Every seller wants to sell their home and get top dollars. Why shouldn’t they, that is every seller’s right to have that expectation. But the outcome can be determined by the type of professional recommendations the sellers receive. Can a seller lose money in a seller’s market?
I don’t know why, but some people are led to believe that in a hot seller’s market, just throwing a property on the market is the best thing to do. Don’t do any inspections, or anything else to beautify the property and just throw it out there and see the money pile grow. Apparently, some listing agents are recommending this strategy to their clients as a way to save money.
Depending on the market conditions in the neighborhood, there may be a chance that an untouched rental property may generate multiple offers and a pile of money. But I would argue that the listing agent who is recommending this strategy is actually losing money for his sellers. The seller may not know, but it is the agent’s job to know the market conditions and make the appropriate recommendation so that the seller is fully aware of all his options. Typically the ability to earn the most money possible is on top of the options list. It is the agent’s fiduciary duty; that’s the value added proposition he brings to the table to earn his commission.
Advising the seller to simply throw the property on the market as a way to save money is tantamount to recommending that a seller put his used car on the market without inventing in a nice detail job first. You can certainly save a little money by not beautifying your car, but the downside would be in the thousands compared to a couple of hundreds dollars for the detail job. If you can throw in a couple of hundred to protect your investment in a used car, why would you not do the same for a house which could be worth ten times more?
So how smart is the recommendation to put a house on the market that has been lived in for a decade without first seeing what the inspectors will find? In this day and age of the internet and aggregator sites, how smart is it to not professionally stage the house to bring out the best. How much money would the seller have saved if the house does not show well and it ends up on the cut list of buyer after buyer? Will the seller get top dollars then?
With the housing market on fire today, one of the ways that buyers are taking advantage of unsuspecting sellers is to overbid during multiple offers, get into pending status, then re-negotiate the price during contingencies for those properties that were rushed on the market without proper inspections being completed in advance. How much money will the buyer try to knock off when they have a second bite at the price? Having full knowledge about the condition of the house prior to engaging in negotiation with the buyer is the only way to properly engage. Going in blind is committing suicide.
Yet, some agents are recommending this strategy as the way to save money? How much money could have been saved by skipping the inspections compared to how much money the buyers will demand if it is discovered that something of substance is wrong with the house? Which method is truly the smarter way to protect the investment in your house during this seller’s market? A seller’s market does not mean buyers will simply buy anything; buyers will pay extra for homes that are free of problems and that show well.
So, in this seller’s market, how do you lose money? Simply throw the house on the market without knowing anything about its conditions and potential problems and hope for a pile of money. Folks, real estate is like any other business venture, you have to spend a little money to make a lot of money.
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