Home sellers have been in heaven these past couple of years, awash in bidding wars that have pushed property prices sky-high. But at long last, the tables are starting to turn.
In short, rising interest rates, rampant inflation, and the threat of recession are causing America’s red-hot seller’s market to level off as a growing number of buyers just give up. Real estate inventory is rising as homes linger on the market. Home sellers who’ve been wallowing in excess are no longer invulnerable, or able to subject buyers to their every whim.
“For the last couple of years, the media has been filled with stories about how crazy the market is,” says Josh Judge, an agent with Berkshire Hathaway HomeServices Verani Realty in New Hampshire. “Because of this, home sellers now believe they can sell for practically any price and in any condition. While this may have been partly true before, recently things have begun to change.”
In other words, home sellers may now see that their lofty expectations are overblown, and that many of the habits they’ve become accustomed to in a hot seller’s market could be downright deadly for a home sale today.
Are you guilty? Check this list of home seller sins below to keep your most maleficent misdeeds in check.
“Greed is alive and well in Birmingham, AL,” says Alison Smith Jones. “As a former real estate agent, I like to keep up with the housing market in the area, so I am regularly checking out homes online, especially if they are located near our house. One in particular has been on the market for seven years—at the listing price of $4 million!”
It doesn’t take an analyst to figure out that if the home were priced right, it would have sold by now. But no, these sellers have fallen prey to this most classic home-selling sin of all.
“The owners obviously believe that their home is one in a million, and they will not deviate from $4 million,” Smith Jones says.
Only time will tell exactly how long these sellers hold on to that hope, and the house.
“I recently viewed a home with some buyer clients in which the owners thoroughly embraced the concept of not needing to lift a finger,” says Judge. “Not only were some basic home fixes in obvious need, but the seller didn’t even bother to do basic cleanup before we took our tour. There was food out on the kitchen island, dirty clothes hanging from most of their bedroom furniture, and socks and bras strewn about the floor in the primary bath. It was as if we dropped by unexpected.”
Judge’s buyers obviously did not make an offer. In fact, no one did, until the sellers decided to make a decent effort to clean the place up.
“Now, you have to put at least a little bit of elbow grease into the process,” Judge notes.
Many home sellers have likely heard (or seen online) what their neighbors sold their homes for and thought, “If they can get that for their home, I bet I can get at least that much for mine!” But keeping up with the Joneses in this way might not be realistic right now.
“Envy of a neighbor who sold for a high price can lead to disastrous results when selling your own home,” warns Cliff Freeman of The Cliff Freeman Group, brokered by eXp Realty, in Prosper, TX. “Remember, home sales start with emotions but end with logic. The emotional decision to price your home based solely on what your neighbors sold for—without logically taking into account timing, condition, size, location, and other factors—will increase the risk of mispricing.”
The result: “This, in turn, could cause you significant financial losses as your listing sits on the market with little activity and no offers,” says Freeman. “Now that the market has hit an inflection point, pricing your home correctly can mean the difference between a fast sale at a top-of-market price and an expired listing that may require a significant price reduction to reintroduce it into the market.”
Bottom line: Don’t allow your desire to top your neighbors to lead you astray.
Proud home sellers might presume their house is perfect as is—and pooh-pooh any suggestions by their agent. This is exactly what happened to Bobby Trendy, a real estate agent with Engel & Völkers Beverly Hills, who once had a client who insisted on keeping their home awash in the color beige, which was awfully hot in the 1990s—but looks horrifically dated today.
“As agents, we know what sells, and it’s not ’90s beige,” he declares. “Always listen to your agent!”
Indeed, the heady days of this heated market have induced some sellers to demand more, more, more! And sometimes they got more than was good for them, according to Smith Jones, who recalls a buyer client who was one of 14 offers on the table, all at full price or above.
But alas, 14 offers weren’t enough for these sellers. They kept the bidding open one more week in an attempt to get a “better” offer—and that offer never came.
By the time the sellers circled back to the original 14, most had disappeared, leaving Smith Jones’ buyer the best one standing. She got the house.
Strong emotions rarely prevail in a real estate transaction, yet Tania Jhayem of Signature Real Estate Group in Las Vegas recently had clients who let anger get the best of them when a buyer asked them to cover some of the closing costs. How dare they! Indignant, the sellers turned down this offer and accepted another one at a far lower price.
“They left thousands of dollars on the table just because they were angry,” recalled Jhayem.
Clearly, lashing out can lead sellers down a dark path.
Jhayem has also seen a number of instances where home sellers fall in love with a new home before they’ve sold their current abode—which rarely ends well. In one case, her clients accepted an offer on their current home well below what that home was truly worth, all so they could move out and into their highly desired new digs.
As Jhayem asserts, “patience and delayed gratification”would definitely have served these sellers better.