Five Steps for Home Sellers to Sell Their Homes in a Buyer’s Market
As we have already learned, the market has changed! We don’t see bidding wars any more (in most parts; however, there are some pockets that remain), and buyers are more reluctant to jump on the first house they see and want to see more homes before making any decision. There are more homes on the market, and the mass media is not helping either with their hysterical screaming headline articles about “slowing down”, “cooling off”, “shifting”, etc.
If you are an overwhelmed seller in this market, you are not alone. There are more inventory now, and for the first time since the Great Recession, the sellers feel like they are not calling the shots any more. What do you need to do and how to go about actually selling your home without giving away much?
First and foremost, if you need to sell now and move, keep in mind that you will have competition and you need to stand out.
- Make the house easy to buy. We all know that homes that are easy to show are easy to buy. If you have tenants in the house, wait until they move out and then sell. It’s best to have a vacant home than with a seller inside, or worse a tenant. If a seller is living in the house, he or she must always keep it “show ready”, and be able to leave the house on a moment’s notice for potential showings. When buyers shop for homes, their agents usually plan their routes to visit vacant homes first, then occupied by sellers, and then occupied by tenants. When a house is occupied by a tenant, the law requires a 24-hour notice to a tenant about entry. So if there are similar homes on the market, and one of them is vacant and another one is with a tenant (and a 24-hour notice), where do you think the buyer is likely to go? You guessed it right! To the vacant home, where a buyer is likely to fall in love with the home and forget about the one on the list that will be visited tomorrow due to the 24-hour notice. Get it? Keep your home easily accessible and available.
- Presentation and appearance. You only have one chance to make a good first impression. Home buying process is emotional. Make sure that your home is “show ready” and is appealing to potential buyers. Landscaping must be done, all sockets and outlets repaired, gutters and roof cleaned, fresh coat of paint, decluttered of stuff, and cleaned. Hire a professional to thoroughly clean the house. Confirm that your agent has arranged a staging consultation and professional photography of your home. If you see that your agent is using his or her phone to take pictures of your house for the listing photos, fire him or her immediately. Not cool!
- Pricing. This is the big one!! Pricing a home is the most important component of the home selling process. Overpriced homes sit longer on the market; but at the same token, you don’t want to leave money on the table. An average realtor can pull the recently sold homes data, compare the prices, and price your home according to this data, or as we call it in the industry, run the comps. Not so fast! If you are in the shifting market, and mortgage interest rates went up, you are going to miss if you price your home according to the recent comps in the neighborhood. Remember that the market is shifting and the prices that were relevant in May, may not be the same in October. Why? Because the affordability factor has changed. When interest rates went up and your average home buyer could afford $2500/month payment and now he or she can only afford $2100/month, the price of the house will change as well. The prices must be sustainable. So make sure your Realtor is savvy enough to understand it. Look at the competition. What homes are for sale in the neighborhood and how are they priced? Price yours below that. You don’t want to catch up to buyer’s perception of value and keep reducing the price. It will be an uphill battle. Be smart and do it right the first time.
- Incentivize buyers and agents to sell your home. Regardless of a market condition, money is a great motivator for anybody. Offer higher than your market average commission to a buyer’s agent. Make sure your agent lets everybody know about increased commission so that buyer’s agents will fight to sell your home. Incentivze buyers. Offer free washer and dryer, big screen TV, etc. People like free stuff and when people look at homes and see two similar homes, that incentive could be the edge that they need in order to pull the trigger and make an offer on your home. Offer to pay buyer’s closing cost or pay down interest rate so that buyer’s payment is lower. Be creative and work with a listing agent, who is savvy enough to take it to the end zone.
- Pick the right Agent to sell your home. There is a general misconception that all agents are the same since they all have gone through the same school and passed the same State exam to get licensed, members of the same MLS and therefore have the same resources and tools to sell your home. Even though it’s partially true, agents are people with their own skills, motivations, and experiences. All agents are different; but unfortunately, there are many hobbyist, divas and just part timers who have no idea how to sell a house. Some will offer discounts as their only value, some will promise you the moon just to get the listing and brush their ego. Do your research. See if an agent is working with a team of agents, does real estate full time, is smart enough to price the home correctly (see Section 3), and don’t jump an offered reduced commission. You need to sell your home, not save on paper, because if the house does not sell, does it really matter how much you agreed to pay your agent?
Considering all of these factors, with the right approach and proactive marketing, you will be able to sell your home. If you have any question, please do not hesitate to contact us. Also, feel free to leave a comment below, or share your own stories and experiences about today’s topic.