When the real estate market is booming, people call it a hot market, and for homeowners who are anxious to sell, this may seem like an excellent time to do it! You’ll find that in a lot of areas in the country, homes are selling faster than ever before.
As you are preparing your home to be sold in a hot market, you have first to understand what a hot market really is. Typically, a hot market is when most of the homes on the market sell faster than two months. The number of houses ton the market is a huge factor in creating a hot market. When there aren’t so many homes available, the demand is going to skyrocket, and it will greatly reduce the amount of time a home is on the market.
You might be thrilled to learn that it’s a seller’s market when you own a home, but there are some downfalls you have to be aware of before you consider listing your home. Here are five ways that a hot market can actually cause problems for a seller.
1. Getting Sold
When you’re selling in a hot market, it’s possible that your house will sell really quickly, even before you’ve found a new home. This could be problematic because if your house sells and you are still searching, you’re either going to be living in a temporary situation or settling for a house which you aren’t in love with. Remember that selling in a hot market and looking for a new home means that you are going to be competing with other anxious buyers out there.
2. The Appraisal Flops
With a hot market, people are likely to offer your asking price, which probably makes you really excited. Although this could be something fantastic, it could also turn out to be not a great thing. If the house appraises lower than the price, the buyer might just walk away. If this happens, you could either renegotiate a deal or have a second appraisal done.
3. Bad Offers Abound
During a hot market, people often make promises that they cannot keep. A seller might be in a contract with a potential buyer, but things could fall through, and that contract could be terminated a few weeks later. This might not be a problem any other time, but when buyers see your house sitting during a hot market, they might start wondering what is wrong with your home. You can avoid being in this situation by ignoring any offer that isn’t accompanied by a preapproval mortgage document.
4. Trying to Beat the 1031 Code
According to the 1031 section of the US Tax code, you are able to sell one investment property and purchase another property without paying tax on it. However, you have to do this within 45 days of one another. This can be tricky in a hot market because you’re in competition with other buyers to find a new investment property.
5. Your Ego
People who sell their homes in a hot market have these ideas that they will be offered much more than their asking price, which isn’t always the case. Instead of waiting for that huge payday that you think you’ll get, accept a reasonable offer that comes your way. You don’t want to be in a situation where you are waiting and ultimately miss the opportunity to get your home sold.