Suddenly, the Housing Market Is Not All About the Sellers
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Selling a home these days isn't as effortless as a year ago, when a seller could choose among competing buyers.
“Overall, I’d say the buying/selling experience right now is comparable to the summer of 2019,” Dana Bull, a Realtor in the Boston area, said in an email. Today, “there’s still low inventory and it’s a very active market, but not as cutthroat and without underlying tones of desperation.”
Last year's home-selling advice consisted largely of tips for choosing the best offer. But those recommendations have grown stale: Homes are receiving fewer offers amid slowing sales.
Sellers need fresh guidance. Buyers are taking more time, and they're getting picky. Here are home-selling suggestions from real estate agents.
Higher rates = fewer buyers and fewer offers
It's still a seller's market, in which would-be buyers outnumber sellers, but it isn't as imbalanced as it used to be, because mortgage rates skyrocketed this year and pushed homes past the point of affordability for some. The result is fewer home sales.
Homes are also taking longer to sell: According to real estate brokerage Redfin, 61.2% of homes for sale in July were on the market at least 30 days, compared with 54.4% in July 2021.
Sellers felt confident of getting multiple offers in 2021, but they receive fewer offers now. Homes for sale in June received an average of 3.4 offers, down from 4.4 offers in June 2021, according to the National Association of Realtors' monthly Confidence Index.
Not long ago, it was common to list a property on Tuesday and sell it by the weekend, says Terri Robinson, a Realtor in Ashburn, Virginia. "Or you had people putting in offer deadlines saying, 'Please submit all offers by 4 p.m. Sunday.' Now that language has disappeared."
Buyers await price reductions
Here's the time-honored way to sell a house:
List it for substantially more than your target price.
Negotiate with a buyer who offers less than you expect to get.
That strategy isn't ideal when selling to today's first-time buyers.
"Home buyers will ignore homes which are perceived as overpriced," Chuck Vander Stelt, a Realtor in Valparaiso, Indiana, said in an email. This is especially true of millennial and Generation Z buyers, he said, who are more comfortable viewing and making offers on houses for which the sellers have set a "justifiable price."
Michelle Doherty, a Realtor in northern Virginia, notices the same thing. Buyers "hold off, thinking, 'You know what? We'll wait for them to drop [the price].'" She prods clients to make offers below asking instead of waiting for sellers to reduce prices. The worst that sellers can say is no, she points out.
Pricing strategy is still fundamental
Keeping the above in mind, agents and their clients still set the asking price using traditional techniques: looking up prices of recent comparable sales, then making adjustments based on the home's condition and the seller's patience.
"If they need the proceeds to secure another home, they may be inclined to price on the low end of the range to ensure enough interest" and sell quickly, Bull said.
Bull added: "I tell my sellers that it’s OK to go with their 'reach price' but to be prepared to react to market feedback if the home is not selling. A price reduction often attracts a new set of buyers and can get those who are already considering the home at the original price to take action."
More sellers are cutting their asking prices. Reductions almost doubled in one year, from 134,036 in June 2021 to 266,812 in June 2022, according to data from Realtor.com.
Buyers don’t want to inherit costly repairs
All these agents underscored the need to clean the house thoroughly, repaint or at least touch up, and beautify the outside. "I think that's something we got away from for a long time," Doherty says. If the seller doesn't have time or money to make the place immaculate, she adds, "then you just have to price it in accordance with what the product looks like."
But beauty is more than Sheetrock-deep to today's buyers. After they make down payments, pay loan closing costs and spring for pizza for friends who helped them move, they want assurance that they won't get torched by expensive repairs in the first two or three years, Vander Stelt said.
"Home sellers can get more for their homes if they can illustrate a low risk of the new owner having a major expense in the near future," he said. He suggests hiring an inspector before listing the home, addressing issues that are identified, rehiring the inspector to prepare a report after repairs are made, then sharing the report with buyers.
Vander Stelt acknowledged that a seller these days is unlikely to recoup the cost of replacing a roof, furnace or water heater. But, he said, "When sellers remove all doubt, buyers react by making offers more quickly and typically pay a higher price."
Bidding wars aren't necessary
Sales success isn't measured by the number of competing offers that a property attracts. One acceptable offer is enough.
"Yes, the market has changed," Robinson says. "But more importantly, houses are still going under contract, and yours will, too. It may take a little bit longer, and we may get one or two offers versus the 10 or 15 that people were getting in the past. But the key here is that we're getting the offers."