Ten Real Estate Myths (and Realities) in a Seller’s Market

It’s a market like no other! A severe housing shortage, coupled with an unprecedented migration to Work From Home, has created a sellers’ market like never before. In some regions of the country, including Tampa/St. Pete/Clearwater Florida, home prices shot up by twenty percent over the year, and are projected to do so into 2022! So what does that mean for folks who are planning to buy, sell, or both this year? Are the conventional wisdoms about real estate still true? Or do new rules apply?

Here are 10 common myths about real estate that might not be true in a sellers’ market… and what the facts are!

• In this market, you’re crazy to hire a real estate agent! Everything sells! Just stick a sign out there and save yourself the commission! It’s true that no one likes to pay a percentage of the sales price when it seems that selling a house is so easy. But if the goal is to sell for the highest price possible, hiring a real estate agent, even in this market, is the way to go. Owners who sell their homes themselves often take the first offer that comes their way, not having the tools or knowledge to market the house in the best way possible. They also might not be familiar with what the contract does or does not expect of them as far as repairs and other issues are concerned. Staging a home, holding open houses, creating excitement about a new listing all help support a high selling price. And when the home is under contract, the real work of keeping the deal together begins, and many “FSBOs” (For Sale By Owners) are unfamiliar with that process. In this sellers’ market, to get the best possible deal and have the smoothest transaction, it’s worth it to invest in an experienced real estate agent.

 In this market, why should sellers pay to get an inspection beforehand? It will sell anyway! For most sellers, the goal isn’t just to sell the property. It’s to sell as quickly as possible, for the highest possible price, with the quickest possible closing date and the smoothest overall process. Yes, paying for an inspection beforehand—a fee generally incurred by the buyer—will cost the sellers a few to several hundred dollars. And the inspection may uncover issues that the seller will then need to fix. But this kind of preventative maintenance allows the seller to offer a worry-free home. Including an inspection report—along with receipts for any necessary repair work—assures the buyer that no surprises will pop up during the inspection period. This peace-of-mind will result in multiple higher offers and may even encourage buyers to drop the inspection period entirely. To many sellers, that may be worth the extra money.

 In this market, there’s no point in staging an empty house—it’ll sell anyway! Again, this is another area where investing a little money will result in a bigger payoff. Staging a vacant house used to be reserved only for homes that had unique spaces that made furniture placement and design difficult for the average buyer to imagine. Now experienced real estate agents have realized that adding furniture, art, and other touches to make a house a home creates a picture that results in a higher sales price. Empty spaces prompt buyers to note what’s missing and other problems. And, ironically, rooms without furniture seem smaller than the same room with furnishings. Beautiful design harnesses buyer emotions and allows them to project their own lives into the space. They fall in love, and will act accordingly.

 In this market, offer buyers’ agents barely anything. Why not, they are hardly working anyway! Everything sells! With so little inventory, buyers’ agents are working harder than ever. In a balanced market, when a buyer makes an offer, it’s more than likely that that buyer will end up with that property. Now, with several buyers for every home, most buyers’ agents will end up making several offers for the same client, as most buyers’ offers will get rejected. With this market, buyers’ agents often drop everything to be the first to show a home or to attend an open house when their client is out of town. They are working harder than ever to sell your house. While it’s always up to the seller how much they want to offer a buyers’ agent, these agents may draw negative conclusions about sellers who underpay buyers’ agents and advise their clients accordingly. If a seller is hoping for multiple offers over asking price, paying buyers’ agents what they are worth is a good place to start.

 Forget the MLS. Isn’t it best just to sell off-market? Let a few agents know you want to sell, and make a deal without ever having to formally list the property? Some sellers want the easiest possible transaction, and don’t want to bother with photographers and showings and open houses. The agent who lives down the street has a friend, so why not sell it that way? For many sellers, selling their home in this way meets their needs. But other homeowners who want the highest possible price for their home will be missing out on connecting with other buyers who might offer a higher price for the property. If the goal is to achieve the highest possible sales price, listing a property on the MLS is the way to go.

 In this market, it’s better to wait until prices go down before buying. They have to go down eventually, right? Everyone remembers the international real estate implosion of 2007. Fortunately, this event is highly unlikely to ever happen again. Real estate experts believe the U.S. is short a million housing units nationwide. And 2007 notwithstanding, housing prices in general have moved in one direction—upward. (That’s not to say that specific homes don’t lose value—they can—but the trend is up.) While inventory should get better and fewer buyers will be chasing the same homes, that will result in slower price increases, not prices decreasing. If you want to buy, and you’re in a position to buy, then now’s the time to buy.

 All it takes is one buyer! In this market, you can price your home as high as you want, because people are desperate and it only takes one to make that sale! While it’s true that home prices have increased nationwide by about 20 percent, it’s also true that home sellers are cutting prices faster than ever. In this red-hot market, if a home doesn’t go under contract the first week it’s available, buyers wonder why. When that happens, sellers often have no choice but to start cutting the price. Even in this sellers’ market, a seller sometimes ends up getting less than they would have if they had only priced the home appropriately from the beginning. While every so often, there’s a seller who “stuck to his guns” and “held out for the price he wanted,” that’s usually a seller who didn’t have to sell. If the comps suggest you’re pricing your home too high, you may be waiting to make that sale.

 If you’re selling your home in this market, it’s always better to hire a real estate agent who has more experience on the listing side than the buying side. When an owner decides to sell, often they contact the names of agents they’ve seen selling in the neighborhood, carefully interview many of them, and then choose. Conversely, many folks on the buying side call the first person a friend recommends. The thinking seems to be that it’s more difficult to sell a house than to buy one, so sellers choose their agents more carefully than buyers do. But in a market where nearly every home for sale receives multiple offers, isn’t the savvier person the buyers’ agent whose clients get their houses? Won’t this experience translate into receiving the best possible offers for your home? The neighborhood selling data is easily found on the MLS. In this market, buyers’ agents are working hard and positioning their clients to win. Their experience will result in the easiest possible sale for your home. And if you’re looking to buy, now’s the time to interview several agents and hire someone experienced who has won multiple bidding wars.

 In any market, a cash deal is always better than an offer that comes with financing. Cash is king, right? Not always. If a buyer with financing offers more than the cash buyer, should you take it? Or should you go with the surer thing? The risk with financing is that a buyer might not be approved for the mortgage, or that the house might not appraise at the sales price. A savvy buyer, working with an experienced buyers’ agent, will offer terms as good as cash and an addendum that pledges to pay any difference between the appraisal and sales price. If your listing agent feels comfortable with the buyer, you could go with that higher offer, even if it comes with a mortgage.

And finally…

 In this market, it’s better to work directly with the listing agent than a buyer’s agent. With several buyers for every home on the market, buyers’ agents are working harder than ever. If there are several homes you’re interested in, working with a buyers’ agent makes the most sense. They’re the experts on the market; they’ll do the leg work for you and help you make the deal. But if there’s one specific home you’re interested in – your dream home you’ve had your eye on for years – it may make the most sense to contact the listing agent directly. (Of course, the best tactic here is to let the home owner know you want to buy before she’s even thought of selling.) Since Florida allows a real estate agent to represent the “transaction” and not the buyers and sellers, she will make more money if she has “both sides” of the deal. In many cases, the seller will also pay less in commission. In a multiple-offer situation, you could stand out if you’re working with the listing agent yourself.

Please note these tips are specific to the state of Florida, and are intended to be general guidance and not legal advice! Writer is a real estate sales associate, not an attorney.