You list a home for sale, but instead of getting calls from potential buyers, all you hear are crickets. Although the market is stacked in favor of sellers (and their real estate agents) these days, the reverse could happen at any time. When there’s a lot of housing inventory available, the market favors the buyer, making getting a sale more difficult.
Selling a home in a buyer’s market isn’t impossible. It just takes a bit more creativity on the part of the agent and seller. You want to do everything in your power to make the home your listing stand head and shoulders above the rest.
Buyer’s Market vs. Seller’s Market
Before thinking of strategies to sell a house in a bad market, it helps to have a clear understanding of the difference between a buyer’s market and a seller’s market. The difference between the two boils down to the gap between supply and demand.
In a buyer’s market, a lot of properties are up for sale. There are usually more properties available for sale than people looking to buy a home. In the buyer’s market, people looking to purchase a house usually have more control over things, because they have so many options. They’re less likely to pay higher prices or go for houses that need repairs, which could explain why a house isn’t selling. For-sale properties linger on the market.
- For-sale properties linger on the market.
- Inventory is high.
- You notice six or more months of inventory on the market (Total number of active listings in one month divided by the number of sales for that month).
- Listing prices have dropped.
- You hear more from people looking to sell their homes than from people looking to list their homes.
In contrast, in a seller’s market, fewer properties are up for sale. Because the supply is less than the demand, homes that do get listed tend to sell a lot more quickly. In May 2017, for example, the average house was on the market for 27 days. The year before, when there was less demand, the average home sold in May was on the market for 32 days.
Another sign of a seller’s market is home prices that creep upwards. Since more people want to buy homes than homes are available for sale, it’s not uncommon for bidding wars to take place in a seller’s market. In June 2017, 40 percent of homes sold at their listing price or above it.
One additional sign of a seller’s market is that you and the seller usually have to do less to make a sale. When the cards are stacked in favor of a buyer, a seller often feels compelled to sweeten the deal somehow and make his or her house stand out. But there’s no real need to do that in a seller’s market since buyers have fewer options.
Tips to Sell a Home in a Buyer’s Market
Although 2017 is proving to be a seller’s market in most areas of the US, the real estate market is cyclical. All it takes is a few new listings to flood the market, and the pendulum can swing from a seller’s to a buyer’s market in no time at all. That’s why it pays to be prepared and to have a few tricks up your sleeve to help make a sale even in a bad market.
Keep an Eye on the Competition
You and the seller might need to readjust your expectations to sell a home in a buyer’s market. That might mean putting the home up for sale for less than the seller would like, based on the current market.
One way to make sure you’re pricing the home so that it will sell is to pay attention to the competition. Just as you would in a seller’s market, you’ll want to pull the comparables, or “comps,” to get an idea of how the market in a particular area is moving. Comps are homes in the same neighborhood of the home you’re about to list. They should be similar to your listing in regards to size, age and amenities.
When sizing up the competition and pricing the home so that it will move quickly, it helps to pay attention to the following:
- When the homes sold. Since the market can fluctuate so much in such a short amount of time, it helps to look at the most recently sold comparable properties. The price of houses that sold six months to a year ago might reflect a seller’s market when there was less available and more demand from buyers. For best results, try to look at the price of homes that sold no more than three months ago.
- Location. The closer the comps are to the property you’re listing, the more accurate they’ll be. Houses that sold on the same block are better than houses that sold in the same neighborhood. Homes that sold in the same area are preferable to homes that sold elsewhere in the town or city.
- Amenities and Features. It doesn’t help to compare your move-in ready listing to a house that was sold “as-is” or as an investment property. Pay attention to the features of other recently sold homes when you’re listing a property. The more like the home you’re trying to sell they are, the better you’ll be able to get an idea of market value and price.
Pricing the home right is just the first step towards selling it in a crowded market.
Help the Seller Prep the Home
Think about a recent purchase you made, large or small. There must have been something about the item you bought that convinced you that it was the one for you. If your purchasing experience was similar to a real estate seller’s market, the fact that the item was the only available option might have been enough to sway you.
But if you had more options, then whoever sold you the item needed to do more to sway you. Perhaps they advertised the product in a way that you made you feel you had to have it. Or maybe they did everything in their power to convince you that the item was a smart purchase and that you’d be better off with it than with any other product.
That’s your job as the real estate agent. You need to work with the seller to help them make the home ready for sale and to make it as appealing as it can be. Here are three tips for selling a house in a bad market.
- Encourage the Seller to Declutter
The better a home looks when people stop by to view it, the more likely it is to sell. When buyers see a house that is full of tchotchkes and boxes of “stuff,” they have trouble envisioning the home as their own. It looks too lived in and too much like the property of the current owner.
As your seller gets ready to put a house up for sale, encourage them to tidy up and pare down. They don’t have to get rid of stuff, but the more belongings they can move out of the home and into storage or a new residence, the better.
Along with clearing out clutter and excess furniture, it’s also a good idea to have your seller spruce up the property overall. They don’t have to make massive changes. Small things, like replacing rusty faucets or doorknobs, can go a long way towards making a home stand out in a crowded market.
- Work with a Stager (or Stage It Yourself)
If you want to take a listing from “ho-hum” to “wow, let’s buy this today!” consider hiring a stager. The services of a stager might even be something you consider offering sellers who decide to hire you, to make your services more appealing. If you’ve got a good eye, you might even be able to provide staging services yourself without having to hire an additional person.
According to the 2017 Profile of Home Staging from the National Association of Realtors, 39 percent of seller’s agents stated that staging a home reduced the amount of time it spent on the market. Nearly 30 percent of seller’s agents noted an increase in the amount offered by buyers when a home was staged.
- Have a Home Inspection
Although many people assume that the onus is on the buyer to schedule a home inspection before closing on a property, an inspection can also benefit a seller. To give your listing an edge in a competitive market, it’s a good idea to encourage your seller to schedule a pre-inspection.
A pre-listing home inspection can do two things. First, it puts the seller’s mind at ease, as they can identify and fix any issues with the home before it goes on the market. An inspection includes checking 1,600 different areas of a house. With so many areas and small details, there’s a lot that can go wrong. Having the inspection will let a seller know what they should fix or if the price of the home should be reduced to reflect the issues the house has.
Scheduling an inspection before the house goes on the market also gives the seller time to fix any problems. Usually, when a buyer-sponsored home inspection reveals an issue, the seller doesn’t have much time to research contractors or come up with a way to fix the problem. They need to act quickly and make a decision, or else the buyer will walk. When there are multiple homes for every buyer out there, that’s the last thing you want to happen.
A pre-listing inspection can also help a seller see the bigger picture. For example, they might think that the problem is a leaky faucet or a faulty toilet, when the problem is something bigger, such as an issue with the septic system. Having an inspection initially can help a seller save money and tackle the problem itself, rather than the symptoms.
If a seller does decide to have an inspection before listing the home, remind them of the disclosure rules in your state. In Pennsylvania, for example, sellers need to disclose all known defects of a house to a buyer if those defects can’t be easily observed. In Maryland, sellers can either make a disclaimer about the home’s condition or disclose known defects to buyers.
Market, Market, Market
Once the home is prepped and ready for sale, it’s up to you as the seller’s agent to market it and make sure that potential buyers find out about the property. It’s not enough to throw up a “For Sale” sign and make sure the property appears online. You also want to make it stand out from all the other homes on the market.
Think Beyond the Open House
Although open houses give nosy neighbors and curious passersby a chance to get a peek at a property, they aren’t how most people go about buying a home. In 2014, less than 10 percent of buyers purchased a home after seeing an open house or “For Sale” sign.
Instead of relying on potential connections made during an open house, it’s useful to use your network, and that of your seller, to find buyers. For example, you can help the seller plan a “House for Sale” party and encourage him or her to invite family and friends. The goal of the party isn’t necessarily to sell the house to someone your seller knows, but to give them details and information about the property so that they can talk it up to anyone they know who’s looking to buy.
You can also use your network of real estate agents to promote the house. You probably know at least one or two agents who mainly work with buyers. Let them know about your listing and invite them to take a look. Taking a direct approach to marketing a house can help you sell it faster in a buyer’s market.
Spice Up An Online Listing
A house that’s for sale quickly finds its way to various real estate websites, such as Zillow and Trulia. While some agents seem content to put up lackluster photos and few details about the property, the more information you provide, the more appealing your listing will look to buyers.
Photography is an essential part of an online listing. Homes with high-quality, high-resolution, professional photos tend to spend about 30 fewer days on the market than listings that don’t include professional photos. Homes listed online with professional photos also tend to sell for about two percent more than those without pictures.
Remember that you don’t only have to rely on real estate websites to market your listing online. Use your social media profile to promote your listings and consider creating a website for each home you have for sale. That way, potential buyers can browse through photos and learn a lot about the property before scheduling a viewing.
Give the Buyer Bonuses
If a house still isn’t selling, here’s one last tip to help move it. Considerable having the seller offer incentives or rewards to the buyer. For example, in a buyer’s market, it’s fairly common for a seller to pay some or all of the buyer’s closing costs or to give the buyer credit for those costs.
Another way to sweeten the deal and woo buyers is to be willing to negotiate with them or offer extras. For example, you might encourage the seller to offer to pay for certain repairs or to upgrade certain features of the home before moving out. Some sellers let buyers “try before they buy” by having the buyers stay over in the home for a night or two.
What affects your bottom line the most as a real estate agent is whether or not you sold a house. Although marketing and preparing a home in a buyer’s market might cost you and the seller a bit more, that extra cost and effort will be worth it in the end when the home sells.
To learn more about the difference using professional photography in your real estate listings can make for your home sales, contact Real Estate Exposures today.