Long Island’s real estate market is hot, but that doesn’t mean home sellers have it easy. Buyers’ offers can fall through, and sellers can face tricky decisions such as whether to ditch an accepted offer in favor of a higher price.
To help sellers get top dollar for their homes and steer clear of problems, Newsday Live aired a question and answer session with local housing experts as part of its web series Hot Tips for a Hot Market.
The virtual session, moderated by Newsday anchor Faith Jesse and residential real estate reporter Maura McDermott, included Jonathan Miller, president and CEO of Miller Samuel Appraisers in Manhattan, and Monica Balsan, real estate salesperson with Daniel Gale Sotheby’s International Realty in Stony Brook.
Responses have been edited for length and clarity.
In this hot market, should home sellers ‘test the market’ by listing their property at a high price?
Miller: The quick answer to that is no. If someone does offer a price that is out of line with what the market supports, they may not get a mortgage. This is a market where homes that are priced correctly move very quickly, but homes that aren’t priced correctly sit for quite a while.
Sellers are getting flooded with offers. How can they know which one to accept? Is it just about choosing the highest price?
Balsan: It’s not about choosing the highest price. Other factors include whether the buyer is pre-approved for a mortgage, the down payment terms, whether the buyers have to sell their own home and when they want to close the sale.
Let’s say a seller has accepted an offer but they haven’t signed a contract, and then a much better offer comes in. What do you tell them to do?
Balsan: I always recommend that we continue showing until contracts are fully signed…. If a higher offer comes in, sometimes the seller will ask the first buyers if they would like to meet or beat that second offer price. Other times sellers just want to go with the first person that came to the table. Some people don’t want to get into a bidding war or do that to other people, especially if a buyer came in right away and got an inspector right away.
Miller: On Long Island at the beginning of this year. four out of 10 homes sold after bidding wars. And so you can see the intensity of the market and how important it is for a seller to be prepared to make a decision about whether they want to stick with the [first offer] or not.
What if a seller accepts an offer, but then the appraisal comes back lower than the offer, and the buyer asks the homeowner to accept a lower price?
Balsan: I just had this happen, the appraisal came in over $100,000 short of the offer price. The buyers…do tend to come back and ask the homeowner to adjust the price to the appraisal price. Sometimes sellers do. In my case, the seller didn’t and the buyer was willing to pay the difference.
Some homeowners may be wondering if this red hot market is about to cool off. Should sellers be rushing to list their homes right now?
Miller: I don’t see this as a short-term situation. there’s not an expectation of some sort of short-term surge in rates. That being said, if you’re looking to sell, there is the lowest inventory on record right now. We also have a generational shift, where we have millennials pouring into the purchase market, coming out of the lockdown pandemic and finding these low rates and seeing the opportunity. So there’s a lot of forces at work.
With demand for homes so high, can you offer some advice about which home repairs and improvements are worth it and which are not?
Miller: The first step for any seller is to try to imagine a buyer walking up to your front door, and what do they see? Look at the yard, look at the landscaping. Rather than big repairs, it’s really about just making sure the house is painted, it’s very neutral in the sense of removing clutter. There’s really not a lot of repairs in this market that are really needed simply because the inventory is so low. We’re really not advising sellers to renovate a kitchen or renovate a bathroom.