Reno Gazette-Journal Sunday, April 5, 2020
Everyone has heard the adage, “buyer beware.” But, when it comes to real estate transactions, experts add the caution “seller beware” – even more so now that we find ourselves dealing with the COVID-19 pandemic.
Many current home sellers are facing the tough decision as to whether to keep their homes on the market. With concerns of prospective buyers entering the home while they are sheltering in place and reduced buyer activity, some wonder if they would in fact be better off withdrawing their home for sale until a later time.
Prospective home sellers who are getting their homes ready for sale, face a similar dilemma. Many are hesitant as to whether to move forward or put their moving plans on hold.
Is it a mistake to attempt to sell now?
Or is the mistake to wait? Wait, and then later deal with the competition from the backlog of homes that will be put on the market when the shelter in place is lifted? What impact will this have on home prices given the economy at that time? How do lenders factor into this with liquidity challenges in this low interest rate environment and the risk of upcoming loan defaults?
Should long time homeowners faced with repairs and updates and who are looking to sell be cautious of the “as-is” offer proposition in this changing market? There is certainly an attraction to the idea of selling “as-is” and simply walking away, avoiding the expense and frustration of the make-ready process. Some view this option as a more attractive alternative than a traditional real estate listing.
Or should homeowners be wary of those who make it sound easier than it really is.
“Selling a home has become more complex in recent decades,” said Brett Junell, Broker Salesperson at Junell Realty Group with Keller Williams. “Even as simple as it sounds, deciding when to sell or selling ‘as-is’ isn’t necessarily simple.”
“Longtime homeowners want an easy solution to selling their home that maximizes equity and lessens the hassles of marketing and negotiations. The challenge is mixed messages from wholesalers, and investors looking to buy deeply discounted properties. Despite what they say, these individuals do not have the interests of the homeowner at the forefront.”
One of the more dramatic shifts in the way people are selling homes is through iBuyer programs. These companies utilize public data and statistics to craft an offer which maximizes their return on investment after resale. This approach offers a seemingly modern solution to what can be a laborious process, yet that convenience can come with a significant cost to the seller.
A MarketWatch investigation of multiple transactions involving iBuyers found that such offers would net customers, on average, 11% less than owners selling their homes on the open market. When fees and other costs are considered this can translate to tens of thousands of dollars lost.
“People are trying to save money and make the process easier,” Junell said. “It’s unfortunate that sometimes what they think will be a simple sale actually ends up costing them not only more money, but frustration and time as well. Without an advocate and guide to direct the process, people are often misled.”
Junell cautions people about accepting unsolicited calls from people claiming they want to buy their home. These solicitations come in the form of neighborhood door knocking now that more people are sheltering in place, calls, and mailings to specific lists based on demographics, housing tenure, and market trends. Homeowners should consider safety as a priority.
The “we buy any house” approach is also used by some real estate firms as a means of generating business. They make an extremely low offer and expect it to be rejected. Then they offer to list the home on the multiple listing service as a traditional sale. This bait-and-switch approach is considered unethical in most real estate firms, especially without full disclosure of the agent’s brokerage affiliation.
Wholesaling is another business model being taught to novice real estate investors looking to make fast cash with little or no capital. It’s based on buying and selling houses very quickly without making any repairs. A wholesaler will get houses under contract well below market value and then try to sell the house or assign the contract to another investor before the closing date.
“This type of transaction can often backfire on the seller,” says Annette Junell, Broker Salesperson with Junell Realty Group at Keller Williams. She described a typical scenario.
“The wholesaler contracts on the property and then attempts to sell the contract at a higher price to a third party before the closing,” she said. “They sometimes put a for-sale sign in the yard before it’s actually theirs. The deal falls apart when the wholesaler can’t find a buyer and doesn’t have the funds to close. The seller is stuck with it.”
Junell adds that in addition to the pitfalls of “cash buyers” and “as-is” sellers, there are outright scams perpetrated against senior homeowners.
“Without a trusted and knowledgeable advisor involved, who is looking at everything from your vantage point, you run the risk of being taken advantage of.” Junell said. “It’s important to consult a real estate agent or attorney to help you weigh your options and protect your interests.”
“In this seminar you will learn how to avoid many mistakes in this changing real estate market. You’ll get insight into what you should know before putting your home on the market for sale or considering an offer, now or later,” Annette Junell said.
The seminar titled The Truth about Mistakes to Avoid when Selling Your Home, will be held April 14 from 10 a.m. to 11:30 a.m. via phone or video conference using Zoom.
The seminar is free to seniors and their guests. Registration can be made online at www.RetiredLivingTruthSeries.com or by calling (775) 432-6398 to receive Zoom Webinar access & instructions.
This article is sponsored by Annette & Brett Junell.