Josh Cooley is the owner/operator of a successful real estate business in Eugene, Oregon and Head Coach at Reger Coaching and Consulting.
2021 is a strong seller’s market — and we expect that trend to continue in 2022. A combination of factors, including historically low mortgage rates and a shortage of available homes, has continued to drive up sales prices and buyer demand.
As we prepare for the new year, now is an ideal opportunity to reflect on the small actions agents, buyers and sellers can take to finalize the best deal.
When working with buyers:
• Research before calling the listing office.
In a highly competitive market, the listing agent has a lot of influence in a sale. Do some research before calling them, even if it’s just reading the showing instructions in the MLS. Don’t make the listing agent responsible for giving you information you should already have access to.
• Don’t lead with negativity.
I’m always surprised when an agent calls about a property and immediately jumps into criticisms like: “What’s wrong with this neighborhood?” or “That roof needs replacing.” If we’re expecting 12 offers on a house, and you rub us the wrong way from the start, your offer likely won’t make it to the top of the list. At minimum, the negativity will be shared with the seller before they make a decision.
• Ask helpful questions.
Agents often call and only ask, “Why are they selling?” Learn to ask better questions that will help the buyer and the seller make a deal, such as: “Other than price, is there anything that would help this make a great sale for the seller?” or “Is there anything that the seller would like us to know about their situation or the home before making an offer?”
• Remind buyers not to talk in the house during the showing.
Some homes have audio or video recording, and an offhand negative comment can get you excluded from consideration. Tell your clients to quietly take notes that you can discuss back at your office.
When working with sellers:
• Watch the market.
Establish a consistent way to track the market every day. I have a search set up in the MLS for every area where we do business, and every morning I print out the results for my team. We see all activity in the entire market at a glance. For instance, in July, we saw around 50 genuine new listings every day. Now we’re seeing about the same number, but 75% of them are price-reduced listings, not new. This practice helps us sense trends in real time and explain them to our clients — like why we may need to list their home at $725,000, not $800,000, if they ultimately want multiple offers and a $800,000 sale.
• Broker the deal.
It’s an emotional time in our industry, and many of us are burnt out, but your job is to remove as much stress from your clients as possible. Be a professional, broker the deal and check your emotions at the door.
• Get pre-approved, not pre-qualified.
Getting pre-qualified for a loan means you have supplied a lender with an overview of your financial information and received an estimate of how much you might be able to borrow. Getting pre-approved requires you to send full financial documents to the lender and provides you with a pre-approval letter for a loan of a specific amount. Pre-approval carries a lot more weight with a seller and can be an advantage if there are multiple offers.
• Use terms to your advantage.
If you work with an agent who asks the right questions, you can determine the terms that matter to the seller beyond price, such as:
1. Later closing date or rent-back option: The seller may not have a home to move into right away, so a later closing date or the possibility of renting the property back could be beneficial.
2. Cash down: A higher amount of cash down makes you a stronger buyer, especially if a home is bid up past the appraisal value or any issues come up during inspections.
3. Earnest money: Releasing the earnest money after inspection is a great comfort to the seller, showing that you are confident in your loan and serious about the sale.
• Be first or last.
If you can confirm a seller will respond right away to an offer, get yours in first. If the seller has set a deadline for when they will review offers, there’s no benefit in being first; it will only drive the price up. Have your agent get written confirmation of the deadline, then be last with your strongest possible offer.
• Understand where the market is now.
The market is different now than it was six months ago. Homes may be selling at the same price, but there are fewer showings and fewer offers.
• Get the whole story.
You can’t look online at the final sale price for a home similar to yours and understand exactly how they got there. What kind of marketing did they do? Did they receive multiple offers that drove the price up? Is the home in top condition so it can command a top price? Listen to your agent’s expertise when pricing your home, and ask questions until you understand their reasoning.
• Leave the first weekend.
Make it as convenient as possible for your agent to schedule showings as soon as your home is on the market.
• Get a pre-inspection.
Before your home goes on the market, get it inspected to make sure there are no major problems. A good pre-inspection gives buyers peace of mind before they make an offer.
• Have a financial plan.
Focus on the big picture. When you sell your home, what do you need to pay off your mortgage and get the down payment for your next home? Is this number feasible? Trust your agent to know the market and get you to the number you need.
• Work with your agent to understand four things:
1. Market trends: What’s the current, non-biased technical analysis of the market?
2. Comparable homes: What’s the story behind sales of similar homes? How many offers did they get? What terms did they negotiate?
3. Location: Which factors are most important to buyers, such as walkability, school district or a specific need?
4. Seasonality: How will seasonality (like going on the market during summer or winter school holidays) affect how you price?
The housing market has been extremely competitive in 2021, and 2022 is likely to keep up a similar pace. Whether you are an agent, a buyer or a seller, you can achieve your desired outcome more easily if you do your homework and invest time in these small but influential steps.