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How Sellers Can Be Ready in a Hot Housing Market
They were a retired couple in their 70s with a ranch-style stucco
house in Covina.
They wanted to sell and knew it was a fast-moving market. Yet they
were stunned when a full-price offer materialized a few hours after the
house was put up for sale.
They accepted the bid but soon panicked. They had expected more time
to plan. Instead, they were faced with leaving their cherished home much
sooner than expected. When the moving van arrived, they were stressed,
unprepared and behind schedule.
"For nearly an entire day, I just sat there waiting for them to move.
There was no possible way to bring furniture into the house until they
left," recalls Monte Helme, who bought the house.
If you're planning to leave a neighborhood where houses are selling
quickly, you should be ready to accept a bid as soon as your house is
posted on the multiple listing service, said Helme, co-owner of Creative
Resources, a north San Diego County company providing content for real
estate Web sites.
"In a hot market, you have to have a plan for where you're going to go
before you sell," said Helme.
The traditional advice to sellers is to postpone shopping until they
have a firm deal on the place they are selling, lest they wind up owning
two houses at the same time.
But advice should be waived in a strong sellers' market, said Helme,
formerly a vice president of Century 21 International.
Here are some suggestions for homeowners selling in a high-demand
Don't assume an immediate bid means you set your price too low.
"When a good offer reaches your door within hours after listing, it's
human nature to think the asking price should have been higher," said
Joan McLellan Tayler, a San Francisco-based author of real estate books.
That reaction usually doesn't reflect reality, she said.
"Your first offer is often your best offer," said Tayler. A burst of
interest frequently follows the listing of a house, especially in still
overheated neighborhoods where buyers are ready to pounce when a
desirable property becomes available.
Suspicions that a listing agent has deliberately underpriced a house
to gain a fast sale are nearly always untrue, according to Tayler. In
fact, rival agents realize that recommending a low price could cost them
the chance to receive a seller's listing, she said.
If your first offer is a good one--in price, terms and certainly of
outcome--count yourself lucky.
"Take the offer and run," Tayler said.
Clean up a "careless offer" and counter it quickly.
Suppose your first bidder offers a generous price, yet you're not
delighted with other terms of the offer. Perhaps you find fault with the
timing suggested in the contract
"In a fast-moving market, some offers are written hurriedly and
carelessly. Very few are accepted exactly as they stand," Tayler said. If
the bid is sound except for a few specifics, Tayler advocates seeking to
improve on it with a prompt counteroffer.
"Buyers don't like to sit on their hands, and there's a risk to making
them wait. Buyers can get cold feet or find another house they like
more," she said.
Carefully review simultaneous offers.
If you're selling in a coveted neighborhood, you may receive several
offers as soon as your house becomes available. It's a good idea to
review them with your agent to be sure you respond ethically and legally.
How should you compare bids? Besides price and terms, you'll want
evidence that the bidder is willing and able to fulfill his end of the
Sometimes the size of the buyer's deposit gives you a good clue as to
the prospect's credibility, Helme said. Also, you may be able to fortify
an otherwise strong offer by requesting a larger deposit from the buyers,
Request mortgage pre-approval in your listing.
Though it's reassuring to know that a large deposit is anchoring your
deal, it's even better to have solid evidence that the buyers can raise
the required mortgage money.
Buyers can obtain nearly watertight guarantees from lenders about
their capacity to borrow. Yet not every buyer does so.
You want to be sure that your bidders are not stretching above their
limits. The ideal way to do that is to write into your listing agreement
a requirement that all those making offers must show proof of mortgage
pre-approval when they make an offer, Tayler suggests.
"Price is important. But mortgage pre-approval also means a great deal," she said.
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Ellen James Martin is a syndicated columnist. She can be reached via e-mail at EllenWrite@aol.com.