How to Sell a Home in a Shifting Market
If you’re in the real estate business or are a homeowner thinking about selling, you’ve probably heard that the market has “shifted.” A shifting market means that market trends are different than they were a few months ago and that seller expectations should move with those trends.
What is a shifting market?
Homeowners all over Southern California watched with astonishment as home prices rose throughout the pandemic and continued to rise for months. Real estate professionals call this a Unicorn Market: one with unprecedented growth but that is not sustainable in the long term. So the current shift is inevitable, and it is normal for the market to slow down and even decline a bit in the near term. The market that favored sellers the past couple of years has shifted to where the buyer is favored in a transaction.
Why is the market shifting?
Experts point to two primary reasons the market pendulum has swung toward buyers. First, rising mortgage interest rates have put the brakes on over-exuberant home purchases—the California Buyer Purchasing Power Index (BPPI) reported in April that a homebuyer could afford 12.7% less home than a year earlier. The organization also projects that buying buyers will continue to fall as interest rates rise in the near future.
Second, homes have been in high demand recently, mostly due to historically low-interest rates. Rising rates mean more potential homebuyers are out of the market, so the supply/demand equation is more balanced—a boon for buyers.
Research the Market and Implement an Updated Strategy
The most effective way to sell your home in any market is to dig deep into the market data for your area. When the market is unsettled but moving towards favoring buyers, doing your research is critical in developing a successful marketing strategy. The downside of working with a traditional real estate agent is that they are vested in selling your home for the absolute top dollar. At the same time, your primary goal is focused on time—getting a contract and closing as quickly as possible. A huge advantage that Offercity provides our customers is that we agree with that position; time is money, and the sooner you get your money, the better.
If time isn’t an issue, then you can strategize for profit. Your real estate agent has access to all the tools you’ll need to analyze the market—data such as recent sales activity, comparables, days on market, showings, and all the minute details that paint the picture of the market in real time.
Choosing an Optimal Pricing Strategy
Here’s where your understanding of a shifting market comes into play. When the market favored sellers, you could look at recent comparable sales and price a bit higher, knowing that your price would likely be met, even with multiple offers. In a buyers market, you’ve got to develop a different pricing strategy—with the realization that these days, you’ve got to be the one who demonstrates flexibility.
Price ahead of the market
It’s hard for sellers to swallow, but when the market shifts towards buyers and interest rates are projected to rise even further, you should price your home ahead of where the market is today. What this means in real terms is that if prices have declined 8% over the past quarter, then your pricing strategy should factor in that drop and set your price lower than the market indicates right now. Real estate experts say that new homes on the market are much like new cars—their value is highest when they’re new to the market. Every day your home sits there, its value decreases.
Get your home in tip-top shape
Again, if time isn’t a factor in your marketing strategy, spending a little cash and sweat equity on improving your home will probably yield a higher price and a quicker sale. A traditional agent will try to sell you on the idea of having your home professionally staged, and if time and money aren’t a big deal, why not? But if you’re like most sellers and want to get the house sold with the least expense, there are simple things you can do to spruce up on the cheap.
Tips for DIY home staging
Houses sell better when potential buyers can see themselves living in that space. Although it seems counterintuitive—most people don’t live in staged homes—getting rid of clutter and personal items is a great first step towards getting show-ready. Touch up paint, repair leaky faucets, and loose hinges, and spend a weekend deep cleaning. You’ll be surprised how much larger a tidy and clean home looks. Clean up the yard—prune any dead or in-the-way branches, keep the lawn mowed, and wash the windows. If you can get your hands on a power washer, wash the exterior of the house.
Be Realistic in Your Expectations
When the market is shifting towards buyers, sellers must be realistic in their expectations for a sale. This not only means that you should consider every reasonable offer but also that you look at more than the bottom line. Buyers in this market have expectations, which often means many seller concessions that cut into your proceeds. A low offer can yield more cash to you if there’s a competing offer closer to your price but has a longer contract-to-close period (meaning you’re on the hook for another mortgage payment) or you want credit for repairs. In short, take the offer and run with it.
Offercity Buys Your Home Outright
Offercity offers you a new way to sell your home. We’ll buy it outright with cash and promise to close more quickly than a traditional buyer could hope for. Even better, we buy as-is—you don’t have to spend time or money decluttering, landscaping, getting inspections, or paying realtor fees. Our business model markets to qualified local buyers and investors who can make an offer immediately, and close within a couple of weeks. Contact us if you’re ready to sell the Offercity way.