The first step is the hardest.
Increasingly, the biggest factor holding back home sales in hot housing markets such as Colorado and Northern California, is that homeowners are afraid they will sell their homes too fast.
At a time when there are a record low number of homes on the market, buyer demand is as strong or stronger than it has ever been, homes in all price ranges are going fast.
So fast, that home sellers fear they will be “homeless” if they can’t replace a home that in some cases literally was snapped up in minutes after it hit the market.
Dealing with the fear of selling your home too quickly is the topic of this month’s question and answer session between Lane Hornung, CEO and founder of 8z Real Estate, and John Rebchook, of InsideRealEstateNews.com.
John: Lane, what do you make of the unwillingness of homeowners to sell their home, even if they would like to move?
Lane: This is a real chicken and egg problem. You can sell your home, but you worry you can’t buy a home. And because people are worried about not being able to find a replacement home, there are fewer homes on the market.
John: How big of a factor is this? Is it paralyzing the market?
Lane: I think it is pretty significant. It is overwhelming, right? People are so paralyzed, they do nothing.
John: If they want to sell and the lack of a potential replacement home is the only thing holding them back, what should they do?
Lane: It is not so overwhelming if they take it one step at a time. The first step is the hardest.
John: What is the first step?
Lane: The first step should be to talk to a good Realtor who is experienced in helping people find solutions in this market.
John: What are some of the solutions?
Lane: 8zers increasingly are using sale-leasebacks. That is, the seller continues to live in their home for a set period of time and pays rent to the buyer. It might be up to six months, but if the seller finds something quicker, the new owners move in.
John: That’s a sign this is a seller’s market, isn’t it?
Lane: It’s a seller’s market alright. In a number of cases, the people live rent-free in their homes until they find a new one. The buyers are willing to let them live in the home rent free, because it’s such a strong seller’s market.
John: How else are people dealing with this housing shortage?
Lane: The good news is that new home builders are ramping up construction. People who can’t find a resale home, often are buying a new home. It might not be ready today, but maybe it will be ready in the next few months.
John: And a house hunter never knows when a home might become available.
Lane: That’s absolutely right. We’ve seen homes hit the market and it results in a real daisy chain reaction. It’s not just good for that buyer and seller, but it could be good for six or seven people down the line. At 8z, we call these linked transactions.
John: So the market is not dead?
Lane: Even in this market, people are buying resale homes every day. Often, the first step when you talk to a good Realtor is to see what is out there. You might be pleasantly surprised.