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For Sale by Owner Articles • Owners.com - ABC's of Real Estate

Hot Market Blunders Chill Sales

By Broderick Perkins
 
Retired civil engineer Jim Prendergast says he doesn't have to be a rocket scientist to know his neighbor didn't get top dollar for her home.
His neighbor hired a real estate agent to guarantee multiple listing service exposure, but she didn't cool her heels long enough in the hot San Jose, CA market to bring in more buyers.
"Here she is paying 6 percent for the listing on a $925,000 home. She sold it in one day. It was probably under priced by $10,000 or $15,000 dollars. She's steamed. I'm going to sell mine myself, but I'm not going to take any offers for the first week," said Prendergast.
Smart move.
Amazed by how fast they can sell their home in a hot market, sellers too often trip up on their marketing efforts and leave cold cash on the table.
Sellers' Blunders
Thanks to a bullish economy, sellers have ruled in many of the nation's housing markets since the mid-1990s. Low interest rates, low inventories, fast value appreciation, rising prices and more buyers than sellers have all contributed to the trend.
Generally, if 25 percent or more of the homes sell within seven to ten days of being listed, the market is hot, says George Devine, San Francisco broker and author of "For Sale By Owner in California" (Nolo Press, $24.95).
“Also, if more than 40 percent of the listings sell for more than asking price, the market is hotter," says Devine.
Not enough exposure is just one of sellers' common mistakes sellers when being on top gives them a false sense of security.
Others include,
  • Selling the property "as is" but not having it inspected. Buyers will be particularly persistent about your home's "as-is" condition. If something obvious turns up after the sale, you could be open to a suit and the court could rule that you should have known about the defect.
    "Get the inspection, but you don't have to do the work. I don't believe in having the work done. If you are in a strong market, nobody is going to quibble and ask you to put on a new roof," said Ray Brown, San Francisco broker and author of "House Selling For Dummies" (IDG Books, $16.99).
  • Failing to get a back-up offer. Offers that include a contingency for the buyer to sell a home and offers from buyers who aren't pre-approved are both red flags that could leave you twisting in the wind. Too many offers that don't gel could leave your home on the market too long. Buyers could begin to think something's wrong with the property and avoid it.
  • Getting greedy. Over pricing a home can have the same languishing effect as neglecting back up offers.
    "If your price is unrealistic, a buyer will have a hard time getting financing if the lender's independent appraisal shows the price to be seriously inflated," Devine said.
  • Poorly handling multiple offers. If you expect multiple offers, but don't delay offer presentations so you can arrange to accept them in an orderly fashion, you'll likely alienate the best buyers.
    "The presentation of offers could resemble the Oklahoma land rush," says Brown.
    Buyers' Blunders
    While sellers have their shortcomings in hot markets, buyers also too often make matters worse for themselves.
    Buyers' common errors in a hot market include:
  • Failing to get pre-approved-- in writing. In a multiple offer situation, a seller won't take you seriously unless you've got what's considered a line-of-credit to seriously shop for a home.
  • Shopping for more home than you can afford. One look at your lack of pre-approval and the seller will ignore you. Never wise, shopping over your head in a strong sellers market also will leave you frustrated and discouraged by a barrage of bids more solid than yours.
    "Unless you are Bill Gates, you will run into a financial limit. If you shop at your affordability level, you'll end up where the competition is fair and the playing field is level," says Brown.
  • Looking for a house to buy, before you've sold the one you have. Sellers don't look kindly on contingency offers in a hot market. At least have a ratified offer from your old house before you bid on the new one.
  • Low balling. No matter how insulted you are by high prices, a bid way below asking will alienate a seller who has taken the time to price his or her home properly.
  • Paying hot market prices for a cool house. If a home has been on the market for more than 30 days in a hot market, you likely can buy it for less than the asking price. If the property has already experienced a reduction in price, it's likely a bargain, or there's something very, very wrong.
    "For many reasons a particular home may be more or less attractive than those surrounding it, " Devine said.

Broderick Perkins, has been a consumer journalist for 20 years. Experienced in print, electronic, and consulting journalism, he is chief executive editor of San Jose, CA-based, DeadlineNews.Com, an editorial content and consulting firm.

© Copyright 2000 by Broderick Perkins. All Rights Reserved.

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