A great article from our friends at Realtor.com on this changing home market! Yes… Things have shifted, but there are still plenty of opportunities to buy or sell a home.
Oct 26, 2022
For the past two years, the real estate market has very much been a seller’s dream. In fact, all a homeowner had to do was put up the proverbial “For Sale” sign, and multiple offers would almost instantly materialize.
“It was a crazy time,” says Jason Gelios, a real estate agent with Community Choice Realty in Southeast Michigan and author of “Think Like a Realtor.” “People were pricing higher and getting bidding wars above that price, and inventory was so low that it was causing a frenzy. Think Black Friday.”
However, the post-COVID-19 housing market finally seems to be regaining some equilibrium. And while prospective home sellers may lament that they missed their prime window, in reality, this is still a terrific time to sell. In fact, according to a recent Realtor.com® home seller survey, 95% of sellers who sold their home in the past year got more than they paid for it.
Nonetheless, some of the more prominent pandemic trends have changed, so sellers might wish to adjust accordingly to get the best deal possible. To help, here are some of the most common home-selling rules you’ve no doubt heard that are actually fine (in fact, better) to break today.
1. ‘Price your home as high as you please’
During the height of the pandemic, people could price their homes above market value and still spark a bidding war.
“The pandemic rule was to throw the home on the market at a high price and watch the people flock in,” says Gelios. “But this doesn’t work in the current housing market. With more homes becoming available, it’s crucial for a seller to set the right price at the start.”
“Many of our sellers are frustrated that they ‘missed the market’ or are disappointed when they hear what list price we would advise. [They ask] ‘Why can’t I list it at the same sales price as my neighbor sold eight months ago?’” says Colleen Gustavson Brownell, a real estate agent with Hunt Country Sotheby’s International Realty in Leesburg, VA.
She predicts most markets will see a 10% to 15% decrease in sales price over the next 18 months from pandemic-high sales prices.
“We’ve already seen a 5% decrease in sales prices recently in our area,” says Brownell. “However, we are still in a robust real estate market, and most sellers can still net a healthy, sizable profit.”
“We know that lately, 1 in 5 sellers have had to cut their list price,” says Danielle Hale, chief economist for Realtor.com. “So the most important advice is to be flexible and listen to what the market is telling you. Keep in mind that even if you don’t sell for the price you initially asked for, you’re likely walking away with a substantial amount of equity in your pocket because homeowners are sitting on a record-high level of equity.”
2. ‘There’s no need to make repairs—it’s fine to sell as is’
When it was purely a seller’s market during the pandemic, it’s easy to see why homeowners didn’t have to make repairs to fetch multiple offers.
“Homebuyers were literally lining up on the front lawn to view a home with dozens of offers pouring in the same day,” says Gelios.
That’s no longer the case, he says. “Simply put, the glory days of a home selling in any condition for top dollar are gone.”
Gelios recalls recently advising a client to make several repairs, including replacing the old carpeting, before listing her home.
“My client had assumed that with a healthy amount of buyers, she could refuse to make the changes,” he says. “It was to my seller’s dismay that most of the feedback we received once the home was listed was about the worn carpet. Had the seller taken my advice about replacing the carpet, the home would have sold faster and for more money.”
Buyers are also starting to ask for the home inspection contingency again—which is leading them to then request repairs pre-sale.
In fact, according to the Realtor.com sellers survey, 67% of homeowners who sold in August negotiated with buyers who wanted repairs done (in comparison with 31% in the previous six to 12 months). If you want a swift, smooth sale, fix things before you list.
3. ‘There’s no need to offer any concessions—buyers are desperate’
During the pandemic, mortgage rates were at rock bottom. That, combined with people’s desire for more space, sparked the home sale heyday of the past two years.
But recently, mortgage rates topped 6% for the first time since 2008. What does that mean for sellers?
Well, to begin with, these high rates are precipitating a cooler housing market since many homebuyers are unable to qualify for mortgages at the same level they were previously.
“With higher interest rates, many buyers in our market are qualifying for $100,000 less than they would have with previous rates,” says Brownell.
“The current volatile environment is certainly affecting sellers, not just buyers,” says Tan Tunador, a senior loan officer with Atlantic Coast Mortgage in Loudon County, VA. “For example, a recent client who bought her new house without selling her previous home expected a quick sale, and is now wondering what to do as her previous home is sitting unsold for over 30 days.”
So what should a seller with a stale listing do? Tunador suggests that sellers offer concessions such as helping homebuyers “buy down their interest rate” and/or pay some of the closing costs.
“This strategy can work to spark a contract if advertised well, or when a seller gets a low offer,” says Tunador. “It’s a way to counter the offer with a ‘win-win’ scenario.”
4. ‘Your home is bound to sell fast’
Pre-pandemic, it easily took three to six months and sometimes a year to sell a home. Once the pandemic began, however, the scarcity of homes on the market brought about offers within days of listing a home for sale.
“Suddenly sellers would wait to list their home until the last minute because they knew it would be under contract within days instead of months—which propagated even more scarcity of inventory,” says Elizabeth Sugar Boese, a real estate agent with Coldwell Banker Realty in Boulder, CO.
“This made it easy for sellers to have a good idea that their home would be sold within 30 days of listing, which also led to many 60-day post-occupancy requests from sellers to enable them to close on their new home and move without a double payment on two homes,” she continues.
Currently, however, the time it takes to sell a home is shifting back toward pre-pandemic timelines, Boese says. “The trend is moving toward longer days on market.”
In fact, recent statistics found that the average time on the market for a home is 50 days. That’s seven days more than last year, but still 18 days less than the typical time on the market before the pandemic.
5. ‘Home staging isn’t necessary’
During the pandemic, people didn’t have to put much into making their homes sellable. The fact that a home was available for sale seemed sufficient. But now that the inventory of available homes is increasing, it would behoove sellers seeking the best offers to gussy things up before putting their home on the multiple listing service.
During the pandemic, “when a new listing created a feeding frenzy, sellers did not have to prepare their home to appeal to buyers,” says Bruce Ailion, a real estate lawyer and agent with Re/Max Town & Country in Atlanta. “Today, buyers have become pickier about the property.”
In other words, if you don’t want to be left behind, you probably need to make some effort to present your home in the best light. That means tidying it up and staging it. In fact, studies show that staged homes sell 88% faster and at 20% higher prices than nonstaged homes.
6. ‘It doesn’t matter when you put your home on the market’
List it and they will come. That was the M.O. during the pandemic. It didn’t matter the season, month, or day.
Not so anymore. Spring and summer are trending for increased home sales once again.
“During the pandemic, the housing market stayed consistently busy through fall, well into the winter months,” says Brian Kwilosz, owner of EXIT Real Estate Partners near Chicago. “This year, however, we seem to have returned to a more traditional cycle—at least in the Chicagoland area—as activity has started to slow in early fall after an intense spring market.”
Last year still saw robust sales during the 2021 winter months owing to low inventory. But now, as the market readjusts and there are more houses available to homebuyers, sellers can expect more of a slowdown as they approach the holidays, with interest returning in the new year.