“The New Normal” is a multistory Inman series exploring what’s returning to normal after the pandemic fades and what will never be the same. Check back tomorrow for a new installment and join us June 15-17 when we take the conversation live at Inman Connect.
The pandemic transformed the entire selling process — from prep-for-sale activities to scheduling and managing showings to fielding multiple offers. The experience looks different now. And sellers are very aware that the ball is in their court.
On every main street in America, you’ll likely overhear armchair experts advising sellers to just plop their home on the market and see how much over-asking they can get on this wild real estate ride. And that might be true, for now.
The days of having to compete with 10 or more properties in the neighborhood are long gone. A seller putting a home up for sale now might be the only home on the market in the neighborhood.
Days on market has taken a nosedive, in many cases, falling to less than 10 as an overall average. (In reality, however, it was more like one or two days at the most.)
Instead of what would be a leisurely open house on a Sunday afternoon, today, sellers are faced with a long line of buyers and their agents, eager to sneak the first peek.
In this crazy market, with so much demand, does it even make sense for a seller to bother doing anything — like, entertain repairs, keep their homes in tip-top shape or indulge in negotiations?
In short, as we transition out of the COVID-19 pandemic, how much have the rules changed for sellers?
Selling ‘as is’ and ‘sight unseen’
Homes are increasingly being sold “as is.” The post-inspection repair list is a thing of the past. Sellers are not having to entertain repairs unless it’s something structural in nature or safety-related.
If it’s not something that could affect the ability of the home to close — like an appraiser calling out the condition or the buyer’s ability to obtain insurance — chances are, sellers won’t be troubled with it. The new normal doesn’t allow for buyers’ nit-picking or any renegotiation.
What’s more, buying sight unseen is now more common in today’s reality. There’s so much technology out there to make that possible. And on top of that, the availability and quality of property data helps “buyers know what to offer, when and what waiting even a week or two might bring,” as Craig Rowe wrote in this Inman article.
Appraisal contingencies? Not so much
There is less regard for appraised value, unless the buyer audience for the home is obtaining financing where that could be more of an issue, such as FHA or VA. Even then, many buyers, having lost out on more than one home, may be willing to concede a bit if they have the cash to do so.
Buyers doing conventional financing understand they may have less leverage with a seller as far as the appraisal goes, and they are willing to take their chances. In many cases, it’s the only way to secure the winning offer.
In our new normal, a seller doesn’t have to sweat the appraisal process and be prepared to renegotiate like they once did — because there are likely several other offers submitted as back-ups.
One upping the Joneses
When it comes to pricing, the new way is to top the highest-priced comp that just sold.
It doesn’t matter if the seller’s home is as nice or not if it’s the only one in the neighborhood, and amongst a handful of homes on the market in its particular price range, the price is going higher by default. After all, what sold a month or two months ago doesn’t matter as much.
Prepping for sale
Is prep-for-sale dead? As we wondered before, in this market, does it even make sense for a seller to bother with prep? Well, the rules haven’t completely changed. A little bit of prep goes along way — even if that means basic cleaning, organizing and adding a fresh coat of paint.
While a seller may not have to replace countertops or even appliances (well, turns out, there’s a huge delay in waiting for them to come in as a result of the pandemic), the buyer will gladly plug into the seller’s existing ones, including the washer and dryer — even if they aren’t the fanciest of machines.
Better to make do with what comes with the house instead of having to find a laundromat because the new washer and dryer are on backorder 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 competing for their home, the competition is fierce. Sellers may feel like they are being stalked as buyers vie for their attention, wanting to be the chosen ones.
In multiple-offer situations, sellers are really getting to test the skill and prowess of their agent. Multiple-offer scenarios are not for the faint of heart, and for an inexperienced agent whose phone is blowing up with texts and calls from numerous agents, the process can be difficult to manage. But this is sometimes even true for experienced professionals.
Something called the “escalatory addendum” or an “escalation clause” is part of the new normal, and it may be used by more than one buyer making an offer. Crazy offers that are way over asking price may have the sellers feeling like they’ve hit the lottery.
However, a skilled agent will be able to separate the wheat from the chaff and discern what may be truly authentic versus someone throwing out a number simply to “win” and potentially renegotiate later.
Receiving numerous offers often means the listing agent has to summarize and explain the terms of each one, which requires a significant amount of preparation for the agent. Sellers may be surprised to find color-coded charts putting all the terms side by side along with printed copies in a binder, tabbed and indexed for easy reference.
Just like there are multiple offers, something called the “multiple counter” is also a part of the new normal, depending on how the seller and agent want to play it. Sellers have to be prepared that in today’s climate, more than one party may be as equally competitive in giving them the price and terms they ask for — which may require more rounds of negotiation to determine who the buyer for the home is.
Staying after closing
Sellers moving out in time for the closing date was so 2019. Now? It’s more common for sellers to stay in the house after closing — for however long they want. The ability for a seller to occupy a home post-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’s also one that could be ripe with liability, and many gray areas and issues that could crop up after closing. This is where an agent’s expertise is useful. They’ve learned how to coach sellers through this process.
Short offer deadlines
The pandemic created the new normal of limited showing appointments, with buyers being thoroughly vetted before the appointment is even arranged. Buyers sending their financial qualifications to the listing agent ahead of time helped reassure sellers that they’re real and serious — not just tire-kickers.
But aside from limited showings, the new normal now includes tight deadlines to submit offers. Agents are finding that one effective way to generate offers is to ask for them to be submitted with 24-48 hours after the listing goes live.
This technique works to bring a little certainty to what can be a largely uncertain process for a seller by yielding multiple offers in a short period of time.
The pandemic dramatically shortened the listing and selling process for sellers, and forced buyers to become decisive about what they want. Now that sellers gotten a taste of it, they will likely not want to go back to the days of having their home ready 24/7/365.
The problem is: It won’t always be a seller’s market. Markets are cyclical — we know sellers can’t rest easy forever.
As we saw in the last market crash, when sellers haven’t been doing the legwork to get their homes ready and in the best possible condition, it takes a lot of retraining and expectation adjusting to get them to prepare their homes at the levels they were before the pandemic hit. It’s best if we, as an industry, don’t allow sellers to skate though the process.