How the Hot Housing Market Can Hurt Sellers Too

Amanda Garland

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Selling a house in a hot marketTierra Mallorca/Unsplash

It is no secret that the housing market across the U.S. is hot right now. Like the surface of the sun hot. And large metropolitan areas like DFW are really feeling the squeeze. Houses are getting snapped up quicker than black Friday deals on TVs. And few if any new homes are being built, at least not any within an hour commute of the metroplex.

Both of these things combined have sent the price of your average home skyrocketing. I had a local real estate agent, and good friend, quote me that between the months of April and May she saw the price of homes increase 15%. That's insane!

All of this is bad for the average buyer. Higher prices and fierce competition can squeeze the more cautious buyers out of the market and can leave the more aggressive buyers with a financial hangover when they find out that inspection they skipped would have revealed the serious foundation issues their shiny new home is suffering from. And in case you weren't already aware, thanks to the soil in the DFW area, this is an all too common problem.

But what is bad for buyers is good for sellers, right? Yes and no.

Yes, sellers are likely to sell their homes for the asking price if not above the asking price. And the average time on the market is only a few short days or mere hours in some neighborhoods. But having your home snatched off the market so quickly can lead to some problems.

Offers Falling Through

Win buyers bending over backward to score their dream home, or really just any home, they are making all kinds of crazy concessions. Concessions that their bank account can't handle or that their banker (or spouse) aren't privy to. When the appraisal comes back too low, or they don't have as much cash on hand as they thought, the mortgage can fall through. And while yes, there are plenty of other potential buyers out there, a house that comes back onto the market can sow a seed of doubt. What is wrong with the house that the deal fell through?

Sometimes there is nothing wrong with the money side of things, and the buyer just chooses to back out of the deal. Perhaps it is because the inspection brought up issues, or they didn't like all the terms. But sometimes it is because buyers are putting offers in on several properties they like at one time, just hoping that one of them goes through. If another house they liked better agrees to their offer, well that's good news for one seller, but bad news for you.

Finding Yourself Homeless

If you were planning on putting your house on the market before you look for a new place to live, you might want to rethink that decision. With houses being snapped up at such a rapid pace, you may find your home is sold before you've even started packing. If everything is in order, closing can take just a few short weeks.

You might be telling yourself that is fine, you'll just rent an apartment until you find a new place. Well, the problem with that is that the rental market is pretty hot in DFW right now as well. Many complexes have waitlists, even after dramatically hiking their rates.

And even if you do find an apartment on short notice, there is all of your stuff to think about. Good luck trying to cram a house's worth of stuff into a one-bedroom 3rd-floor apartment (personal experience here). Movers and storage units are also at a premium right now, so take that into consideration as well.

Instead of risking the prospect of crashing on your neighbor's couch while you watch the new homeowners move their stuff in, layout the terms when you sell the house. And always give yourself a few extra weeks as a cushion.

Emotional Separation

The longer you spend in the house selling process, the more time you have to distance yourself emotionally from what has been up until now, your home. With the housing market on fire right now, you may find an emotional attachment still securely in place when you go to sign the closing papers. You may be tempted to back out.

The market does not care about your feelings. So to avoid this problem, make sure you are fully emotionally ready to divest your house before you put it on the market. Begin thinking of it in terms of a financial transaction before you even start looking for an agent. Because the last thing you want is an awkward moment of tears at the closing.

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A Texan and new mom, writing about things I am most passionate about; personal finance, parenting, and the events that shape Texas.

Dallas, TX
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