Short time on the market. Multiple offers. Record sale prices. We live in a seller’s market right now in Tulsa. With a double-digit increase in sale prices over the last year, Tulsa homeowners saw their equity shoot up and, understandably, want to cash in on it. But can a seller’s market actually hurt a seller? In some ways, yes. But there are steps you, the seller, can take to minimize or even eliminate potential problems.
Tulsa Seller’s Market: Helpful or Hurtful?
With many properties receiving multiple offers, buyers turn to ever more drastic measures to get their offer accepted. While this sounds fantastic for the seller at first, it can actually come back to bite them in the tush later on. Watch out for these scenarios to avoid problems with your real estate transaction.
Waiving the Home Inspection
Before this recent boom, buyers typically hired an inspector to check out the condition of the home. A home inspection made buyers aware of potential issues (both big and small) that lurked beneath the surface. This helped inform a buyer whether or not to continue with the sale and if further negotiations might be required. However, today’s buyer may forgo the home inspection in an effort to appeal to a seller. After all, inspections take time and could lead to a discount on the sale price. But this may lead to issues with the seller down the road.
If a buyer discovers a major expensive problem in the home after they move in, they might try to sue the seller for damages. One way to shore up your position is to make sure you disclose any defects in the home that you are aware of. If you do not do so, you may be found financially liable for the repairs. To make an even stronger case, consider obtaining a pre-listing inspection. This shows both good faith and transparency on your part to the buyer.
Waiving an Appraisal
Now, in a seller’s market, prices continue to rise. In fact, some home values may increase from the time you enter escrow until you sign the final paperwork. (Not always a “thing”, but it can happen.) Banks require that an appraisal be performed before they will approve a loan. With cash buyers, this is not a problem. However, if your buyer needs a loan to purchase your property, your transaction could hit a snag if the appraisal comes back under the agreed upon sale price.
To combat this issue, first of all, make sure you list your Tulsa home appropriately for the current market. Follow your Tulsa REALTOR®’s advice on this. Secondly, check the buyer’s financial status to make sure they have the funds to make up for any shortfalls between the appraised value and the sale price. (Again, your REALTOR® can do the research for you.) Finally, you might consider increasing the earnest money deposit. You keep it if the buyer must walk away from the sale and has no contingency in place.
Short Time Frame
You list your home. Several buyers make an offer. You accept one and enter escrow. Sounds awesome. But where are you going to go after you sign the final paperwork? Many sellers find themselves scrambling for their next home even after keys are exchanged, especially in a seller’s market. After all, the seller now becomes the buyer and gets thrown into this crazy market with other buyers. And if you need some of the proceeds from your current sale to fund your next home purchase, what do you do?
Add a rent-back contingency into your purchase agreement. This allows you to stay in the home for a designated amount of time (usually about 60 days) for an agreed upon amount of money. This also gives you time to find and secure your next home. While not ideal for home buyers, they may agree to it in order for their offer to be accepted. In the crazy market we are experiencing right now, this happens much more than you might think.
Always, always discuss your options with your REALTOR®. They know the market best. And they are on your side. Good luck!
Lori Cain, REALTOR®, Serving Midtown and the greater Tulsa, OK area. Call 918-852-5036.
