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How Much Leverage Do Today’s House Sellers Have?

How Much Leverage Do Today's House Sellers Have? | Simplifying The Market

The housing market has been scorching hot over the last twelve months. Buyers and their high demand have far outnumbered sellers and a short supply of houses. According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), sales are up 23.7% from the same time last year while the inventory of homes available for sale is down 25.7%. There are 360,000 fewer single-family homes for sale today than there were at this time last year. This increase in demand coupled with such limited supply is leading to more bidding wars throughout the country.

Rose Quint, Assistant Vice President for Survey Research with the National Association of Home Builders (NAHB), recently reported:

“The number one reason long-time searchers haven’t made a home purchase is not because of their inability to find an affordably-priced home, but because they continue to get outbid by other offers.”

A survey in the NAHB report showed that 40% of buyers have been outbid for a home they wanted to purchase. This is more than twice the percentage in 2019, which was 19%.

What does this mean for sellers today?

It means sellers have tremendous leverage when negotiating with buyers.

In negotiations, leverage is the power that one side may have to influence the other side while moving closer to their negotiating position. A party’s leverage is based on its ability to award benefits or eliminate costs on the other side.

In today’s market, a buyer wants three things:

  1. To buy a home
  2. To buy now before prices continue to appreciate
  3. To buy now and take advantage of historically low mortgage rates while they last

These three buyer needs give the homeowner tremendous leverage when selling their house. Most realize this leverage enables the seller to sell at a good price. However, there may be another need the seller has that can be satisfied by using this leverage.

Here’s an example:

Odeta Kushi, Deputy Chief Economist at First American, recently identified a situation in which many sellers are finding themselves today:

“As mortgage rates are expected to remain near 3%, millennials continue to form households and more existing homeowners tap their equity for the purchase of a better home…Many homeowners may want to upgrade, but do not for fear that they will be unable to find a home to buy.”

She then offers a possible solution:

“While the fear of not being able to find something to buy will not disappear in a limited supply environment, new housing supply can incentivize existing homeowners to move.”

There’s no doubt many sellers would love to build a new home to perfectly fit their changing wants and needs. However, most builders require that they sell their house first. If the seller sells their home, where would they live while their new home is being constructed?

Going back to the concept of leverage:

As mentioned, buyers have compelling reasons to purchase a home now, and many homeowners have challenges to address if they want to sell. Perhaps they can make a deal to satisfy each party’s needs. But how?

The seller may decide to sell their home to the buyer at today’s price, which will enable the purchaser to take advantage of current mortgage rates. In return, the buyer might lease the house back to the seller for a pre-determined length of time while the seller’s new home is being built. A true win-win negotiation.

Not every buyer will agree to such a deal – but you only need one.

That’s just one example of how a seller might be able to overcome a challenge because of the leverage they have in today’s market. Maybe you feel a need to make certain repairs before selling. Perhaps you need time to get permits or approvals for certain upgrades you made to the house. Whatever the challenge, you may be able to work it out.

Bottom Line

If you’re considering selling your house now but worry a huge obstacle stands in your way, let’s connect. Maybe with the leverage you currently have, you can negotiate a deal that will allow you to make the move of your dreams.


Source: KMC

Posted in: For Sellers, Housing Market Updates, Move-Up Buyers, New Construction, Pricing, Selling Myths Tagged: Real Estate

© Margo Borkin Real Estate 2010

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Margo Borkin Real Estate

Margo Borkin Real Estate
1 week ago
Margo Borkin Real Estate

We all have one...⁣
⁣
• The one recipe you return to again and again because it’s just so darn delicious⁣
• The one you find yourself mindlessly grabbing the ingredients for every time you stop at the store⁣
• The one you can make on auto-pilot even though you’re so exhausted you can hardly see straight ⁣
⁣
So what's your bonafide “go-to” meal! Share it in the comments below, bonus points for pics.
... See MoreSee Less

We all have one...⁣
⁣
• The one recipe you return to again and again because it’s just so darn delicious⁣
• The one you find yourself mindlessly grabbing the ingredients for every time you stop at the store⁣
• The one you can make on auto-pilot even though you’re so exhausted you can hardly see straight ⁣
⁣
So whats your bonafide “go-to” meal! Share it in the comments below, bonus points for pics.
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Margo Borkin Real Estate
1 week ago
Margo Borkin Real Estate

Think the highest offer on a home always wins? Think again. Here are four reasons why a seller may not choose the highest offer:⁣
⁣
1. A buyer brings an all-cash offer: A buyer paying cash means there won’t be any financing pitfalls — and sellers LOVE avoiding pitfalls.⁣
2. A buyer can close ASAP: If a seller is antsy to get moving, an offer from a buyer who can close quickly will zoom to the top of the stack.⁣
3. A buyer shares their story. Sometimes buyers want sellers to know exactly why their house is “the one.” And sometimes, that’s all it takes for a seller to agree — especially if a seller has lived in the home for decades and their move is a sentimental one.⁣
4. A buyer doesn’t ask for contingencies. A common contingency is that a buyer must sell his or her home before buying. Sellers love when an offer is free and clear of cumbersome contingencies totally out of their control.⁣
⁣
It’s true — you want to go in with a strong offer price-wise, but that’s not the only thing sellers are looking for. Sellers want an offer that’s competitive, clean, AND close-to-asking price — the closer you can get to all three, the better!
... See MoreSee Less

Think the highest offer on a home always wins? Think again. Here are four reasons why a seller may not choose the highest offer:⁣
⁣
1. A buyer brings an all-cash offer: A buyer paying cash means there won’t be any financing pitfalls — and sellers LOVE avoiding pitfalls.⁣
2. A buyer can close ASAP: If a seller is antsy to get moving, an offer from a buyer who can close quickly will zoom to the top of the stack.⁣
3. A buyer shares their story. Sometimes buyers want sellers to know exactly why their house is “the one.” And sometimes, that’s all it takes for a seller to agree — especially if a seller has lived in the home for decades and their move is a sentimental one.⁣
4. A buyer doesn’t ask for contingencies. A common contingency is that a buyer must sell his or her home before buying. Sellers love when an offer is free and clear of cumbersome contingencies totally out of their control.⁣
⁣
It’s true — you want to go in with a strong offer price-wise, but that’s not the only thing sellers are looking for. Sellers want an offer that’s competitive, clean, AND close-to-asking price — the closer you can get to all three, the better!
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Margo Borkin Real Estate
2 weeks ago
Margo Borkin Real Estate

It's time for the last secret in our 5 Secrets of a Successful Sale — secrets that together will help you sell your home without a hint of luck or wishful thinking.⁣
⁣
Before jumping to Secret #5, a quick review:⁣
⁣
Secret #1: It’s your kitchen that’ll sell your home.⁣
Secret #2: Declutter, depersonalize, and stage your home.⁣
Secret #3: Don't go overboard on upgrades.⁣
Secret #4: Find out what your home is worth, then shave 15-20% off the price to spark a bidding war.⁣
⁣
And last but certainly not least...⁣
⁣
Secret #5: Work with the right agent.⁣
⁣
The easiest way to hire the RIGHT agent? Knowing when they’re the WRONG agent. Here are few warning signs:⁣
⁣
• They have few references.⁣
• They aren’t familiar with your neighborhood.⁣
• They are new to town.⁣
• They are hard to reach by phone, email, or text.⁣
• They pressure you to make decisions before you feel ready.⁣
⁣
There are a ton of AMAZING agents out there. So don’t settle! Keep looking and asking around until you find an agent you “click” with — getting a successful sale (and maybe that pot o’ gold!) depends on it.⁣
... See MoreSee Less

Its time for the last secret in our 5 Secrets of a Successful Sale — secrets that together will help you sell your home without a hint of luck or wishful thinking.⁣
⁣
Before jumping to Secret #5, a quick review:⁣
⁣
Secret #1: It’s your kitchen that’ll sell your home.⁣
Secret #2: Declutter, depersonalize, and stage your home.⁣
Secret #3: Dont go overboard on upgrades.⁣
Secret #4: Find out what your home is worth, then shave 15-20% off the price to spark a bidding war.⁣
⁣
And last but certainly not least...⁣
⁣
Secret #5: Work with the right agent.⁣
⁣
The easiest way to hire the RIGHT agent? Knowing when they’re the WRONG agent. Here are few warning signs:⁣
⁣
• They have few references.⁣
• They aren’t familiar with your neighborhood.⁣
• They are new to town.⁣
• They are hard to reach by phone, email, or text.⁣
• They pressure you to make decisions before you feel ready.⁣
⁣
There are a ton of AMAZING agents out there. So don’t settle! Keep looking and asking around until you find an agent you “click” with — getting a successful sale (and maybe that pot o’ gold!) depends on it.⁣
View on Facebook
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Margo Borkin Real Estate
2 weeks ago
Margo Borkin Real Estate

Got the kitchen looking great?⁣
Got your home decluttered, depersonalized, and staged?⁣
Chatted with a realtor about worthwhile upgrades?⁣
⁣
Fist-bump! You’re SO ready for Secret #4 in our 5 Secrets to a Successful Sale! ⁣
⁣
While this one won’t require any elbow grease, it will take a tiny leap of faith. Secret #4 is all about pricing your home to sell — fast.⁣
⁣
Secret #4: Find out what your home is worth, then shave 15-20% off the price to *hopefully* spark a bidding war.⁣
⁣
Sound scary? That’s okay — I’m here to walk you through every step. Here’s why I love this pricing strategy: ⁣
⁣
• Pricing your home just below market value instantly gets buyers’ attention and motivates them to schedule a showing ASAP.⁣
• Once buyers see your home (and LOVE it), they’re more likely to put in an offer if they feel like they’re getting a deal.⁣
• When they realize there are other offers on the table, buyers tend to get competitive and are willing to increase their bid to land the home they want.⁣
⁣
With interest rates at historic lows and a lower than normal inventory, if you're looking to sell, you'll 100% be in the driver’s seat. ⁣
⁣
Curious what your home is worth in today’s market? I’d love to run the numbers for you — just drop me a message.⁣
... See MoreSee Less

Got the kitchen looking great?⁣
Got your home decluttered, depersonalized, and staged?⁣
Chatted with a realtor about worthwhile upgrades?⁣
⁣
Fist-bump! You’re SO ready for Secret #4 in our 5 Secrets to a Successful Sale! ⁣
⁣
While this one won’t require any elbow grease, it will take a tiny leap of faith. Secret #4 is all about pricing your home to sell — fast.⁣
⁣
Secret #4: Find out what your home is worth, then shave 15-20% off the price to *hopefully* spark a bidding war.⁣
⁣
Sound scary? That’s okay — I’m here to walk you through every step. Here’s why I love this pricing strategy: ⁣
⁣
• Pricing your home just below market value instantly gets buyers’ attention and motivates them to schedule a showing ASAP.⁣
• Once buyers see your home (and LOVE it), they’re more likely to put in an offer if they feel like they’re getting a deal.⁣
• When they realize there are other offers on the table, buyers tend to get competitive and are willing to increase their bid to land the home they want.⁣
⁣
With interest rates at historic lows and a lower than normal inventory, if youre looking to sell, youll 100% be in the driver’s seat. ⁣
⁣
Curious what your home is worth in today’s market? I’d love to run the numbers for you — just drop me a message.⁣
View on Facebook
· Share
Share on Facebook Share on Twitter Share on Linked In Share by Email
View Comments
  • Likes: 1
  • Shares: 0
  • Comments: 0

Comment on Facebook

Margo Borkin Real Estate
2 weeks ago
Margo Borkin Real Estate

Checking in today to share Secret #3 in my 5 Secrets of a Successful Sale. A quick look back at the past two secrets:⁣
⁣
Secret #1: It’s your kitchen that’ll sell your home.⁣
Secret #2: Declutter, depersonalize, and stage your home. ⁣
⁣
And today…⁣
⁣
Secret #3: DON’T go overboard on upgrades.⁣
⁣
It’s a mistake I’ve seen too many times. ⁣
⁣
In an effort to get top dollar for their home, well-intentioned sellers take on major renovations without consulting a realtor first. Misinformed and assuming they’ll get every dollar back (and then some!), they go overboard on upgrades only to be disappointed at the closing table.⁣
⁣
And while there are upgrades worth doing prior to selling, they’re often quick fixes, not major renovations. ⁣
⁣
If you’re thinking about selling soon, reach out to a realtor who knows your neighborhood and can give you data on the upgrades that matter most to buyers in your area. ⁣
⁣
Not thinking about selling, but know someone who is? Pass this along and save them from the stress, headache, and expense of unnecessary upgrades.
... See MoreSee Less

Checking in today to share Secret #3 in my 5 Secrets of a Successful Sale. A quick look back at the past two secrets:⁣
⁣
Secret #1: It’s your kitchen that’ll sell your home.⁣
Secret #2: Declutter, depersonalize, and stage your home. ⁣
⁣
And today…⁣
⁣
Secret #3: DON’T go overboard on upgrades.⁣
⁣
It’s a mistake I’ve seen too many times. ⁣
⁣
In an effort to get top dollar for their home, well-intentioned sellers take on major renovations without consulting a realtor first. Misinformed and assuming they’ll get every dollar back (and then some!), they go overboard on upgrades only to be disappointed at the closing table.⁣
⁣
And while there are upgrades worth doing prior to selling, they’re often quick fixes, not major renovations. ⁣
⁣
If you’re thinking about selling soon, reach out to a realtor who knows your neighborhood and can give you data on the upgrades that matter most to buyers in your area. ⁣
⁣
Not thinking about selling, but know someone who is? Pass this along and save them from the stress, headache, and expense of unnecessary upgrades.
View on Facebook
· Share
Share on Facebook Share on Twitter Share on Linked In Share by Email
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  • Likes: 1
  • Shares: 0
  • Comments: 0

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