An open letter to sellers …

Dear sellers, we feel your pain. We really do. It’s no fun to have your house on the market right now, or even if you’re one of the lucky sellers and you actually have an offer on your house. It’s just no fun. We want you to know, you’re not alone. There are lots of sellers out there right now, waiting for the phone to ring and only hearing the sound of crickets chirping. The market is adjusting rapidly, and it’s different on a daily basis. Clearly the market is not what it was two years ago. But if you went on the market just a few months ago, today’s market feels different.

Today’s home buyers

The buyers who are out there today are a completely different breed of buyer than you were. If you bought your home in the last four or five years, you were a real risk taker. You flew from open house to open house, possibly with an offer in your hand. You waived home inspections, appraisals, financing contingencies. You wrote offers well above the asking price, with ginormous earnest money deposits. You ignored all advice from fathers-in-law and office mates. You knew what you had to do and you did it. You leapt before you looked, and you accepted the consequences.

You made the real estate market fun!

You desperately wanted to get into the market, and you stopped at nothing to make that dream a reality. And you were amply rewarded for your chutzpah. You got a house (at a time when it was close to impossible), and you got to take advantage of that tide of appreciation that raised all boats. In all likelihood, your home is worth much more today than you paid for it.

Now, if you can only get a buyer to make an offer!

What you should understand is that buyers today are much more risk averse and circumspect than you were. Being risk averse and circumspect were not options for you. If you wanted to buy a home, you had to throw caution to the wind. Today’s buyers don’t have to, and they’re not going to, and you can’t make them. Nyah.

Today’s buyers are all those folks who didn’t have the stomach for your market. They wanted to wait until that market cooled down. They refused to play the reindeer games. They would not be bullied by sellers into making ridiculous offers. They created and pored over Excel spreadsheets that told them that those rapidly inflating prices were totally unsustainable. They hemmed and hawed, and waited. While you were painting your new powder room, glad to be out of the frenetic pace of buying, they fretted about their quality of life and worried being “house poor.” They commiserated with each other about the market, and they sought advice from all and sundry. Luckily for you, you just sat back and watched your investment grow. You showed them.

Well, now, all those risk-averse buyers are back. And they’re mad. And they’ve got muscle. And they’re using it. On you.

Buyers today have a couple of very notable options that were unavailable to you --- choice and time. There is incredible inventory out there today, which means that buyers can be choosy. And they can take their time doing it. They may see a hundred homes before making an offer. They may go back to homes they sorta kinda like, two or three times, or more. They may sit with their agent and write an offer … and then take the evening to “sleep on it.” And then NOT PRESENT THAT OFFER AT ALL because they want to see more properties.

All of this would be anathema to you. You would just do it. Pull the trigger already. Buy a house, for crying out loud, you’d scream at them.

Negotiations

When a buyer actually does write an offer on your property, first of all, you must consider yourself lucky. It will seem very hard to do. Please understand, though, that if you receive an offer, you’re way ahead of 90% of the other sellers out there that month. The offer will seem unbelievably low. Just prepare yourself now. Your knee-jerk response will be to tell the buyer’s agent to kiss your foot. Resist the urge. Please. Forget that the buyer’s agent set off your burglar alarm and then didn't lock the door behind herself. Forget that you overheard the buyer insulting your grandmother's antique dining table. Forget that the buyer’s agent called just as you were putting your fussy baby down for a nap and HAD TO SHOW YOUR HOUSE RIGHT THEN. Remember, you’re lucky to even have an offer. Keep repeating that. I’m lucky. I’m lucky. I’m luuuuucccckkkky.

A buyer who writes an offer on your home has probably seen many, many other homes. He or she knows that there are many other options out there --- possibly hundreds. That there are so many options WILL be factored into the buyer’s offer to purchase your home. And the offer may seem quite low. Resist the urge to reject such an offer. Remember how long it took to get it. Even the lowest offer should be rejected only after very careful thought. If the offer isn’t to your liking, hold your nose and make a counter offer.

Home inspections

So, you’ve gotten an offer (disgustingly low as it was), you’ve negotiated with a recalcitrant buyer and his idiot agent for the last 10 days, and you’re now officially UNDER CONTRACT. Whew. Thank goodness that’s over! But don’t start spending your money so fast. You’re only in the eye of the hurricane. The winds will start whipping in the other direction soon … you’ve still got to get through the home inspection.

The buyer’s offer will probably be contingent on a satisfactory home inspection. It’s also quite possible that you never had a home inspection when you purchased it. If there are any niggling issues that you know of, address them now, before going on the market if possible. Nearly every home inspection reveals something the seller was unaware of. If what has been revealed is something that you would fix if you were going to continue living in the home (a cracked hot water heater, a roof leak, etc.), you should probably agree to fix it, whether it would be required under the contract or not. If it’s a safety or habitability issue, address it. This is not the time to flat-out refuse to do something that a buyer asks for, no matter how ridiculous it sounds to you. Now is the time to negotiate around these issues. Steel yourself now.

A note about disclosure. If your home inspection reveals defects that you didn’t know about and you are not able to come to terms with the buyer, you may be required to disclose those defects to other prospective buyers. (Check with your agent or a local real estate attorney.) Such disclosure may (ok, probably will) dampen enthusiasm for your home, thereby reducing your home’s market value. You’re probably better off trying to come to terms with the buyer, as hard as it may be to swallow in the moment.

Appraisals

As the market continues to adjust, we are seeing more and more appraisal issues cropping up. So, even though you’ve agreed to sell the property for a price below what you’d hoped, and you’ve agreed to shell out money to fix the loose toilet seat after the home inspection, and you’ve agreed to give the buyer money to help pay for her closing costs --- now the appraiser says the house is worth LESS than you’ve agreed to accept. Aaargh.

The good news

There’s a sense among some analysts that the market is shifting, for the better. "We've probably seen the worst of the housing slump, although it may not have entirely bottomed out yet," says Freddie Mac chief economist Frank Nothaft. "Lower mortgage rates should help stimulate activity in the housing market."

With the mid-term elections over, the free-floating anxiety about the political scene has dissipated, which has kept some buyers out of the market. Plus, there will be a new crop of politicians and staff members moving into the area. While some of them will initially rent, many will enter our housing market as buyers. More buyers looking at the same inventory may also create additional urgency in the market.

All of which is good.