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The Power Position, Who's On Top?

Power Position

I was at a closing today & a lender asked if Sherry or I had ever seen a market like this. Our unanimous answer was a clear & definite NO. The real estate market today is totally unique to any other we've seen.

How so, you ask? Buyers are constantly in competition, which isn't unique in itself, however, once an offer gets accepted, the buyer still has very little power. Buyers are writing out their power in offers today.


Buyers are offering to pay significantly over the asking price. (We had a buyer offer $30,000 over & still not get an accepted offer).

SECOND Buyers are including clauses that state they will take the burden of inspection issues onto themselves, and some are even forfeiting the right to inspect all together (which we would absolutely not recommend) to put them in a stronger position to get their offer accepted. Some buyers are also removing other testing contingencies including (in Wisconsin) radon, well, water & septic testing. Again, this is not something we ever recommend to our clients.


The clause that is a difficult one for all parties to face is the appraisal contingency, but especially buyers. Should a buyer need to take out a loan, an appraisal will be ordered by their lending institution, regardless if the contingency is checked off in an offer. If a property doesn't appraise a lender will not loan on the property. The difficulty lies here: properties are selling for some much more than the list price. An appraiser has to use the most recent existing sales in the market to come up with comparable properties in order to come to an appraised value. Appraisals haven't caught up to home sales (Yet!). Buyers are running into appraisals that aren't coming it at the accepted offer price. This then puts buyers in a position to either A.) negotiate with the seller (which isn't always an option when so many interested parties are standing by) or B.) bring the difference of the offer price & appraised value to the closing as additional down payment (if affordable to the buyer).

Either way, if a property doesn't appraise there are either one or two frustrated parties. In short, the negotiations don't always end when the offer is accepted. To avoid this issue, buyers are adding in a clause into the offer stating that they will bring the additional funds to closing as long as the property appraises to the list price. Which again, puts the seller in a position of power.


Rarely has a market been so skewed toward one party, however in the past 2 years we have seen sellers flexing their muscles. Mind you, muscles that were atrophied since the 2008 market crash, so it's no wonder, sellers are enjoying their time in the sun.


If you're a buyer or seller in today's market, it's important that you have a knowledgable realtor guide you through the market. We can help you navigate this market, whether you're on the buying or selling side. Don't hesitate to reach us today!

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