“The New Normal” is a multi-story Inman series that explores what returns to normal after the pandemic wears off and what will never be the same again. Come back tomorrow to see a new installment and join us June 15-17 when we take the live conversation on Inman Connect.
The pandemic transformed the entire sales process, from sales preparation activities to scheduling and managing exhibitions and submitting multiple offers. The experience looks different now. And salespeople are well aware that the ball is in their court.
On every major street in America, you’re likely to hear armchair experts advising sellers to simply put their home on the market and see how much they can oversupply on this wild real estate journey. And that could be true, for now.
The days of having to compete with 10 or more properties in the neighborhood are long gone. A seller who lists a home now could be the one only house on the market in the neighborhood.
Days on the market have plummeted, in many cases falling to less than 10 overall average. (Actually though, it was more like a day or two tops.)
Instead of what would be a quiet open house on a Sunday afternoon, today sellers are faced with a long line of buyers and their agents, eager to take a look.
In this crazy market with so much demandDoes it make sense for a salesperson to bother to do something, like entertain repairs, keep their homes in great shape, or engage in negotiations?
In short, as we emerge from the COVID-19 pandemic, how much have the rules changed for sellers?
Selling ‘as is’ and ‘unseen’
More and more houses are being sold “as is”. The post-inspection repair list is a thing of the past. Sellers do not have to consider repairs unless it is something of a structural or safety-related nature.
If it’s not something that could affect the home’s closing ability, such as an appraiser stating the buyer’s condition or ability to obtain insurance, then most likely sellers won’t worry about it. The new normal doesn’t allow buyers to cut corners or renegotiations.
And what is more, buying in sight without being seen now it is more common in today’s reality. There is so much technology to make it possible. And on top of that, the availability and quality of property data helps “buyers know what to offer, when and what the wait may bring, even a week or two,” as Craig Rowe wrote in this Inman article.
Appraisal contingencies? Not so much
There is less consideration for appraised value, unless the home buying public is obtaining financing where that could be a bigger problem, such as FHA or VA. Even then, many buyers, having lost in more than one houseThey may be willing to compromise a bit if they have the money to do so.
Buyers who do conventional financing understand that they may have less influence with a seller when it comes to appraisal and are willing to take a chance. In many cases, it is the only way to protect the winning bid.
In our new normal, a seller doesn’t have to worry about the appraisal process and be prepared to renegotiate like they once did, because there are likely several other offers sent as backups.
One going up to the Joneses
When it comes to pricing, the new way is to beat the higher priced composition that was just sold.
It doesn’t matter if the seller’s house is that pretty or not if it’s the only one in the neighborhood, and among a handful of houses on the market in your particular price range, the price is going up by default. After all, what was sold a month or two ago doesn’t matter that much.
Preparation for sale
Is the preparation for the sale dead? As we wondered before, in this market, does it make sense for a salesperson to bother with preparation? Well no rules completely change. A little preparation is enough, even if it means basic cleaning, organization and adding a new coat of paint.
While a seller may not have to replace countertops or even appliances (well, it turns out there is a long delay in waiting for them to arrive as a result of the pandemic), the buyer will be happy to connect to the seller’s existing ones, including the washer and dryer, even if they aren’t the fanciest machines.
Better to get by with what comes with the house rather than having to search for a laundry room because the new washer and dryer are pending for several months.
Putting your best foot forward
Multiple offers are part of the new normal for selling a home in a post-pandemic world. This can be both a blessing and a curse at the same time. While sellers love to have buyers compete for their home, the competition is intense. Sellers may feel like they are being harassed as buyers compete for their attention, wanting to be the chosen one.
On multiple offer situations, salespeople are really testing their agent’s skill and dexterity. Multiple offer scenarios are not for the faint of heart, and for an inexperienced agent whose phone explodes with texts and calls from numerous agents, the process can be difficult to handle. But this is sometimes even true for seasoned professionals.
Something called a “tiered addendum” or “tiered clause” is part of the new normal and can be used by more than one buyer bidding. Crazy deals that are well above the asking price can make sellers feel like they have won the lottery.
However, a trained agent will be able to separate the wheat from the chaff and discern what may be truly authentic versus someone throwing in a number simply to “win” and potentially renegotiate later.
Receiving numerous offers often means that the listing agent has to summarize and explain the terms of each one, requiring a significant amount of preparation on the agent’s part. Marketers may be surprised to find color-coded charts that place all terms side by side along with hard copies in a binder, tabbed and indexed for easy reference.
Just like there are various offers, something called a “multi-counter” is also part of the new normal, depending on how the seller and the agent want to play it. Sellers need to be prepared that, in today’s climate, more than one party can be equally competitive by giving them the price and terms they request, which may require more rounds of negotiation to determine who the home buyer is.
Stay after closing
The sellers that moved in in time for the closing date was 2019. Now? It is more common for sellers to stay in the house after closing, for as long as they want. The ability for a seller to occupy a home after closing at no cost to them is the new normal offered by buyers as a way to seal the deal.
While it may seem like an ideal situation for the seller, it is also one that could be fraught with responsibility and many gray areas and problems that could arise after closing. This is where the experience of an agent comes in handy. They have learned to guide salespeople through this process.
Short offer terms
The pandemic created the new normal for limited show appointments, and buyers are scrutinized before even making the appointment. Buyers submitting their financial ratings to the listing broker ahead of time helped reassure sellers that they are real and serious, not just tire kickers.
But aside from limited projections, the new normal now includes tight deadlines for submitting bids. Agents are finding that an effective way to generate offers is to request that they be sent within 24 to 48 hours after the ad runs.
This technique works to provide a bit of certainty to what can be a largely uncertain process for a seller when generating multiple offers in a short period of time.
The pandemic dramatically shortened the listing and selling process for sellers and forced buyers to make decisions about what they wanted. Now that sellers have tried it, they probably don’t want to go back to the days when they had their home ready 24/7.
The problem is, it won’t always be a seller’s market. Markets are cyclical – we know that sellers cannot be quiet forever.
As we saw in the last market crash, when sellers haven’t been doing the groundwork to get their homes ready and in the best possible condition, it takes a lot of retraining and adjusting expectations to get their homes ready to the levels they need. . they were before the pandemic. It’s best if we, as an industry, don’t allow sellers to skid during the process.