A hot market means low inventory combined with lots of buyers looking for the perfect place. In many instances, a hot market does indeed mean a faster sale at or above asking price. However, there are some pitfalls that a house seller in a hot market needs to be aware of before watching the money roll in. Quick easy money doesn’t just happen.
One of the “lucky” aspects of a hot market is that “tired” or unusual homes sell more quickly than they otherwise would. As buyers become more and more desperate for a home, they become more willing to overlook cosmetic flaws, and might even be more willing to accept pricey fixes such as an old roof or leaky windows.
A seller may find they a better chance of selling a home “as-is” without having to make major updates. Whether you, as a seller, make any significant fixes to the property before listing is best decided through a discussion with a professional agent in your market to evaluate comparable properties in your neighborhood.
Home staging, on the other hand, is recommended even in a hot market. If you want to attract multiple offers on your property right after listing it, staging is probably the number one way to make that happen. In a hot market, buyers need to move quickly and are driven by first impressions and emotions. There is no better way to make someone fall in love with your house than to stage it to five it a “wow” factor to distinguish it from the rest of the pack and give it an even better advantage over any other homes that might go on the market at the same time.
If you can’t afford to stage, at the bare minimum the property should be de-cluttered and thoroughly cleaned in preparation for showings.
Be Prepared to Move Quickly
Hot markets see more buyers purchasing with cash or minimal financing than other markets. If you’re lucky, your buyer might not need to be approved for a loan, which would greatly reduce the amount of time your property is under contract. If you decide to accept an all-cash offer, you will likely close in a short amount of time.
Be prepared, at least mentally, for this possibility prior to placing your property on the market. It might even be wise to have a rental lined up if you do not find another property to buy right away.
Be Prepared for Problems with Appraisal
Hot markets often arise quickly. Appraisers might be comparing your property to properties sold at least a year ago. If no properties in your neighborhood have sold recently, an appraiser might have to look back many years to find comparable sales; sales which will likely be for a lot less than your current offer.
That can hurt you as a seller. If a property doesn’t appraise for the offer price, the buyer will have a lot of difficulty getting a loan for the current offer price. You might be forced to lower your sales price or seek out buyers who are paying cash and do not need the approval of an appraiser to complete the deal. Most of the time, if a property doesn’t appraise and the seller won’t lower the price, the deal is dead, as the buyer has no other options besides a traditional lender to cover the purchase price.