HUD Articles

Whenever a home comes to market, the seller wants to understand how long they should expect the process to take. Over the last two years the time it took to get an offer, go through escrow and transfer to a new owner was as short as it has ever been. The factor behind this speed was almost exclusively due to the very high demand for homes in just about every marketplace – way more buyers than homes available. So, what about now?

As the Michigan market settles back into a more usual pattern of demand – slightly more homes for sale than buyers – the time it takes to sell has begun to rise. The overall process can be broken down into two parts. First, how long does it take before an offer comes and can be negotiated. Second, how long does the inspection and escrow process take before the sale closes.

Right now, the average time before an expected offer is around a month. The key here is understanding what “average” means. If you take out the homes that sell in the first 7 to 10 days they are on the market, the average time goes up to nearly two months. What causes this pattern? No surprise here – price. Regardless of what price range a house is in, if it is not priced within about 10% of where it will sell, no offer usually comes at all. The price at which an offer will come is called the “Trigger Price”. Above that price the home will just sit. How we know this is that a home at the Trigger Price has a contract in less than 10 days. So, the shortest time to a contract is a starting price for the home that is at the Trigger Price. That does not mean to underprice a property, so make sure you have a pro help you do your homework.

Contract negotiations are just that. A few months age a seller just had to pick the offer they wanted from the several that came on the first day the home was on the market. Now, as most of the time, expect to go back and forth a few times before coming to agreement. Make sure the tenor and tone of the negotiations communicates a willingness to get a deal done.

Another change from last year is that buyers want to fully inspect a home and get a mortgage. This greatly effects the time a home is in escrow before it sells. Inspections take one to two weeks, and an appraisal and loan commitment can take another three to six weeks. A seller can effect this timetable greatly if they understand the process and incentives they might offer. Get help from a good agent to help manage this process.