Owning a home has many advantages, such as being able to call your own shots and building equity over time. After all, it’s a foundational part of the American Dream. But it can also be expensive, especially when it comes to maintenance and repairs. Meanwhile, would-be homeowners are being further spooked with high interest rates, high property taxes, expensive insurance and an uncertain employment market. As such, many buyers are priced out of the market altogether or choosing to sit on the sidelines in the hope that prices will ratchet down. In today’s market dynamics, renting often makes more sense than buying. Recent statistics show that almost 15% of pending home sales fell through in the month of June alone. A good number of buyers are choosing to back out of deals as they sense a shift ahead to lower prices or realize that the costs of homeownership are more than expected. With deal cancellations at all time highs keeping your contract from flunking escrow is the name of the game these days. Following are ways to avoid deal cancellations:
PRE-SALE INSPECTIONS
Most of us can recall that at the height of the Covid market many if not all inspections were often completely waived as buyers jockeyed to get their offer accepted. As a result, subsequent studies showed that the incidence of “buyer’s remorse” was at an all time high once inherent problems came to light. Many of these necessary fixes, like replacing an HVAC system or a roof put them out to the tune of multiple thousands of dollars. This came as a shock for many, especially first-timers.
But the market has shifted and as more inventory has come onboard, inspections are once again a rite of passage for most deals being made today. If you are on the listing side, there is a solid case to be made for getting ahead of this possible curve ball by encouraging your sellers to get their own inspections done prior to going to market. This accomplishes three important things: (1) It takes the surprise out of possible hurdles that may come up during escrow. In fact, many problems can be circumvented altogether if your sellers choose to address those problems prior to the home going on market, which is the most ideal scenario. (2): It reassures potential buyers that major systems and features of the home have been vetted and disclosed. Some buyers may even choose to bypass their own set of inspections in order to avoid delay and extra cost which can greatly expedite the selling process. And (3) it will support a higher sales price by eliminating extra negotiation and haggling over repairs.
ADDING REASSURANCE WITH A HOME WARRANTY
In addition to getting home inspections done ahead of time, it’s wise to add a home warranty. On the listing end, it’s easy to purchase a home warranty during the listing phase that will then transfer to the buyers once the home is sold. If you are working the buy end, making sure a home warranty is added into the sales contract is always a good idea. A home warranty is designed to cover the repair or replacement of major systems and appliances and is also a good way to address problems that may not have been discovered during the inspection process. And it’s good marketing because it allows you to add a sign rider. This is an effective way to attract a wider pool of buyers who feel reassured by the extra protection a home warranty will give.
REALISTIC PRICING
It can not be overstated that the best way to avoid deal cancellations is to price the home for the market you are in. For most regions throughout the U. S., gone are the days of offers pouring in way over asking with contracts executed in the course of a few hours or days of coming on market. Today’s market shows more of a “balanced” market, and in some areas, a “buyers’ market.” And because interest rates are higher, it’s more important than ever to get your pricing right. There is little wiggle room and many buyers will not bother with anything that looks overpriced for the reality of today’s market. With higher interest rates, property taxes and home insurance all lining up in a formidable row, the listing price must be perfect from day one. The last thing you want to do is have the home sit for longer than necessary and then have to reduce the price. That never looks good. As such, it’s vital that you educate your sellers to the updated reality of what to expect for a sales price. Because at the same time that buyers are backing out of deals, sellers are backing out of listings, with both sides often choosing to wait it out. This has resulted in today’s mostly frozen real estate market–a reality that is not serving anyone.
STAGED TO SELL
Finally, the cherry on top is staging. With all the concerns of today’s uncertain market, buyers want to see homes that look and feel like they are in perfect condition. Eliminate red flags by being aware of possible inspection problems and then ensure the home shows as perfectly as possible. At the least, the home should have an inviting entry, tasteful paint colors and decor, and be impeccably clean and organized. Do not underestimate the power of a perfectly staged home–it can be the difference between getting offers or getting none.
At the end of the day, it’s a bit of a tough market out there. But with many folks being called back into the office, there are a number of buyers and sellers that can no longer afford to wait it out. And this is where the magic of your expertise and skill will be invaluable.