Understand & Address Seller Mindset in a Seller's Market
I get it, I do. Buyers are overextended, overstimulated, and feeling pretty crispy, so a conversation about how sellers feel might not be top priority. Hear me out. I promise it’s worthwhile. Understanding how the pace of the market and buyer activity (and at times misbehavior) has influenced and increased seller anxiety, will help you buy a house. And, don’t worry, I’m having conversations with sellers about understanding the pressure that you’re under, ways they can help to provide relief, and working with you for a smooth sale.
The heck do they have to be stressed about?
In a word, buyers, but buyers aren’t really to blame. The housing shortage, the pandemic, the overall pace of the market, and other factors created a reactive environment that lead to an increase in stress inducing activity. It’s important to keep in mind that sellers, much like you, have life events and plans that may depend on selling their home. Being aware of these stressors and knowing how to address and alleviate them improves your knowledge and position.
1) The Multiple Offer Situation FOMO
On its head, this one probably makes the least sense, but it’s daunting to comb through and choose between multiple offers with widely varying terms and contingencies. It becomes less about picking the best offer and more about the fear of rejecting many offers. Sellers worry that they’ll pick the wrong offer and end up in a transaction that drags on forever, with a buyer that holds them hostage and nickels and dimes them with repair requests, with a buyer that gets cold feet and terminates the transaction, or with a sale that fails due to financing. How can you ease their mind?
Have your agent call the listing agent. A buyer’s agent that communicates, builds rapport, and inquires about the seller’s wishes and concerns demonstrates experience and cooperation.
Do what you can to simplify your offer. A buyer that minimizes paperwork and contingencies, while still protecting their interests, comes off as serious and committed.
Shorten contingency timelines. A buyer that moves through the process efficiently shows their dedication and resolve.
Provide financial details when possible and appropriate, and have your lender call the listing agent. Every buyer sends in a pre-approval letter. Speaking with the lender helps to back that up, and buyers that show that they have the cash that’s promised in the offer (closing costs, down payment, appraisal gap, etc.), show that they are a solid choice from a financial angle
2) The Gotcha Inspection Response
Sellers worry that they’ll pick a high offer only to be hit with a laundry list of repair and maintenance requests from buyers that no longer want to negotiate. Do they cave to get the contract to closing? If they do, will they even be able to hire the contractors needed to do the work? If they refuse, will they have to go back on the market and risk getting a worse deal on round 2? How do you address this fear?
Ask if the seller has a previous or current home inspection report that you can review to get a feel for the condition of the home.
Offer a quick inspection timeline. Knowing that they won’t have to wait long for the results can help sellers get through this stressful time.
Consider your inspection contingency options. Would the seller allow a pre-inspection? Do you need the ability to negotiate for repairs, or would you be happy to learn about the property with the option to terminate if repair needs are too great? A pre-inspection or Pass/Fail inspection provides valuable property information and provides the seller with confidence that you’re in it for the long haul.
If there are repairs to negotiate, do your homework, get estimates, and consider negotiating for a reduced price or a credit in lieu of repairs. It removes the concerns over the seller’s ability to get contractors out in time, and it gives you the opportunity to hire the contractors of your choice, oversee the work and ensure that it’s done to your standards. Win. Win.
3) The Cold Feet
When the market went from a jog to a sprint, buyers suddenly found themselves writing offer after rejected offer, throwing out offers within hours or minutes of touring a home, paying way over the list price, waiving every contingency, and facing some pretty steep buyer’s remorse once the dust settled. As a result, buyer terminations jumped dramatically, and sellers found themselves with a new possibility to fill their nightmares. What can you do?
The agent to agent communication under fear #1 is a good place to start with this. Your agent should build rapport and share what property features drew you to the house and why you’re excited about the property. A buyer that’s invested in a property because it suits them and loves specific features is less likely to get cold feet.
View a property as soon after it hits the market as possible. Buyers that get in quick and show continued interest during the 3-5 day wait, provide time for their agent to build the relationship and reassure sellers that they are invested.
Unless you’re up against the offer review deadline, don’t write and submit an offer within hours. I recommend waiting until closer to the review date because it shows sellers that you carefully considered the offer. A thoughtful offer is made by a buyer less likely to suffer buyer’s remorse and terminate.
4) The Failed Financing
Your lender and your own preparation really come into play here. It’s absolutely true that no one can predict the future. An unexpected change in your employment or major life event can bring about a financing failure. Some things are out of your control, but you can do your best to ensure that your finances are in order.
Be frank with your lender and your agent about your finances. They’re going to want you to be successful, so they’ll work to help you set a comfortable budget, find solutions that work for you, and prepare.
Share the evidence of your finances that you’re comfortable sharing. Obviously, don’t share account information, but a current letter from your bank stating that you have the cash needed can go along way to building seller confidence.
Bottom line, you’re working towards a common goal.
Sellers and buyers both want the property to change hands, and everyone in the market has hopes, plans, fears, and things keeping them up at night. A little understanding and effort towards making things easier for the seller goes a long way towards making things easier for you (and vice versa, sellers).