As a seller in an aggressive market, it’s easy to get carried away with expectations of the pot of gold awaiting you. But the end of the rainbow may disappoint you if you don’t understand the market. Expert appraiser Ryan Lundquist offers some sound advice on how to sell in a hot market.
By Ryan Lundquist, special to The Home Front
1. Don’t get high on the headlines
It’s easy to read articles that say “the market is hot” and then ignore data in the neighborhood. It’s as if we see something in print and price according to the headline instead of actual sales and listings. Right now there are no shortage of articles saying “Sacramento is one of the hottest markets in the nation”, so be careful about getting distracted by the headlines.
2. Don’t aim for the unicorn
It’s easy to price for that one magical unicorn buyer who is going to pay more than anyone else for some reason, but I would advise you to price based on recent similar sales and similar listings that are actually getting into contract. I find some sellers say things like, “A cash investor from San Francisco is going to swoop in and pay top dollar for my property.” Yeah, maybe. But what might also happen is you sit on the market instead of sell because you priced for a mythical buyer instead of a real one.
3. Be careful to not treat the contract price as holy
We like to think there is something holy about a contract price as if price negotiation is finished when a contract is written, but that’s simply not true. If a buyer finds repairs are needed or if an appraisal rightly comes in lower than an inflated contract price, it may be prudent to reduce the price.
4. Remember the difference between “comps” and sales
We like to think all sales are “comps”, but there is a difference between properties that are actually comparable and ones that are simply sales. It’s easy to get distracted by a few high sales in the neighborhood, but if they are nothing like your property, then don’t give them much weight and pay the most attention to homes that are actually similar to yours. In simple terms, if your home was an apple, what have other apples sold for in the neighborhood? Don’t price your apple according to orange or banana sales.
5. Be aware of appraisals being scrutinized
If you haven’t sold a home in years, know the lending world has changed from what it used to be over ten years ago. These days lenders scrutinize appraisals like never before, so be careful about accepting an offer that is incredibly high if there is no way it is going to appraise that high. Of course if the buyer has cash to make up the difference, then you are fine. But if the buyer is strapped for cash, then the highest offer probably isn’t your best option. This is why many agents tell sellers to look for the strongest offer instead of the highest one.
Ryan has much more to say about how to sell in an aggressive market. Read more essential selling tips for hot market conditions on Ryan’s blog.
About the author
Ryan Lundquist is a Certified Residential Appraiser based in Sacramento, California. He authors the clever and insightful Sacramento Appraisal Blog, one of the real estate industry’s top-ranking blogs.
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