Everyone knows that Austin is a seller's market right now. You all have heard some variation of the following story….
“We put our home on the market, had 8 offers in 2 days and sold it for $12,000 over our asking price!”
That’s exciting, right? And honestly, in this market we experiencing right now, this isn’t hard for any Realtor in our market to accomplish. The market can do a lot of the work if your goal is ONLY to get an offer. If your goal is to get it SOLD, then keep reading!
HOMES NOT STAYING SOLD
A new common trend that a lot of people ARE NOT talking about is having their home come back on the market after receiving multiple offers and having a bidding war.
Let’s first look at the statistics and see how common this trend is…
According to the Austin Board of Realtors, in the last week 465 homes have gone under contract in Austin. During the same period, 93 homes have gone under contract and come back on the market. That is roughly 1 in 5 homes not staying sold after initially going under contract!
From my experience, once your seller has picked an offer, most of the other buyers go away. They move on to other properties, their initial enthusiasm has waned and/or they rethink their initial bid. Losing out on this initial “herd mentality” can really suck the wind out of a home sale/sail. See what I did there…
The top reasons buyer’s back out of contract (in no particular order):
- - They are not financially qualified to purchase the home
- - They are having regrets about paying so much for the home after bidding it up
- - The buyer and seller cannot agree on repairs during negotiations.
- - The home not appraising for the agreed upon price AND the buyer and seller not agreeing on how to proceed forward
- - Miscellaneous reasons: lost their job, lost their minds, were crazy to begin with, divorce, natural disasters, etc...
The sad reality is that most, if not all of these issues could have been easily avoided. The worst part is that, if the buyer AND the seller would have hired a more qualified Realtor to represent them, reasons #1-4 could have been avoided.
If you want it to stay sold AND sell for top dollar, there are a few things you need to be thinking about.
#1 - Qualify the Offer
This is the simplest and first step you should take when receiving offers.
Make sure the terms are fair and reasonable for all parties.
Make sure the contract is completly and properly filled out. (You can’t imagine how many contracts I see with major mistake that can cost buyers and/or sellers a lot of money)
Run a Seller Net Sheet on each offer to help compare offers and see which one will bring you the highest net proceeds at the completion of the sale. (Sometimes it is not always the highest offer that nets you the most, there a lot of other factors to consider)
If any of the terms aren’t clear, call the buyer or buyer’s agent for clarification to ensure you know what you are accepting, countering or rejecting.
#2 - Qualify the BUYER
Let’s start with the premise that all buyers are emotionally drained, crazed lunatics who’ve made ten offers on ten houses only to be rejected. They are beaten down, kicked around and will do just about anything to get a house. We will call this buyer "BOMB BUYER", ready to explode at any point.
What we are trying to ensure is that your buyer IS NOT a bomb buyer. That they have thought the purchase through and are in a good state of mind to buy. It really helps when a cover letter is attached to the offer telling us a little more about the buyer. It is also prudent for a listing agent to have a conversation with a buyer’s agent. It’s amazing how often this does not happen and how amazing having a five minute conversation can get everyone on the same page. Texting/emailing does NOT count as a conversation.
Questions to ask are:
- How many offers have they made?
- How long have they been looking?
- Have they walked away from any purchases after going under contract?
- Are they first time homebuyers?
This line of questioning should get a good conversation going and help you understand how likely they are to continue forward if you decide to accept their offer.
#3 Qualify the Buyer’s Lender
This is another easy phone call that a good Realtor will make on behalf of the seller. Having them have a quick conversation will help give you a better understanding of how strong of a borrow the buyer is. It is also prudent to find out if the lender qualified them based on a conversation or they actually collected pay stubs, ran credit, etc.
Some good tips for working with lenders are:
- Are they local? Can you physically go visit them?
- Do they have a direct phone number you can call to reach them?
- Do they have an in-house loan processor that they can access quickly and easily?
- What is their track record for closing on time?
- Have their appraisers been coming up short on appraised values? Are their appraisers vetted and scrutinized regularly.
- Do they do a lot of the type of loans they are qualifying the buyer for? I.e. FHA, VA, Jumbo loans, condos loans, 1st and 2nd mortgages, etc.
If I am raising more questions than answering them with the above line of questioning, feel free to reach out to me so we can dig into why these questions are important.
Buyer tip: In a competitive market, choosing a lender based on interest rates and closing costs is not always the best idea. You need the lender who will go the extra mile, ensure you will close on time and make you look good to a seller. It’s about winning in this market, not about getting the best deal.
#4 Qualify Your Buyer’s Realtor
This is another area where you need to know you can trust the other party to perform and see the purchase all the way to closing. Believe it or not, there are a lot of Realtors out there who seem to enjoy having contracts terminate. They create emotional drama instead of being the calm voice of reason in the transaction.
Thousands of real estate transactions close everyday. Everyone agrees to the terms, all parties are happy and it is a win-win for both sides. There is no reason that the sale of your home shouldn’t happen just like clockwork as long as everyone is doing their job. Remember, clear and consistent communication by all parties involved solves 99% of problems that arise.
Make sure the buyer is represented by an agent who has experience (or is being mentored by an agent with experience), make sure they understand the type of property their client is buying and how the process works for the specific property--i.e. condos, land, multi-family, ranches all have different things that need to happen.
In summary, make sure due diligence is done before accepting an offer. This market moves fast and emotions run high. Have a plan on how you are going to review and respond to offers and stick to it. When offers come in, don’t stray from the plan. And if I didn’t touch on it enough, make sure your agent is picking up the phone to have real conversations with prospective buyers and their agent. Communication ensures you will net the highest amount and reduce the likelihood of contracts falling apart. If you have any further questions about selling your house or want to know more about something specific I touched on please don't hesitate to reach out. I would be happy to help you out in any way I can.