Red flags are a major negative not just for homebuyers, but for sellers as well. Therefore, it is incumbent on agents representing either party to become as aware as possible of whatever issues lie within a property for sale, and to determine what to do about them.
Part 1 took a closer look at some of the red flags buyers shouldn’t ignore as they navigate the real estate process. Here, we focus on the unique issues sellers are likely to come across, as well as agents and the challenges they may face. While many assume sellers know every detail about their homes, that’s not necessarily always the case. Sometimes even the seller may not know what red flags within their home should have been addressed before putting it on the market.
“Throughout my 30 years in Arizona real estate, I’ve noticed that many sellers may not be aware of issues with their homes,” says Dan Gonen, associate broker with RE/MAX Excalibur in Scottsdale. “Some sellers aren’t too concerned with the home’s condition, while others address repairs right away.”
There will often be buyers not particularly interested in the condition of a home as long as the price is right, but sellers must nevertheless be careful. Those who decide to at least hear what a quick-cash company will offer can call them at the number provided on the postcard they received in the mail or contact them online. A call will result in a representative coming to the property, usually within a day or so, and making an offer, usually very low. Online, you must provide your name, address, phone number and email before the visit. Again, they are looking for sellers who value an instant sale over extracting every dollar they might get using a REALTOR®.
Alexander Chingas, an agent with Coldwell Banker Realty in Westport, Connecticut, acknowledges that some sellers would find the alternatives presented by the instant-cash companies appealing.
“Every so often we’ll be sitting with a client having a meeting about selling their house, and they show us the mailers they received, asking what they should do with them,” he says. “It’s a numbers game probably, and the company figures if they solicit enough homeowners, someone might go for it. They are opportunists looking to probably take advantage of an under-informed consumer.”
Jeffrey Decatur, a longtime broker associate with RE/MAX Capital in Latham, New York, notes that sellers can make a big mistake before homebuyers even show up at their property.
“One of the biggest red flags is when a property condition disclosure has ‘unknown’ for all the answers,” he says. “You’re not fooling anybody, because you live there. Total red flag that the seller is hiding something or thinks they are alleviating themselves from liability. The funny thing is that most buyers look at all the unknowns and it makes them uneasy which, in turn, results in no offers, longer time on market and less money in the seller’s pocket.
“Another kiss of death is ‘sold as-is,’ which immediately puts buyers on the defensive,” he says. “They are better off saying the roof is old, and they are willing to give a credit, but the seller is out of town and doesn’t have the means to take care of it. Completely different message.”
Here are other potential red flags listing agents and sellers may experience.
Lots of walk-throughs but few offers. Both you as the listing agent and your seller client have zero to gain if the house doesn’t move. Clearly there’s a problem if there are the usual number of buyers visiting but few or no offers are made. The obvious one is that it’s overpriced, but perhaps the photos online are misleading. Asking buyers what they liked or disliked may solve the puzzle, because all houses sell at the right price.
Too many lowball offers. A first cousin to the home being overpriced, lowballers are often an indication that savvy buyers recognize the price is too high and adjust their offers accordingly. Some lowballers may think the seller needs to sell fast; others are just fishing. Regardless, they can help the seller decide whether to adjust the price or do something else, like staging the home, to find buyers willing to make realistic offers.
Multiple contingency clause requests. Appraisal and inspection contingencies are perfectly normal, but some buyers may ask for restrictive clauses that could delay your transaction if they back out or drag their feet. Most inspection clauses allow for around 10 days to inspect a home. If a buyer wants much longer, that could be a red flag.
No pre-approval. Buyers don’t have to be pre-approved for a mortgage to make an offer on a house. And you almost certainly advise buyer clients to have one. Buyers without pre-approval who want to include lots of contingency clauses in the contract may be a hassle to do business with, or may just be looking without plans to buy, so there can be a lot of time wasted.
Cash offers with proof. Home-sale transactions when cash is paid simplify the process. But when a buyer says they plan to pay cash, there should be some sort of proof at some point. A mortgage pre-approval avoids the awkwardness of asking a cash buyer to show personal financial information indicating the ability to carry through to closing.
No internet ID. Today, almost everyone is online in some capacity, whether on social media or a business website. You should be able to verify that the buyer exists in some way. If a potential buyer seems mysterious, it’s worth some internet sleuthing to see if you can find information to verify their identity claims.
Holiday decor no-no’s
With the holiday season in full swing, festive decorations are great ways for people to express visual creativity for the season. But Palm Paradise Realty Group, a professional concierge real estate service, says homesellers should understand that red flags can arise by going too far.
“When selling a property, it’s best to utilize decor that appeals to the broadest audience possible,” says a company spokesperson. “A neutral aesthetic allows prospective buyers to picture themselves living in the space without being distracted by overly personalized or seasonal decor.
“Buyers often want a blank canvas they can customize according to their tastes. When a property is cluttered with themed decor, it risks being perceived as less desirable, making it harder to attract offers. Sellers need to remember that while they may love particular styles or trends, their tastes don’t matter while selling. The goal is to create a welcoming atmosphere that resonates with a broad audience, elevating the home’s marketability.”
To help avoid damaging the value of their homes, here are five festive decorations best avoided by sellers.
- Permanent modifications for temporary festive decor. Making permanent changes to your home for the sake of seasonal decorations may seem like just embracing the festive fun, but can have unintended consequences. Installing elaborate light fixtures, custom-built displays or permanent fixtures designed for specific holidays can deter potential buyers, who may view these modifications as excessive or impractical. Buyers usually gravitate toward homes that will require minimal upkeep. Permanent festive decor that they’ll have to maintain will likely be seen as an unwanted burden, making the property less desirable.
- Themed front doors or windows. While a front door painted with reindeer pulling Santa’s sleigh may be a fun and cheerful way to celebrate the season, bold colors and specific holiday themes can alienate prospective buyers who may not share the same taste. If buyers think the property needs significant aesthetic changes, they may make a lower offer or even decide against offering altogether.
- Unconventional exterior paint choices. Unconventional exterior colors, like bright reds, greens or glittery silvers and golds, can clash with surrounding homes and make a house stick out in a way that’s unappealing to buyers. Bold, unusual colors can appeal to the right buyer, but they usually just decrease the home’s curb appeal. These colors make the property feel overly personalized, which prevents buyers from imagining themselves living there. The costly need to repaint the whole exterior can lead to lower offers or a longer time on the market.
- Oversized festive lawn ornaments. While eye-catching and fun for the neighborhood, oversized lawn ornaments and decorations can overwhelm a property and detract from its architectural features. Large, extravagant displays dominate the space around the home and draw the eye away from the house, making the garden or front yard feel cluttered and unkempt. This impression can distract potential buyers and make it challenging to envision the property’s true potential.
- Decorations that highlight structural flaws. Excessive decorations can obscure the home’s facade, reducing its curb appeal or, worse, highlighting its structural issues. Festive decorations can inadvertently draw attention to flaws such as peeling paint, cracks or outdated features, raising concerns among buyers about the cost of repairs or renovations.
