What’s a Buyer or Seller to do?

It’s been an interesting week to say the least. We had an offer on one of our listings from a buyer with a 793 FICO score and he could not qualify for a loan. We had the AmGen and Countrywide scares. We even had a magnitude 3.5 earthquake just to make things exciting.

In this ‘interesting’ market, what is a buyer or seller to do? We have a couple of recommendations.

If you are a buyer, make sure that you have full lender approval before you start writing offers. This means a formal advance approval letter or a letter of commitment from your lender, not just a pre-qualification or pre-approval letter if you want your offer to be taken seriously. Lenders have pulled back so far now that any REALTOR who accepts an offer with just a pre-qual/pre-approval letter needs a firm smack on their head. If your letter of approval is more than 30 days old be sure and have your mortgage broker check with the lender and ensure that the underwriting requirements have not changed. We are seeing requirements move on a daily basis over the last week and do not expect it to change in the very near future.

Another mistake buyers should not commit is making a ridiculously low offer on a home. Yes, we all realize there are a lot of homes on the market and you have choices; nobody expects you to pay $22 for a $20 bill. That said, offers that come in at a ridiculously low price set the stage (if they are not rejected) for an acrimonious negotiation process in which every request will be a fight to the bitter end and will, in all likelihood, end up in a deal that does not make it through escrow.

Your REALTOR should spend the time to educate you to current market conditions, what a reasonable offer may be and how low you can go in order to start negotiations at a level that will result in a sale price that you and the seller can live with.

As a seller, your task is harder. For your home to sell in today’s market you need to be the best value in a given price range. ‘Best value’ does not mean the cheapest, it means you need to be THE readily apparent value among the homes in a $25K-$50K price range for features, condition and how well it shows. Time and time again I have taken unsophisticated buyers out into the market and after seeing 10-15 homes they have a very real feel for what value is in the price range we are looking in, even if they cannot articulate it.

Value can be a lot of things; it may be a spectacular remodel, it may be a perfectly staged and great showing home, it may mean being priced to sell vs. testing the market…… your REALTOR should be able to explain these criteria and how you can achieve them in the shortest period of time and for the least amount of money.

Buyers are so skittish right now that deficiencies that would not have hit their radar a year ago stand out like neon signs today. Your home has to be easy to both show AND for REALTORS to preview. It has to show good at every opportunity; paint needs to look good -even if your paint is looking great, you should paint something in the house every 21 days or so. The psychological impact of the new paint smell is greater on buyers than you think. Curb appeal is critical- I have yet to go out with buyers once in the last 4 months without bypassing at least one home due to it’s appearance from the car.

If you are serious about selling, have your REALTOR review the pricing on your competition every week and follow the advice you are given. Remember, the market does not care what you need or want to sell your home for, it will only bear what buyers are willing to pay for it. You can control how easy your home is to show, how well it actually shows and how well it is priced and marketed. You cannot control interest rates, what the market will bear and when the perfect buyer walks through the front door.

Your REALTOR (whether it is us or anyone else) is earning their commissions in this market from the advice they give you and their ability to keep the deal together once you get into escrow. Your REALTOR matters more now than ever before. Choose wisely.