BIG MISTAKES Buyers & Sellers are Making in the Raleigh Housing Market

These are some really weird times in the Raleigh housing market. Sellers think it's a massive seller market and they hold all the cards. Buyers think the market is about to crash and that they hold all the cards and it's turning into a buyer's market. When in actuality, it’s turning into a more balanced market and those of us that sell real estate are happy about it. Many people don't know how to handle this market and they're making giant mistakes. 

Buyers and sellers are both making some pretty major mistakes. Let’s get started with mistakes that sellers are making. The number one mistake sellers are making right now and unfortunately sellers have always made this mistake, is thinking their home is special and unique and one of a kind. We can't tell you how many listing appointments we’ve been on where the seller has told us their home is worth $100,000 more than what it actually should be priced at. All because they have a very unique blend and version of linoleum floor or their brick is one of a kind in the Raleigh market. Unfortunately that's not the case. Buyers don't look at your house being particularly unique based on certain features you may have like your countertops or the type of windows. There is really not a tremendous amount of value that you would gain for putting in solar panels or special windows. You need to be expecting that your home is going to be worth, what your home is worth, when you put your home on the market. People think their home is special because they have brand new windows. They think they're home is special because there's just not that much inventory right now. There has been that demand for the last couple years. Sellers are slow to realize that there's not that much demand out there now that there was back in 2021 or early 2022.

The next mistake sellers are making is rejecting showings. This kind of goes along with that arrogance we just talked about where they think they're home is special. Sellers are rejecting showings because it doesn't fit into their schedule or they're busy with the holidays. They don’t want people coming in their home. As we say to our potential sellers that we are about to list their home, all showings are precious diamonds. Some showings may be a diamond you want to own, some of them may be cubic zirconium. You need to respect every one of these showings as if it was the last showing that you’re going to ever get on your home. You should not be declining those showings if you can help it. We understand there are two ways you can sell a house. First there’s the comfortable, easy, smooth, warm and cuddly way and that’s called taking three to four months to sell or there's the rip it off the band-aid painful kind. This is where you have showings that happen at midnight. Your house is perfectly looking good. Everything is great and you accept all people coming into the house to make an offer. You do all you can to encourage an offer and that takes usually a relatively short period of time. 

This segues into the next mistake that sellers are making, which is they are not keeping up their home when those showings are happening. They have accepted the showing, maybe they've declined five or six before that but they accepted this showing. Unfortunately their home looks like a bomb went off. An agent from our team just took a  client this past week to see a home. The pictures were very deceiving. The pictures online showed a house that was actually clean. Instead, there was dirty socks everywhere, there was food on the dining room table. It looked like the zombie apocalypse had happened. The owners had to get out of this house quickly to save their brains. It was that bad. It looked like they had just vacated two minutes ago. The house was a wreck, complete disaster and you could not see anything beyond it. It was also a hundred thousand overpriced. The buyer decided not to bother trying to negotiate on this house because they felt the owners would be unreasonable. The house was a mess and the price was a mess. If you're planning on selling your home, keep your house tidy. 

Another mistake sellers are making is they think the market is just as hot as it was back at the beginning of 2022. A hint, it’s not. They are overpricing their home. They are pricing in anticipation of where they think the buyer is going to finally land on an offer price. All you’re doing is scaring off the buyer. The house that we just told you about, it was cluttered, was probably a hundred thousand over asking and it's been on the market for about 115 days. On the flip side there was a home in Cary that was priced a hundred thousand less than this clutter home. It went live on a Wednesday, and by Friday their were already multiple offers. They announced the deadline for all the offers to be in by five o’clock. This house had been on the market for 52 hours. The house was well priced. It is going to go over asking price. It was clean, orderly and organized. The home looked like the photos. It was staged well. The owners didn’t make the same mistakes that the zombie apocalypse, clutter house made. Please know, if you are going to sell your house in this day and age, do not price it where you think it's going to land as a final offer price. Price your home where it should land when your agent does the comparables on the recent sales and adjust accordingly to that. You’re going to scare off a lot less buyers doing that. You’re going to end up getting most likely a higher price than what you’re asking for versus leaving it on the market a while and getting a much lower price. 

The next mistake sellers are making is they are refusing to do repairs. You finally get an offer on your house. Then the buyers do an inspection report and present you with the inspection report and you say no we're not doing any repairs. What you're doing when you're not willing to make any repairs is you're causing some animosity among the buyer. If the buyer is in the least bit concerned about this home and the suggested repairs from the inspection report are really big, like the hot water heater needs to be replaced. The heating and air system needs to replaced. The roof. It may may be worth their while to terminate this transaction and that’s going to leave you with a lot of problems. We’ll talk about those problems later on. Please whatever you do, understand that you should not refuse all repairs. You should come to the negotiating table with the buyers and try to negotiate out those repairs. Keep everybody thinking win-win so you can get yourself to the ultimate goal which is getting your house sold. 

The next big mistake we’re seeing sellers make right now is sitting on the sidelines waiting for the spring to come. Most homes are sold in our market in the spring months. This is the last week of February through the second week of June. This is the period of time when the most homes are sold in the Raleigh marketplace. This is a really great time to get your home sold. There is a lot of buyers out there and there's a lot of people looking to buy homes. To sell in the winter is also and could potentially be an even better time to sell. There is very low inventory, lower than normal and normal in the last couple years has been terrible so now it's multiple levels of terrible as far as inventory goes. You have low competition. If your home is priced well, staged well, all the things we recommend our sellers do. It is very likely you're going to get your home sold with the few buyers that are circulating out there. If you have a buyer that’s looking to buy a home right now, they are not just out looking around in the winter because they enjoy looking at homes, they’re looking at homes because they need to buy a home or they desperately want to buy a home. Give them a product, to buy your home everybody’s going to end up happy.

Just to summarize the mistakes that sellers are making. The biggest mistake sellers are making right now is being arrogant. Don’t be arrogant when people are looking to buy your home and you’re looking to sell your home be humble. Be aggressive. Be doing all that you can do to get your home sold. Don’t be arrogant at thinking that your home is this amazing one-of a-kind home and it deserves to be priced at a million dollars when it really should probably be priced at $125,000. Don’t be arrogant. Be thinking win-win with the buyers and you're going to get the ultimate reward which is getting your house sold.  

Next up, let's talk about the mistakes buyers are making. The number one mistake buyers are making right now sitting on the sidelines waiting until the spring market happens.  The spring market is when the most amount of homes are available to buy. Unfortunately during that spring market when the most amount of homes are out there, you also have the most amount of buyers out there. You’re going to be competing with multiple people to buy multiple homes. Unfortunately, we don’t anticipate in the spring there's going to be just a treasure trove number of homes out there. There is going to be a lot of competition for what is out there. If you're ready, willing and able to buy a home in the winter, now is the time to start looking. You may find the perfect home for you and if you do, the good news is you're not going to have a whole lot of competition likely for that home. You are going to be able to be out and get that home and be happy before your friends who are waiting until the spring can find their dream home. They might have to fight others and pay over asking price for it. This is something you most likely won’t have to deal with in the winter months.

The next mistake that we're seeing buyers make right now is paying too much for due diligence. Do not just because you maybe have heard that you have to pay due diligence and it has to be competitive. Don’t feel like it necessarily needs to be $50,000, $100,000, $25,000 that we saw back in the beginning of 2021 or 2022. You simply don't have to pay that right now especially if you’re the only offer. It is not necessary. Make a due diligence offer of $5,000, $10,000 which is still really good money. Do not get me wrong I don't want to down play it -  $50,000, $100,000 in due diligence. The worst thing that's going to happen is that seller is going to come back and and negotiate. They will ask you for more due diligence money by not paying that due diligence. This is money you're not necessarily going to forfeit should you have to terminate that contract and that's going to be a very good thing for you. You will have more money in your pocket when you go. You will have to look for the next home.

The next mistake we're seeing buyers make is not doing a home inspection. Please whatever you do even if the seller said says they're not willing to do any repairs on the front end and they tell you that and you still buy the house. Get the home inspection done. It may be that you’re sitting on a home that has structural issues. It has foundation problems with cracks. It has the heating and air system out. It has a roof out that that right there in Raleigh North Carolina is going to be $40,000, $50,000 no matter what the home is. The bigger home, you are going to have to spend more than that. $40,000 or $50,000 is a big amount of money to have to swallow, to buy that home, if that home is not worth paying that much down. You need to determine its transaction if they're not willing to do repairs. You’re going to want to ask those sellers, "are you sure you don't want to do repairs because I’m going to have to terminate." Don’t ever, not do an inspection. Always know what you're getting yourself into one way or the other.

The next mistake buyers are making that is not asking for repairs. Back in the olden days of 2021 and early 2022 a lot of times you couldn't ask for repairs. You had to take the home that you were given because the seller would gladly terminate your transaction and sell it to someone else. It is not that way now. There is less competition out there. You should be asking for repairs if there’s some. Don’t be shy about it. We always recommend, the seller should have done a pre-listing inspection and that way they knew what they were getting themselves into as far as when they go to sell their home. The seller knows what kind of repairs would be asked for. Most sellers don't do that unfortunately so they may be a little shell-shocked and surprised when you come at them and tell them they need a new heating and air system. We had a client where we had to go to the seller and say, “hey we need $8,000 heating and air system because the system's on the its last leg.” It took a lot of back and forth and we finally were was able to secure that system for our buyers. They were happy. But, had our buyers not been willing to push back on the seller when they said no when we asked them to replace the system, they would have had to pay $8,000 down the road.

Another egregious mistake we’re seeing that buyers make right now is sitting on the sidelines and renting. If you are waiting for the market to crash it is again unlikely. We’ve said in many times before, it's unlikely that we're going to have a market crash. We might have a soft correction. Do not be sitting on the sidelines renting and you're paying someone else's mortgage by renting. Especially if you're well ready, willing and able to buy a home, go ahead and get in the home of your dreams. Yes your interest rate may be a little higher than what you are hoping for but it's certainly possible in the state of North Carolina to refinance that interest rate down the road or as soon as rates come down. They will come back down eventually. Go ahead and get in your home refinanced when you can. Stop paying someone else's mortgage by renting.You're going to be better off. Your landlord won't be better off but you’ll be better off. 

There is a giant elephant in the room that we need to talk about for people that maybe haven’t really experienced or thought about it. We've talked about a little bit in this and that is the consequence to both the buyer and the seller for terminating a contract after you’ve already gone under contract.For the buyer what are the consequences for terminating a contract? Let’s say, those repairs came back outrageously high and the sellers are not willing to do anything. You need to terminate. What are the consequences? Well if you terminate before the due diligence date you’re going to forfeit your due diligence money. This is another reason we say don’t put $50,000, $100,000 into due diligence because you're not going to get that money back. The due diligence money goes to the seller. The seller keeps that money and can go on and re-list that home. This is a major negative consequence for a buyer. They are going to be out that amount of money whatever it is. If you terminate after the due diligence date, you will be losing not only your due diligence money but your earnest money deposit as well. That is the money that the attorney holds in escrow until closing time. Now incidentally as we've remind everyone many times, if you do not terminate, please know the due diligence money and the earnest money go towards your down payment. If you did buy a hundred thousand dollar house. You put down $5,000 in due diligence and $5,000 in earnest money that means at the time of closing you need to come up with $90,000. Most people do that by financing. The money goes toward part of your down payment. Those are the negative consequences for buyers. If they terminate they're obviously going to be out money and they're going to have less money in their pocket when they go buy their second home or take their second stab at buying a home. 

As far as sellers go what are the consequences? A lot of sellers are a bit arrogant. They don't think there's very many consequences for them terminating but unfortunately and especially in this market when things are not moving as quickly and there’s not as many buyers out there looking. There are some negative consequences for the seller. The number one is when you re-list that home, any good real estate agent that's helping a buyer is going to ask your agent “why did the home come back on the market?” Your agent is obligated to let them know if that home came back on the market because there’s a lot of repairs. Say the house needs a roof and you refuse to do the roof those buyers are going to have to be told the new buyers that they are responsible for putting on say a $15,000 roof. Most people don't really get excited about having to cough up $15,000 as soon as they move into their brand new home and finding out it's not all that brand new. You will have to disclose the inspection information you've received including any of those major repairs and the minor stuff. The best advice to give you if you terminate, be prepared on that second time to be willing to cough up money to do repairs, or give allowances for things like that roof or heating and air or even minor electrical issues. Get that done before you re-list the home. Bottom line sellers, very rarely will you make as much money or more money the second time they have to list their home. If you terminate that first transaction it may not be in your best interest because you may end up making even less money down the road. Again you're going to have to put the home back on the market. Days on the market is going to start accruing again and really because of in the age of Zillow where people are really watching days on market, to have a high days on market is a kiss of death. Your home may have sold seven days into it but because it's is under contract and you re-list it those days are going to continue accruing. You may end up having a 40-day days on market your second time around. This is really the kiss of death for a lot of houses. 

Another negative consequence for sellers, they may have to list their home at a really bad time of the year or slow time of the year. Let's say you sold your home in November. The contract terminated in middle of December and you're now having to put the home back on the market at Christmas. Most people are not looking around Christmas time, that means you're behind the eight ball to get your home sold. Bottom line, try to work things out with that first offer. You are going to be a lot further along in the end.

How do you avoid these mistakes if you're looking to buy or sell a home? First thing to do is don't get emotional. If you're buying a home, do not get emotionally attached to that home until you actually own it. If you’re selling a home know that when you put the home on the market it is a product for sale just like it's a car. Do not get emotionally attached and think this is my baby, I love this home. No. Your goal is to get the home sold. Act accordingly.

The number two thing and applies to both buyers and sellers, they need to be realistic when they buy and sell homes. Always be thinking win-win, not I'm going to get something over on the other guy. Always think win-win. Sellers need to also remember the consequences if they have to re-list with the home. Days on market will accrue. It is unlikely you're going to get as much money for the home. Be very aware when you go to the re-list a home, when you that the second buyer is not going to be as generous as that first buyer. Know that if your buyer doesn't offer crazy amounts of due diligence money which is not necessary in this market offer the minimum you think you're able to offer and if the seller wants more they can negotiate that back and forth during all the negotiations of the offer price, closing date. If you're a buyer, make sure you're making that calculation if you've put $10,000 due diligence down and you've come to find out you've got $40,000 worth of repairs that need to be made. Make the calculations is it really worth it to continue on with this house? You may want to terminate, move on to the next one and cut your losses. This is something to be thinking about. 

If you're considering a movie either into or out of the Raleigh area our real estate team and would love to be your agents of choice. You can email us at [email protected] or give us a call at 919-964-0474 or click here to fill out our contact request form and hear from us. 

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