financial questions. But when it really comes down to it, sellers don’t know what’s going on in every buyer’s head. A buyer may look great on paper and then back out two days into due diligence because they simply changed their mind.
As a seller, it’s always important to keep all contingencies to a minimum. In a frenzied market like the one we’re in now, it’s even more important. Buyers are throwing in offers well over list price, and some may try to use due diligence and finance contingencies to renegotiate the deal. Keep in mind most buyers are honest and aren’t trying to put on over on a seller. Just be aware and consider this possibility.
Because buyers are having to pay so much over list price in this market, they’re starting to get more particular when it comes to inspection requests in some cases. Before listing a home, the seller should have all systems inspected and serviced and take care of any other issues with the home they are aware of. The last thing a seller need is a big surprise to put up in an inspection report that causes the deal to fall apart.
Because homes are selling so quickly and prices are rising at the same rate, sales sometimes aren’t recorded rapidly enough to show up on current appraisals. Basically, appraisals may come in low simply because the appraiser isn’t taking into account the three homes in a neighborhood that have gone under the contract that week and home sales for the prior month are $5,000-$10,000 lower than the purchase price of this subject property. In multiple offer situations, it may be possible to find a buyer that will go under contract with no appraisal contingency and is willing to bring the extra cash to the closing table if the home appraises below the purchase price. These are some of the main issues sellers should be looking out for in 2021. It’s a crazy market and sellers have most of the advantages. Just be sure to protect yourself and lean on an experienced agent to guide you through the transaction.