It is a challenging residential real estate market in a number of ways right now.
There are so many gimmicks from listing the home for a short period of time in order to encourage bidding wars, promises like “making sure” you can stay in your home for weeks to months after closing (a concerning prospect on a whole new level), various discounts for using a particular agent or lender, to promising to purchase your home if it doesn’t sell.
These agents and/or investors may or may not deliver on those promises, but an experienced agent who has been through and understands these market cycles – and who can see through the various gimmicks and still provide sound and critical advice — might be more important than ever before when considering how to handle your most valuable asset.
As I have listened to our buyers, our sellers, as well as appraisers, lenders, and other agents, there is concern that this market is so far out of balance. If you work in this industry or you are buying or selling a home, it is a daily topic of conversation. The most common question: “When will this market balance out?”
It is exciting and profitable to be a seller right now. There is nothing wrong with that. The investment aspect of their home has paid off. We know the housing market goes up and goes down — and it’s favoring the sellers’ right now. That is great. What is concerning is that the market is so far out of balance that we have buyers who feel they have little to no shot of having their offers accepted, especially our buyers who are in the under 350,000 market and are restricted by their cash funds or loan programs. We also have sellers who have little incentive to negotiate and in some cases have unrealistic expectations of their buyers.
Probably most concerning to me is sellers requiring or buyers being willing to give up some very important contingencies – the protections put in place for both buyers and sellers. We are seeing offers that are well over the market value and appraisals being waived. We are even seeing sellers require and/or buyers being willing to waive inspections — all in the hopes you get lucky and your offer is accepted. Our buyers should not feel like they are rolling the dice at a casino in hopes of winning big. It has turned into what feels like a lottery or game of chance when writing offers on homes.
There are people and stories behind those offers. They have worked hard to be able to purchase a home, and yet they have no control over the inability to do so – and that is very hard to see happen.
Buyers are able, willing and ready, but so are five, 10, 20 other buyers looking at the same home. There are some heart-breaking situations out there. There are some desperate individuals and families doing everything they know how to secure a home and still not having their offer chosen. They may not be comfortable or able to waive an appraisal or the inspections or the other contingencies, and so they are left on the sidelines without a home because enough of the buyers are “all in” and will do anything to “win.”
I hope we are not forgetting about the very human and emotional elements that come with buying and selling a home. I work with many buyers that have their offer chosen, and I am grateful every time, but I work with a number of buyers who have written multiple offers and have been beat out by cash or waived appraisal and multiple other waivers. They are protected, but it doesn’t make it easy.
I am very careful to explain to my buyers and sellers what it means to waive an appraisal or cut down the inspection days (I have never waived an inspection period and, in my experience, that would be a very unwise thing for both a buyer and a seller to do), but I leave that decision of what they want to do up to them. I have never had a seller ask for a buyer to waive any of those contractual contingencies or inspections. I know that is happening a lot. If a seller wanted those terms from their future buyer, I would immediately share the very real risks that the seller takes on when requiring those terms. That is not a wise requirement.
This is a market so out of balance that I have had multiple buyers get the keys to their new home and find that sellers did not have the homes cleaned or left debris at the homes. Fortunately, it doesn’t happen often, but it’s sad it happens at all. I am seeing more and more sellers want to live in the homes – free of charge – for weeks, even months, after closing. I can understand signing a lease and leasing back a home if that works for the parties, but what a serious risk to both buyers and sellers when there is not a signed lease and no safeguards are in place for both parties. Please be sure you are protected when leasing back or offering a lease back.
I hope we agents are considering how very important it is, so very important, to protect our buyers and sellers. From the terms the sellers are requesting, and sometimes requiring, to the terms our buyers are offering — sometimes putting it “all in” at the table in hopes of being chosen — both sides need our sound, experienced, fair-minded, unemotional, honest advice and counsel more than ever.
The market will adjust over time, but until then, I hope we can be sensitive to each other.
Sellers are trying to find the right buyer for the home and make sure it closes on the closing day and buyers are trying to secure a home that fits their needs. Hopefully we are all doing our best and being respectful along the way.
Editor’s note: Rebecca Durfey is a Peoria-based Realtor with Keller Williams Realty Professional Partners.