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Be Prepared to Move Quickly
Hot markets see more buyers purchasing with cash or minimal financing than other markets. If you're lucky, your buyer might not need to be approved for a loan, which would greatly reduce the amount of time your property is under contract. If you decide to accept an all-cash offer, you will likely close in a short amount of time.
Be prepared, at least mentally, for this possibility prior to placing your property on the market. It might even be wise to have a rental lined up if you do not find another property to buy right away.
Be Prepared for Problems with Appraisal
Hot markets often arise quickly. Appraisers might be comparing your property to properties sold at least a year ago. If no properties in your neighborhood have sold recently, an appraiser might have to look back many years to find comparable sales; sales which will likely be for a lot less than your current offer.
That can hurt you as a seller. If a property doesn't appraise for the offer price, the buyer will have a lot of difficulty getting a loan for the current offer price. You might be forced to lower your sales price or seek out buyers who are paying cash and do not need the approval of an appraiser to complete the deal. Most of the time, if a property doesn't appraise and the seller won't lower the price, the deal is dead, as the buyer has no other options besides a traditional lender to cover the purchase price.
Take Advantage of the Hot Market
If you have unusual circumstances surrounding your sale; for example, you want to find another home to move into before moving out or a tenant whose lease won't end for a few months; use the hot market to your advantage. Buyers are more wiling to accommodate sellers' needs when inventory is low. Once offers come in on your property, you have greater bargaining power to use to accommodate special moving needs. Don't be afraid of negotiating. Your buyer is just as aware as you are of the limited options on the market.
Don't Get Your Hopes Up Too High!
Just because the market is hot does not guarantee multiple offers for over asking price.
Sure, you've heard about the house down the street that sold in two days for $50,000 over asking. But you do not know all the circumstances surrounding that sale. Perhaps it was a fluke, with the perfect buyers coming in for that house. Perhaps there was something highly unique to that property that made it sell so fast and for so much money.
House prices can differ drastically within neighborhoods. Many criteria that aren't readily apparent from researching the MLS or past sales might make a property sell for more: a great layout, lots of light, decorator colors, or mature fruit trees are all examples of things that might tip buyers into a frenzy that creates high prices and multiple offers.
Your home might not offer these. Take solace in the fact that you are selling in an up market and are more likely to sell for closer to your asking price than you would in a down market. And, if you happen to be one of the lucky ones who garners more from the sale than you ever imagined, feel free to pop the champagne at closing!