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Not All Sellers Are Equal
Hot real estate markets can mean high home prices and
that's great for home sellers. But all sellers will not
benefit equally. Also, extreme markets can be risky.
Here's what to watch out for:
As tempting as it might be, don't automatically
assume that you're going to receive a huge price for
your home. The media tends to report the excesses in the
marketplace. You'll see a listing that sold with 35
offers, or one that sold for hundreds of thousands of
dollars over the asking price. You're not likely to find
reports about the listings that sold with only one
offer. Yet, many homes sell this way.
Even if you do receive a flurry of fabulous offers,
you could end up selling for a much lower price. The
number of failed transactions usually climbs during a
sizzling market.
For example, a home recently sold in the Oakland
Hills in Northern California for considerably over the
list price. The offer that was accepted was $100,000
higher than the next best offer. Within a day that buyer
backed out. The seller's euphoria waned when $100,000 of
profit evaporated overnight.
In frenzied markets, buyers feel pressured to push
their offer prices higher in order to be competitive.
It's not uncommon for buyers to break through their
financial comfort zone in the peak of a multiple offer
contest. After more sober consideration, a certain
number of these buyers realize they made a mistake and
withdraw from the contract.
Sellers in this situation wonder whether they're
entitled to keep the buyers' good faith deposit money.
You'd need to consult an attorney for the answer. If the
purchase contract includes an inspection contingency,
the buyers may be able to back out without penalty,
depending on how the contingency is written.
Before you count on the proceeds from your sale, make
sure that the buyers have removed their inspection
contingency. Buyers, who are particularly generous at
the offer stage, could end up settling the score a bit
by asking the sellers to repair defects found during
their inspections.
HOME SELLER TIP:
Beware of offers made without
contingencies. This may seem like a seller's dream.
However, no contingency offers can lead to trouble,
especially when the buyers don't understand what they're
getting themselves into at the time they make their
offer.
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