Today’s real estate market has revealed countless components of people’s character. Many of those components are of the not so pleasant type. The extremely competitive market in which we operate today has its challenges for everyone. Whether you’re buying, selling (or both), representing a buyer or seller, facilitating financing or conducting the closing, the tension in the normal course of doing business can be anything but normal.
Today, I’ll focus on the experience from the consumer’s perspective. A later blog will focus on the service provider’s perspective.
A more thorough understanding of a consumer’s perspective can be instrumental in the service provider’s ability to accommodate the needs of the consumer. Likewise, a more educated consumer can contribute greatly toward less frustration for the service providers.
The limited supply of properties for sale – otherwise known as the housing inventory – is the greatest contributor to the heightened level of sensitivity that exists today. Buyers are experiencing frustration with the process of having to compete with so many other buyers for a single property. Combine that with the highest and best scenarios used by many sellers and listing agents, and it only further complicates things for many buyers as they are forced to reconsider their offer and/or decide to improve the offer or hold to the current offer.
Buying can be very emotional, and the more emotionally attached a potential buyer has become to a property, it further intensifies the situation. Many buyers have experienced the short end of the negotiation process 5, 10, 15 or even 20+ times as they have searched and bid on properties to no avail.
They’ve also been forced to offer as much as 20-30% above the seller’s asking price in order to secure the bid (which can be scary) and this is just the beginning. Inspections and Due Diligence brings its own share of concerns as the property is evaluated further for verification of its overall conditions.
Proper buyer representation will help buyers navigate many of these situations with an improved potential for the desired positive results.
Seller’s blood pressures are soaring due to the major loss in values over the past several years and recovery strides the market is currently making. Many sellers are challenged with making sure their property is properly priced in conjunction with the anticipation of what a buyer is willing to pay in today’s open and highly competitive market.
To further complicate the situation, the seller’s ability to capture this price commonly hinges on the final verdict of an appraisal and the buyer’s lender. The appraisal process must adequately consider what has taken place in the market place with recent sales, thus many sellers are on pins and needles as they are anxious to see how close their negotiations with the buyer are supported by neighboring sales history.
The multiple offer situation can generate an onslaught of offers for many sellers. Within hours of listing property many sellers are seeing 5 to 10 offers and many offers are at list price or better. How to evaluate the offers for price, terms, concessions and negotiated points are just a few things that must be considered in the process of accepting an offer.
The offer yielding the highest price may or may not be the best overall deal for the situation. We are all familiar with the old saying “money isn’t everything”. Things like cash vs. financing, seller paid closing cost, personal property, repairs, closing date, and possession conveyance are just a few other things that may also impact the overall value of an offer.
The seller must have the proper representation to help them navigate these types of situations.
Getting to the Closing Table
As you see, there are various factors that must come together to make a transaction happen successfully. Negotiating can be very taxing, and when things don’t work out as expected or desired, the party on the short end is more likely than ever to feel slighted and seek formal methods to voice their concerns, file complaints, and even seek legal action.
In order to best ensure the success of a transaction in today’s market, everyone involved will need to have a thorough understanding of the circumstances. This can usually be accomplished with upfront consultations between buyers, sellers and their knowledgeable, respective representation.
Honest dialogue here will help everyone have a better understanding of the market and set the proper expectation for all involved, which will decrease much of the tension that exists. Today’s market requires knowledge and perseverance, so consult a professional, institute a game plan and proceed with patience.
In future blogs, I’ll explore a more in-depth look at what service providers (Realtors®, lenders, inspectors, appraisers, etc.) are challenged with under these same circumstances. If you have any questions or comments, please leave a reply below.
Tags: atlanta, atlanta real estate, Better Homes and Gardens Real Estate Metro Brokers, Buyers, due diligence, financing, first time homebuyers, georgia, listing, Metro Brokers, patience, Real Estate, real estate agent, real estate closing, seller, success