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Selling a Home During a Pandemic, Some Experiences

I hinted this was coming a few weeks ago.  We sold the house of the individual under our power of attorney.  It was a unique experience so I figured I would write about my experience selling a home during a pandemic.

Selling a Fixer Upper Home During a Pandemic

So some background before we start.   Our power of attorney deferred a bunch of maintenance to his home.  As such the home in this case was sold to cash buyers as a fixer upper.  That may influence some of what we experienced.  However, through the process I was also exposed to what is going on in the housing market at large.  As such I suspect this may be useful even for those selling or buying a move in ready home.

Finding a Realtor

Starting from the beginning, to sell the home we chose to go with a real estate agent who was a friend of a family member.  We of course also checked reviews for the realtor, as you always should.  Getting a good realtor can make a huge difference on the sale of your home if you choose to go the realtor route.

Negotiating Realtor Fees

The next step hasn’t changed much for selling a home during a pandemic.  Realtor fees are negotiable.  Educate yourself about the typical selling fees in your area.  Then ensure the fee percent you are agreeing too with any realtor is at minimum competitive with the going rate in the area.

Historically realtor fees have often fallen in the 6% range.  But that rule of thumb has changed in many areas of the country due to changes in home value, the rise of do it yourself services like Zillow, and the increase in the number of brokers compared to housing value in general.  You can use this article to explore what the going realtor fee is in your area.

Staging While Selling a Home During a Pandemic

After agreeing on a realtor fee and locking into a sales contract for some period the next step is to get the house ready to list.  For selling our own home years ago we removed excess furniture and personal effects.  We then staged things. 

In our 2020 pandemic case we were selling a fixer upper with to be honest a lot of excess items that needed to be removed.  So we focused on cleaning out the items that would detract from home assessment.  Sub optimal maybe, but it was a choice we made to get the property on the market while things are hot in our area.  More on that later.

Setting a Target Price

This agent did a great job of giving us a range of potential values for the worth of the home given the area.  We chose near the middle of that range for the listing.  If you choose too high people will not even look at a property. 

Too low and you risk losing out financially.   People anchor on costs due to bias.  So if you post too low they will adjust their offers relative to that price.  Even if they offer more then listing, it will still likely be relative to your listing amount.  So listing price is hugely important.  We also chose to sell the washer and dryer with the home rather then attempt to sell them separately (an important part of listing decisions is to decide what you will sell with the home).

Filling Out the Disclosure, Erroring on the Side of Unknown

Next we had to answer a disclosure on the status of the home.  You need to answer things like the age of the home, any known issues, things you’ve changed, etc.  In our case the POA individual only had limited knowledge of the answers.  Where possible I collected feedback from our POA subject.  For all else I had to put unknown.  

It is important to answer these disclosure documents as correctly as possible as you can be held legally responsible if you purposely answer incorrectly.  I say purposely as most of them ask in a way that it refers to your own knowledge of the property, so it isn’t about inspecting something and then reporting it.  It is about not hiding issues.

New Requirements When Selling a Home During a Pandemic

Before the home was listed a major new step was added due to selling a home during a pandemic.  We had to fill out forms stating we were Covid symptom free, or at least the family member involved with the house sale (myself as the POA).  Also each visitor to the home would have to sign a release around Covid.  Don’t you just just love liability?

Liability and Injuries During Realtor Tours

Now one unique part of the home we were selling was some of the areas needing maintenance presented some risk to those touring the home.  For these areas we roped them off with caution tape to keep people away from them.  A note here, case law is not entirely clear on what happens in these type of situations if someone gets hurt.  So where possible any risks, like say a collapsed deck, you should take a precautions to keep idiots from walking out on the obviously broken deck and hurting themselves.

What Kind of Home Market are we In?

Anyway, our POA’s home was listed for sale on Sunday.  By Thursday there were 30 tours.  Each tour individual answered a survey about what they experienced in the home.  Staging was routinely ranked as poor, not a surprise given the state of the home.  On price half our visitors stated they though the price of the property was too high while half stated the price was just right.  The ironic thing is, regardless of the price answer, many of these same buyers still submitted offers.  In 4 days we received 10 offers.

Everyone Seems to be Buying or Selling a Home During the Pandemic

Now before I get into the details of these 10 offers for selling a home in a pandemic a comment.  Less you think 10 offers was exceptional due to the price of the house or something else, my realtor confirmed this is really common right now.  I’ve heard the same from investors in the area and people buying their first homes.  Real estate, especially those in rural or suburban areas, are all selling in a matter of days.  Most are being bought above listing.  

Offers Above Listing are the Norm

One investor who I talked to basically stated point blank in order to get an investment property it is basically agreed your offer must be above listing.  Wow!  Some data indicates this has to do with supply which is exceptionally low right now while demand has remained constant .  One has to wonder if when the moratoriums on evictions and foreclosures lifts for most of the country how quickly the supply will lift.  This is why I haven’t purchased as an investment property as of yet.

A Review of Offers While Selling a Home During the Pandemic

So onto those 10 offers.  One offer included a financing contingent.  This one was rejected out of hand for fear our fixer upper would not qualify for financing.  Even if we had a normal house I heard from our realtor that financing has recently become a negotiation point.  Apparently many buyers are writing into their contracts that they will pay in cash for any gaps between appraisal value and sale value to ensure they can purchase a home.    

Less Contingencies, More Valuable

In essence the less contingencies the more valuable an offer: inspection, financing or otherwise.  These can avoid a renegotiation or fall through of a winning bid at a later date.  With the risk of the market cooling off later  as I mentioned before, you want to do what is possible to ensure the sale sticks.

Anyway, after rejecting this one offer there remained 9 more.  Of those 9 only 3 were under listing.  None were more then 2-3 percent under listing despite half saying the home was over priced.  Again, one has to question the accuracy of surveys…

A Look at the 6 Over Listing Offers

So if we focus on the 6 over listing the question became what contingencies were in place and what price.  In our case we threw out inspection contingency bids because we had a number of no inspection needed bids.  No sense risking having a sale fall through due to something discovered on a house.  This was especially true for my situation where as a POA I can only disclose I have no idea of any non visible issues for the home since I haven’t lived there (and our POA subject doesn’t entirely remember).  Note there would be an offer dollar value where I’d be willing to take an inspection contingency risk, but the difference was not significant enough.

Entering a Bidding War While Selling a Home During a Pandemic

Which brings us to negotiation on price and any written requirements.  If two bids are exceedingly close you can consider pushing a bidding war by playing the two parties against each other via your realtor.  You can also ask for non pricing sweeteners.

In our case the sweetener ended up being a clause where they would dispose of remaining useless items in the home.  No need to rent another dumpster and spend my weekends sorting through junk from the attic or basement!   Anyway, that sweetener probably is not relavent to you, but I suspect it will give you food for thought for the type of things you can negotiate.

Closing Out Home Equity Loans

So in our case we had an offer with no contingencies.  So essentially the sale was a done deal.  Still our work was not done.  In order to ease the sale of a home it is best to closeout things like home equity loans.  You can also do this at the closing table, but it may be easier to do ahead of time.  Anyway a few weeks before listing we put in a request to close the home equity line on the house.  Note paying off doesn’t do it, you must actually close the account and potentially pay to have the state record that closing.

Checking For Closing Cost Errors

Anyway after agreeing on a price we had to pay careful attention to ensure the home equity close out was managed correctly though the process, rather then paying the transfer company to also record the close out.   The day before closing they send you a file disclosing closing fees.  The fee for closing the home equity loan was listed on that form.  So I had to have it removed.

That really indicates the important of reading through that closing costs form closely.  You can then ensure anything gets corrected before you show up at the closing table.

Tax Certification Responses Slowed During Covid

The other thing holding up our closing a bit was tax information. Due to the glut of people selling a home during the pandemic the tax authority was backed up.  Ultimately they did not provide the appropriate certifications of paid off property tax in a timely manner to our closing company.  In order to get the housing to close on time I obtained evidence of property tax payments to push things through anyway.  *It’s always good to keep records of any and all tax payments you make.

On the big day I came to the closing office with the original POA document.  I had to provide a copy of it previously to get things ready but they needed the actual at closing.  I also brought my drivers license, a pen, and some things I wanted to provide the new owners (don’t forget the keys!).

In and Out From the Closing Table 

The process of signing closing documents for a seller, especially without a mortgage, only takes a few minutes.  Ours took a bit longer because someone misspelled my name due to a typo.  (Again always read the paperwork!).  But otherwise 30 minutes later I had a big check for our POA and they had the keys.

Bouncing A Check After Selling a Home

I wish I could say that was the end of our experience selling a home during a pandemic but alas it was not to be.   I deposited the check that Friday afternoon with the plan of shifting those funds to a high yield savings account for now on Monday.  The funds showed up as available on Sunday and on Monday I moved them to a new savings bank.

And then the fun began.  Monday afternoon the check from the closing company was returned as insufficient funds.  The money flow to the savings account then promptly bounced.  Go big or go home, I’ve never bounced a check in my life and here my first was low 6 figures.. Yipes.

Just Because Funds Are Available Does Not Mean the Check Cleared

After some calls to the closing company I determined that the funds were not paid due to some security check they have on their bank accounts for checks.  They forgot on Friday afternoon to release the check!  So new life lesson for me.  Just because funds are available does not mean a check has cleared.    After my heart started beating I made a few calls to get things resolved.

Alls Well that Ends Well When Selling a Home During a Pandemic

Anyway the closing company sent me out a new check.  Then I had to jump through hoops to remove fraud alerts from the online savings accounts stemming from the bounced checks.  2 weeks later I finally have things rectified for our POA’s funds.  The closing company is still in process of sending funds to cover the multitude of fees incurred by our POA due to the bounced check.

Anyway, there we go.  That was my experience selling a home during a pandemic for our POA.  Good luck to those selling a home now. Hopefully the above will help you avoid any pitfalls while maximizing the value you receive from your home.

4 Comments

  1. Q-FI
    Q-FI October 6, 2020

    Interesting post FTF and these are good pointers to observe.

    I’m about to start house hunting in a very competitive and hot market – not looking forward to that part of it. And your banking escapades are crazy. It seems like something always goes wrong in a bizarre way. Hahaha. At least there’s never a dull moment, right?

    Hang in there with the busy bud.

    • Katie Camel
      Katie Camel October 7, 2020

      My advice to you, Q-FI, is to visit every open house you can, including ones outside your price range, to learn the market inside out. Learn what listing versus sale prices. This is what I did and knew what to offer on my house. I’d already been in a bidding war and landed in another with my current home, so I had a contingency on my offer that I automatically increased my offer another $500 on top of the other bidder’s offer up to a limit I was comfortable with. I won! It’s also amazing what realtors don’t know and what they’ll say to get a sale – just an FYI.

      Nice post, FTF! You’re right it’s a hot market with limited supply. My house appreciated nicely during this pandemic.

    • FullTimeFinance
      FullTimeFinance October 11, 2020

      Thanks. Best of luck on the house search. I can only give one recommendation regardless of hot market. See a few before buying to get a feel for what you like and the market prices. The first home we bought ended up leaving much to be desired. The second time we bought a house we took more of our time and found something where I don’t miss anything.

  2. Financial Samurai
    Financial Samurai October 25, 2020

    Good stuff. Interesting to see the other side of things. Glad the market is strong. Glad you got your check cleared too! Lots of scams with that one!

    I decided to buy a home in the pandemic and upgrade our lives. I can’t believe, thanks to rates, we can live in a nicer home for less, years later.

    I have never appreciated living in a nicer home than I have now. I’m ready for lockdowns 4 life!

    Sam

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