Setting the right sales price

When home and cabin owners make the decision to sell, the first thing they want to know, of course, is what the correct sales price for their property should be. Working every day with the market, I watch what’s happening with sales prices and I keep up with the trends of what’s happening. Right now, we are in a sellers’ market due to the low number of properties for sale, so the demand for homes and cabins is continually driving up the sales price.

Before most clients contact me, however, they’ve already turned to the internet for their research into setting the correct sales price. Real estate marketing websites use computer generated figures based on a total sum of properties without any input from a human. So they don’t take into account all the little things that appraisers are going to care about when they come out to see if the lender should finance the purchase. As a result, the internet estimates are generally incorrect. Sometimes, they are too high. Other times they are too low. For cabins, this number is derived by including all the very expensive log cabin construction in our county – lumping every kind of construction together. To the computer there is only one category and it is called “residential,” whether it is overnight rental cabins or true residential like your house. Clients who list with me will ask if the estimated sales price will hurt the sale of the home if it doesn’t match what we have priced it at based on market comparisons that are more “apples to apples.”

Well, here’s the good news, sellers: the online sales price estimate isn’t going to hurt us.

As a matter of fact, we’re going to use it as a marketing tool! We have estimates like this all the time and we make them work in our favor – even though you and I know that the estimate is not accurate (and actually buyers and buyers agents do as well).

In the Great Smoky Mountains Association of Realtors Multiple Listing Service, there is no division for the type of properties we have in Sevier County. If it has bedrooms, it’s a residence – even if it is a 12-bedroom log lodge bringing in an income of $300,000 a year.

The sold numbers that throw this off are our new construction log home cabins which run $170-$280 a square foot. (True residential properties are still running right at $100 a square foot to build.) When the computer picks up these log cabin numbers it just creates estimates that are well, not accurate. It doesn’t fit the programming pattern, so it messes it up. Some computer programs also don’t seem to be able to keep up with the pace of the market, which can be a problem for someone who is selling their house based on today’s sales prices and not on a price from 90 to 120 days ago.

Until we’re all replaced by computers, sellers and buyers still need people who can look at all of the data and not just one piece of it to help determine the correct sales price for a listing on the market.

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Buying property in a sellers’ market

We – like many communities around the country – are in a sellers’ market.
If you’ve discovered that finding the perfect vacation cabin or second home in the Smokies hasn’t been the dream you imagined this year, don’t fret – you aren’t alone.

We have had a shortage of properties for sale this year. Even now, there are only about 1,000 active market listings for sale in our local Great Smoky Mountains MLS association. At the same time, we have seen our number of buyers increase, but with less properties to consider, it’s definitely driven the demand, and the sales prices, up.

Winning the bid for the cabin in a seller's market isn't easy.However, if you’ve found a property your heart is set on, there’s hope. There are things you can do and ways you can approach the seller with an offer that will make them choose yours over everyone else’s. Here are few ways you can make the successful bid.

Be prepared to go above the asking price. This is just the reality in a sellers’ market. When supply isn’t keeping up with demand, the market value – what someone is willing to pay – inevitably goes up. We’ve seen a number of properties on the market sell for an amount above asking price, particularly when the property is in what agents will call a “multiple offer” situation. This is where the seller has received more than one offer, and instructed the agent to give all of the people making offers the chance to submit the very best offer they can within a set amount of time (usually a day or two). So if you had offered a little less than asking but someone else offered asking price or even just a couple of thousand dollars more, it’s more likely they will take that bid over yours.

Do anything you can to make your offer the most appealing. Going above asking price, particularly in a multiple offer situation, isn’t a guarantee you will win the bid. What matters the most is which offer looks to have the strongest chance of making it to closing. Can you buy the property with cash? If you can, that is usually the offer that will win. If not, then you will need to consider some other ways to make the offer more appealing. Get prequalified with a lender who will provide a letter. These days, lenders can get prequalification within five minutes, and most have an app where you can do it from the ease of your cell phone. Have a larger down payment or offer a higher escrow. Agree to take the property “as-is.” “As-is” is a real thing that happens frequently these days, but it doesn’t mean you’re stuck with the property if there’s something seriously wrong. You can still order a home inspection and go through the normal procedures, and if your inspector finds a problem that the two parties can’t resolve a way to fix, you can still will walk away from the purchase. Most sellers and their agents understand that if it is a serious issue with the property, it will have to be addressed if you decide not to buy the property after all. So that tends to make the seller a little more open to negotiating the repairs for those types of issues. And lastly…

Don’t wait to make the offer if it’s the one you really want. This is the hardest part of the home search for many buyers. Buying a home or cabin is a big decision and most people, understandably, want to take some time to think on the decision before they make an offer. Impulsive buying really goes against human nature, and rightly so. Unfortunately though, time is of the essence these days. While you’re sleeping on it, someone else is making an offer that could be accepted by the seller. It’s not uncommon for a buyer to miss out on the cabin or home they really want because they didn’t want to make an offer immediately.

The bottom line is, it’s a sellers’ market and will continue to be so for the foreseeable future.

Going into the home search with that understanding in mind will make the process of finding a home in a sellers’ market much less stressful for you and give you the edge in making the best, most attractive offer you can in order to win the bid for the home or cabin you really want.

Whether you’re buying or selling, the time to get started is now

If you’ve been thinking about buying or selling your home or cabin, now is the time  – whichever side of the process you are on.

buying or sellingFor sellers, it’s the right time to sell because you can ask for a higher price these days. The number of properties – including homes and vacation/rental cabins – is low, creating a market where those properties that are priced competitively will sell for very close to asking price and very quickly, too. It has also meant an increase in sales prices as people are willing to offer more to get the home they want and face a greater number of buyers competing for less inventory. We’ve seen properties with offers on them within as little as three days of being listed, and usually at or above the asking price of the cabin or home.

For buyers, it’s the right time to buy because interest rates are still relatively low and down payment terms are reasonable. If you are considering a cabin as a second home property, you should also talk with your accountant because it’s been reported that second homes are still eligible for some tax deductions that were removed from other types of home ownership in the tax bill the federal government adopted at the end of 2017. National outlets such as realtor.com are telling us to expect the rates to reach 5 percent before the end of the year, so the longer you wait, the more it may cost you in the long run. Of course, buyers who are working with lenders are getting some tough competition from buyers who are willing to bring cash to the table, so that’s something to keep in mind when making an offer on a home or cabin.

If you’re a buyer, another thing to consider is that homes are continuing to increase in value. So, if you wait another year, you’re going to pay more for the same square feet or the same house than you would right now. However, you don’t want to panic or settle for something that you don’t love, but waiting to start the search isn’t a good idea.

If you’re preparing for the process of buying or selling and want to learn more about the local market, need help determining the value of your property in order to sell it for the most appropriate price, or need help finding the best second home/investment cabin to buy, we are here to answer any questions you may have.

Six commonly asked questions about selling

selling a homeAre you thinking about selling your home?

Recently, I wrote an article for the Sevier News Messenger about the questions I am most commonly asked by new homeowners planning on selling their home or cabin on the market.

You can read the article in its entirety here.

If you are thinking about selling your home and have other questions you’d like to ask, don’t hesitate to call! I stay busy, but I’m never too busy to help you with any of your real estate needs. Call me anytime at 865-765-6157 or 865-429-2121. You can also call my support line at 865-654-2111.