Are you a property owner and wondering whether now is a good time to sell? Whether you’re looking to sell your primary residence or an investment property, now may be the perfect time!
No one could’ve predicted that the U.S. real estate market would be going gangbusters in the midst of the COVID-19 pandemic. It has certainly taken the real estate industry by surprise…in a good way. We are all thankful that we still can work, and that we have clients to work for and to help. There was about a two-week halt in our Hawaii market during March when the news about the Coronavirus was announced. This was followed by quite a bit of transaction cancellations, as buyers got scared about our economy. Also on the flip side, sellers didn’t want to expose their families to the virus as strangers toured their homes, potentially being COVID positive but asymptomatic.
After a few silent weeks, we started getting more calls from people wanting to buy since interest rates were so low…then a month later getting calls from people wanting to sell because they heard it was a great market for selling. Fast forward 6 months later, our market in Hawaii is going off the charts!
What Can Sellers Expect?
Let me preface this by saying that pricing is always the key, and the more move-in-ready your home is, the more it will appeal to the masses. In general, you can typically expect to be “in escrow” within a week of listing if all goes right. Seller agents are getting 20-40 showing requests on their listings, so whether your agent does only private showings or an open house, your property will get much attention.
Owner Occupied Homes
If you’re living in the property, you should plan on being gone for several hours a day for the first several days. Obviously the more your agent shows your home, the more offers you could potentially receive. Most of my sellers prefer to make the home readily available for showings during the first few days once they go live, so hopefully they can receive a bunch of offers, choose one, and then be done with the showings after that.
Especially during this pandemic, your agent should ensure that the buyers coming to view your property are pre-qualified… so only someone that is ready to make an offer goes into the home. The agent and their buyers should also attest that they are COVID-19 symptom-free and register with the listing agent for contact tracing purposes if needed in the future. Visitors should wear masks and gloves, or sanitize their hands upon arrival, and all surfaces that are prone to being touched should be wiped down thoroughly.
If you are no longer residing in the home, showings are much easier. The property can be shown at a moment’s notice, and while visitors should still have no symptoms of being ill, that threat to your health is not a factor.
What Kind of Offers are Sellers Now Receiving?
If your listing is like the majority of listings today, you should get multiple offers within a few days of going live. Many sellers are receiving between 10 to 20 offers…yes, you heard right, 20 offers!
Since active buyers know what kind of offers they are competing with, they know that to be the one chosen, they have to present a strong, clean, well-written offer. Therefore many buyers are offering thousands of dollars over the asking price. While this is wonderful for our sellers, this is not where the frenzy stops. What’s even better than a high offer price is a high appraisal clause.
What is an Appraisal Clause?
If the purchase is being financed, the lender requires an appraisal of the property. This is one person’s opinion on the value of the property, and this figure is what the loan will be based upon. Because the purchase price may be way higher than the recent sales in the area, the appraisals could come in short or lower than the purchase price. If this happens, there is a problem… either the buyer has to come in with cash to make up for that shortfall, the seller has to lower their price to the appraisal value, or some combination of these two scenarios.
So to take some of the risk away from the sellers, buyers are offering to “make up” if there is an appraisal shortfall in their purchase. These make-up amounts used to be $5,000 or even $10,000 years ago, BUT NOW, the appraisal clauses have been upwards of $20,000, some higher than that…and some buyers who really want the home and have the extra savings are even putting NO limit to their make up amount. How crazy is that?
Yes! In ADDITION to a high offer and high appraisal clause, many buyers are offering to pay for customary seller closing costs, such as the termite inspection report and the condo and/or association documents that are required to be given to the buyer in escrow. Buyers are also deleting carpet cleaning and even waiving the seller move-out cleaning of the home as the icing on their offer. For the most part, this means sellers are saving thousands in sales costs and experiencing easier transactions and smoother closings.
So, is now a good time to sell? You tell me…
For more information, feel free to contact me.