Who could have imagined that a global pandemic would be a catalyst for one of the most dramatic upswings the real estate industry has seen in recent years. A seller’s market often means bidding wars, higher prices, and faster sales for homeowners. And while this is all good news for sellers, you’ll still need to be strategic if you want to sell your lake home for the most money possible. For expert tips on selling your East Tennesse lake home in a seller’s market, you need to work with the best who are specalisted in the lake home and lake community market.
- Cut your budget for cosmetic upgrades like staking and renovations
With fewer properties to choose from, eager buyers are more willing to overlook outdated interiors and cosmetic issues than they would in a buyer’s market where beautiful homes are a dime a dozen.
Here are some quick and easy ways to make your lake home more inviting without spending a lot of cash:
- Paint the main living areas a neutral gray or beige.
- Store loose items in decorative bins & hide electrical cords and wires out of sight.
- Put photographs, mementos, and other personal items away.
- Landscaping bushes and shrubs around your dock and shoreline
2. Plan your next move before you sell
In a seller’s market, homeowners are often pleasantly surprised to find their property sells much quicker than anticipated. Some lakefront homes are on the market for less than a week, sometimes pending in a matter of hours!
When making plans to list your lake home, prepare for your next move at the same time. Pre-pack whatever you’re taking to your next home, and donate, sell, or toss whatever you don’t want.
You should also begin searching for your next home as soon as you’re ready to sell. If you haven’t started looking for your next home, have a backup plan in place in case your home sells quickly. You may consider renting for a bit so you can take your time finding the right property. You can also negotiate a seller rent-back so you can remain in your home as a renter after you sell it, talk with one of our agents if this is something you may be interested in!
3. Strategically price your home to encourage multiple offers
While it’s tempting to reach for the stars with a high listing price, note that overpricing your home could turn off informed buyers and leave your home sitting on the market. And even if a buyer agrees to a sky-high price, they may not be able to close if the appraisal comes in low since lenders won’t typically approve a loan larger than a property’s appraised value. On the flip side, if you price your home too low, you might not sell your lake house for as much as you could given the hot market.
The goal is to find the sweet spot: a price that reflects a home’s fair market value based on the size, floor plan, location, and condition. Your real estate agent will round up recently sold comparable homes, or “comps,” in Competitive Market Analysis (CMA) to determine how much your home is worth in the current lake home market on your specific East Tennessee lake.
4. Make the most of a bidding war
Bidding wars are common in a seller’s market. With fewer options to choose from, buyers flock to desirable properties that check most of their boxes. As a seller, you’ll need to evaluate your offers with your realtor and respond carefully to leverage the best deal possible.
The National Association of Realtors (NAR) outlines three ways to handle a multiple offer situation:
- Accept the best offer. This works when an offer is head and shoulders above the rest. For example, say you receive a cash offer that’s significantly higher than the other offers which the buyers require financing. Not only is this buyer’s offer higher, but it’s also more likely to close smoothly without a lender involved.
- Inform buyers of the competition and encourage stronger offers. Typically, real estate agents won’t disclose the offer amounts to competing buyers. Instead, they’ll inform all buyers that other offers are on the table and encourage them to submit their highest and best offer before a set deadline.
- Respond to one offer with a counteroffer, and set the others aside until the buyer responds. A seller may opt for this strategy if they receive an outstanding offer but aren’t yet ready to turn away other offers. For instance, maybe you get an offer with an excellent price, but the proposed moving date doesn’t align with your plans. You’d want to counter to see if the buyer can accommodate before committing to the deal.
Thankfully, you don’t have to determine the best response on your own — your real estate agent will be by your side to help you understand the best stratagies and tactics that buyers are using in this wild market such as escalation clauses, aggresive timeline, and sight unseen situations.
5. Remember the highest offer is not always the best
Most sellers gravitate towards the highest offer. But our Lake Team cautions our clients that the highest offer is not always the best offer. Here are the main components of a strong offer in a seller’s market:
–A cash offer: Even if a cash offer is not the highest, it can still be the best for a few reasons. When a buyer pays in cash, they don’t need to prove the home’s value to a lender, taking the appraisal out of the equation. Skipping this step is beneficial in a hot seller’s market where prices are rising faster than appraisers are willing to recognize..
-A large down payment: According to a study by NAR and Experian, the average homebuyer made a 12% down payment on home sales between July 2018 and June 2019. As a seller, note that the higher the buyer’s down payment, the better. A buyer with a large down payment has to borrow less, reducing the risk they won’t qualify for their loan.
-Few to no contingencies: In real estate, a contingency is a requirement outlined in the purchase agreement that must be met for the sale to close. If the buyer’s contingency is not satisfied, they can walk away from the deal with their earnest money. As a seller, you want an offer with few contingencies since these slow down the sale and act as “escape hatches” for buyers to back out. The most common contingencies include:
- Appraisal contingency: The home must appraise for an equal or higher value than the buyer’s offer for the sale to close.
- Financing contingency: The buyer can back out of the deal if they are unable to secure financing.
- Home sale contingency: The buyer only moves forward with purchasing the property if their own home sells.
- Inspection contingency: The buyer requires a home inspection and may cancel the sale if the seller does not agree to complete or pay for necessary repairs.
-Buyer concessions: In a seller’s market, buyers may throw in concessions, or incentives, to encourage the seller to choose their offer. For example, the buyer may offer to cover closing costs that the seller would customarily pay.
-Flexible moving date: In a seller’s market, sellers may sell their current home faster than they’re able to buy their next one. That’s when a flexible moving date or rent back comes in handy. Buyers willing to budge on this point and give the seller some breathing room to house hunt may just push their offer to the front of the line.
6. Anticipate appraisal issues if you accept a high offer
Pricing a lake home on the higher end of market comps is all well and good, but the home must appraise for equal or less value than the buyer’s offer in order for the buyer’s lender to approve the loan.
When a lake home appraises below the asking price, there are a few options to address the gap between the appraised value and the sales price. Your agent can advise on what the best strategy is for your home sale.
7. Hire a top real estate agent who understands the demands of a seller’s market
Choosing the right real estate agent is by far the most important decision you’ll make when selling in a seller’s market. While any agent can assist you sell your home, only a lake specialist can win you the best price possible and understand all the ins and outs of East Tennessee lake homes and communities.
Lakefront Living Realty agents outcompete their peers when it comes to market research, marketings, pricing strategies, and bidding war negotiations — all essential for maximizing your sale potential. Contact us today to learning more about listing your lake home!
Original article by HomeLight.
Reposted by Polly Harrison, Lakefront Living Realty TN