In today’s heated housing market, emboldened sellers are making increasing demands from homebuyers, and in many cases, spoiling sales.
It’s no secret that the current housing market is a competitive one in which several major markets are functioning in what ValueInsured calls a “housing hysteria stage” in its latest Modern Homebuyer Survey. What is telling in the survey is that a significant percentage of homebuyers are losing out on purchasing a home due to what they consider “unrealistic seller’s demands.”
Twenty-one percent of homebuyers said unrealistic or unconventional demands from a seller ultimately botched a sale for them. This was true among 26 percent of millennial first-time buyers as well as 30 percent of starter-home buyers.
ValueInsured notes that these buyers say they are financially ready and interested in purchasing a home. The seller demands were their only hold-up.
Delayed or canceled sales resulting from seller demands “adds to the severe bottleneck we have in the housing market, with record-low inventory particularly at the starter-home level,” according to ValueInsured.
Some of the so-called “unrealistic sellers’ demands” include waiving contingencies, cash-only offers, and accelerated or decelerated closings.
The survey also cited a Seattle housing market “survival guide” noting some new “standards” in seller demands, including waived financing clauses, inspection clauses, and appraisals.
It is also reportedly common for sellers to request a “fast closing, followed by slow moving.” In this case, the seller would close and transfer the title but continue living in the home as a renter for 60 to 90 days.
While seller demands can lead to a canceled sale, ValueInsured said, “let’s not ignore the fact that sellers are increasingly making demands because some buyers are willing to accept them.”
In overheated markets, “the vicious cycle continues, home prices in these markets continue to skyrocket due to low inventory, as income growth and inflation fail to keep pace,” ValueInsured stated in its report. Some eager buyers are willing to purchase homes sight unseen or without an appraisal, or inspection, which can be very risky.
While acknowledging that homebuying is emotional, the survey warned, “If you are buying such a home in a peak market and without some level of protection, the stakes become extremely high, and the risk exposure could be irreversible.”