After years of a real estate market that’s been as hot as a Fourth of July BBQ, many homeowners are now finding themselves in the position of having to sell their homes in a buyer’s market. Along with interest rates that have crossed into the 6% territory, there appears to be no doubt that the real estate market has officially taken a turn. While a more balanced real estate market is good news for buyers who have been priced out of the market for years, it can be a real challenge for those who need to sell their homes.
When a market shifts from a seller’s market to a buyer’s market, it requires a different approach when it comes to pricing, marketing, and negotiating the sale of your property. Gone are the days of pricing your home at the high end of the range and getting multiple offers overnight. Typically listings stay on the market longer, with more price reductions. Bake into that, current recessionary fears and more buyers sitting on the sidelines — or priced out of the market entirely — due to higher interest rates and affordability concerns, and it can be a real challenge to get your home sold.
So, what can sellers do to get their homes to stand out and get the price they’re looking for in today’s market? There are actually a few key strategies that can make a big difference.
Strategies for Selling a Home in a Buyer’s Market
In the current market, it’s now more critical than ever to price your home correctly, make sure it’s in tip-top shape, and be prepared to negotiate if you want to sell your home quickly and for the best possible price.
Price the home correctly
In a buyer’s market, overpricing your home is a surefire way to keep it from selling. With more homes on the market and fewer buyers looking, you’ll need to be competitively priced in order to get buyers interested. In a seller’s market, owners could get away with pricing their homes higher without much worry that they would sit on the market for very long. It wasn’t uncommon for homes to sell for over the asking price, sometimes at jaw-dropping prices. But in a buyer’s market, those same homes will languish on the market until the sellers are finally forced to lower their prices to meet the current market conditions. Overpricing your home now will likely result in fewer showings, and ultimately more price reductions.
It’s important to remember that just because you may have paid a certain price for your home, or put a lot of money into renovations, doesn’t mean that’s what your home is currently worth in today’s market. You’ll need to factor in current market conditions, as well as the prices that similar homes in your area have recently sold for. This can be a tough pill to swallow for many homeowners, but it’s important to be realistic if you want to sell your home quickly and for the best possible price.
Work with your real estate agent to find comparable homes that have recently sold in your area, and use those prices as a guide when setting the price for your home. It’s also important to remember that buyers are often looking for homes that are priced below market value, so pricing your home at or just below fair market value is often the sweet spot.
Clean and depersonalize your home
Another important strategy for selling your home in a buyer’s market is to make sure it’s clean and depersonalized. In order to appeal to the greatest number of buyers, your home should be free of clutter, with a neutral palette that allows buyers to envision themselves living there. This can be a real challenge for many homeowners, as it can be difficult to detach emotionally from your home and see it through the eyes of a buyer.
A perfect example of this is a listing I had in San Francisco years ago. The owner of the property was a musician and his girlfriend was an artist. The home was a perfect reflection of their creative personalities, with colorful murals on the walls, an eclectic mix of furniture, and musical instruments everywhere. Unfortunately, their unique taste also made it very difficult for other buyers to envision themselves living there. We ended up staging the home with more neutral furnishings and paint in order to appeal to a wider range of buyers and ultimately sold the property for over the asking price.
If you’re having trouble seeing your home objectively, it may be helpful to hire a professional stager. A professional stager can help you clear your space and arrange your furniture in a way that makes your home feel more spacious and inviting. They can also offer suggestions for depersonalizing your space, such as removing family photos and personal mementos.
Making needed repairs
Another key selling strategy in a buyer’s market is to make any needed repairs before putting your home on the market. In a seller’s market, many homeowners could get away with leaving minor repairs undone, as buyers were often willing to overlook them in order to get their hands on a property. In fact, in this most recent seller’s market, many homes were selling “as is” with no repairs being made at all. Many buyers did not even include inspection contingencies in an effort to make their offers more attractive.
However, in a buyer’s market, buyers are often more choosy and have more negotiating power. And with more competition (in the form of more homes on the market), buyers can be more particular about the condition of a home. This means that sellers need to do everything they can to make their homes as appealing as possible. This includes making any needed repairs, such as fixing leaky faucets, addressing electrical or HVAC issues, and repairing any damage to the home’s exterior, like a worn-out roof.
If you’re selling your home right now — in the fall of 2022 — any repair that needs to be made should be done before putting your home on the market. Thinking otherwise is simply putting your home at a competitive disadvantage. Buyers will likely be looking for any reason to lowball their offer, and even small repairs can be used as leverage.
Bonus: Offer buyers a rate buydown
If you’re really looking to sweeten the pot, you can offer buyers a rate buydown. Offering a rate buydown is an especially attractive selling point in today’s market, and frankly is a strategy that is not being utilized enough. This is especially true with the surge in interest rates in 2022. By offering a rate buydown, you’re essentially locking in a lower interest rate for the buyer, which can save them hundreds or even thousands of dollars over the life of their loan.
Here’s a quick example: Let’s say your home is listed for $400,000. It’s been on the market for 30 days, with some showings but no offers. A typical response to this by many agents and sellers would be to reduce the price, perhaps $390,000. The reality of this, however, is that a $10,000 price reduction is not likely to make that much of a difference to buyers in terms of their monthly payments. In fact, it would only result in about a savings of $50 per month. However, in the same scenario, if a seller were to offer a 1% rate buydown, the buyer would be saving approximately $240 on their monthly payment. To put this in perspective, to accomplish the same result as a price adjustment, the seller would have to reduce their price by approximately $42,000 to provide the same monthly savings to the buyer. In this case, it simply makes more sense for a seller to offer the rate buydown, as they won’t have to reduce the sale price so dramatically, yet will still be offering a very attractive incentive to buyers.
Selling your home in a buyer’s market doesn’t have to be difficult — as long as you’re strategic about it. By pricing your home correctly, making needed repairs, and decluttering and depersonalizing your space, you can make your home more appealing to buyers. And if you really need an ace in the hole, offer a rate buydown. With these strategies, you’ll be at an advantage and will be more likely to sell for the price you want.
