Caveat Venditor: Let the Seller Beware
You may remember the old Latin dictum Caveat Emptor – “Let the Buyer Beware.” But there’s another old saying just as relevant in today’s unprecedented real estate market: Caveat Venditor – “Let the Seller Beware.” The bottom line is that it’s just as easy to make big mistakes when selling a house as when buying a house, which is why it’s so important to work with a real estate agent to guide you through the process.
Right now and for the foreseeable future, we’re still in a strong seller’s market. Despite inflation and rising interest rates — which ultimately impact mortgage rates – we still see low inventory which results in rising home prices, multiple offers, and bidding wars. Homes are selling like hotcakes, often in a matter of days, so it can be tempting to just put a sign in the yard and do it alone.
The reality is that agents are more necessary than ever for homeowners wanting to have a selling process that is easier, faster, and more profitable. Here are reasons to consider why hiring a real estate agent makes the most sense in selling your home:
There are really two tactics being used in today’s housing market: one is to price the home a little below the most recent sales of comparable homes with the intention of receiving multiple offers and maybe creating a bidding war. The risk is that if there aren’t multiple offers, you could receive an offer below the most recent sales.
The other strategy is to compare your home to the most recent comparable sale in your neighborhood and price slightly higher. With prices appreciating this could make sense. However, things are changing so rapidly in local real estate it is necessary to keep an eye on the market and current sales prices to assure you haven’t priced your home too high. This is why you need an agent who will present an objective view based on market activity to figure out a realistic asking price.
The bottom line is that although we are in a strong seller’s market, pricing is still critically important. Buyers and their agents are more informed than ever about what houses are selling for. An agent can help you with the initial pricing and monitor what is happening in the market. Even in today’s competitive market, an overpriced house can alienate buyers, resulting in the house languishing unsold until the price goes down.
If the home is priced correctly, you can expect multiple offers. The average contract is sixty pages long, and unless you are very familiar with its content it can be overwhelming. The best bid for a seller is not necessarily the one that offers the most money. You need to have someone on your side who can weed out the good contracts versus the lesser ones.
Is the offer complete and ratifiable? If a buyer is unwilling to present some proof of the funds necessary to close, it is something to be concerned about. Unless you know the buyer personally, are you willing to take their word that they have the necessary funds?
An incomplete or sloppy contract shows a careless agent on the buyer’s side. It is a red flag that they may be difficult to work with moving forward. Agents have a list of reliable contractors that can help with any necessary preparations or repairs. Always remember that this is a business transaction and needs to be treated like one.
GUIDANCE IN CHOOSING THE RIGHT OFFER
Receiving multiple offers on your home might seem like a homeowner’s dream, but it takes an experienced agent to determine which offer you should consider. There are many things to take into account if this situation should arise.
For instance, besides the offer price, is there an escalation clause? What type of financing is the buyer presenting with the offer? What contingencies are included with the offer and what are the time lines for these contingencies? Is the buyer’s agent well-known and reliable? Who is the lender and the settlement agent? Is the lender local? Does the proposed settlement date work for the seller? All these issues need to be weighed before accepting an offer.
I know from personal experience the dilemma of determining the right offer when there are multitudes to choose from. I put a property on the market recently that received twenty-three offers. Unless you are an agent yourself or a real estate attorney, processing this many contracts would be extremely difficult, if not impossible. Remember, you don’t have a great deal of time. Buyer’s agents expect a quick response; they are entitled to have an answer within twenty-four hours. The contract the sellers ended up accepting was clearly the strongest, but it took hours of review to determine which proposal was the best for the seller.
Another example of the advantage of using an experienced agent is the input the agent can give regarding market preparation. I recently sold a home in Bethesda that received multiple offers. Prior to being listed, I suggested the owners make simple cosmetic upgrades of paint and refinish the floors. Although these changes cost little in the grand scheme of the transaction, they may have been the most appealing characteristic of the home for the eventual buyers. They expressed appreciation that they “didn’t have to do anything before moving in.”
The above scenarios owners face when selling their home, whether dealing with pricing, contracts, or deciding between multiple offers, all point to the advantage of hiring an experienced real estate agent. Keep in mind that an agent sells houses all the time, you only do it once. Use their expertise and experience to your advantage – you will be glad you did!
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