In the last few months, I have received numerous calls from Sellers who are in a panic. They have their home listed and they have not received a single offer on their home. In some cases, the home has only been listed for a few weeks! However, there have been cases where the home has been listed for a number of months. The pendulum of the real estate market has certainly swung in the opposite direction, and rather quickly!! So what exactly does a Buyer’s market mean for Sellers?
Gone are days when sellers could do nothing in the terms of getting their homes ready for sale, ask top dollar and still sell a dated home in a bidding war over the weekend. Am I saying this will never happen, of course not! However, that is now a rare exception and no longer the norm. There is simply more available inventory for Buyers. This means Buyers can take their time making a decision and be more selective. From what we’ve seen over the last few months, they have certainly become much more selective!
Now Buyers are paying close attention to all the details and imperfections and “potential” problems. If they don’t like what they see it will cause them to walk out the door and they’ll be off to the next house. In the past, even if they saw the “issues”, they were willing to overlook them because there was so little else to choose from. Now, there is substantially more inventory so they have the luxury of time to look and see what else is available without the panic of the bidding war or the offers date.
We do still see homes with offers dates. They will typically be homes that are priced very aggressively and are hoping to attract multiple bidders. However, this strategy has backfired a number of times and resulted in no offers, or only one offer at well below what the home owner was hoping to receive. This can become very risky. If you list low, then receive no offers, it’s next to impossible to up the price to what you really want. Yet, we have seen this happen. Most Buyers that may have been interested and were waiting to see if there was a bidding war, will simply walk away once you raise the price. If they were marginally interested in the lower price, the chances of them being interested in a higher price are really not great!
So the number one rule, is that pricing your home fairly and properly for its age condition and location becomes critical in the success of the sale. Even if you overspent on your home when purchasing, gambled in a bidding war, or over-improved it with the hopes of better returns in a market that was seeing double digit market increases for years, you may have to make some tough choices, if you really need to sell it now. Depending on your circumstances, it may be better to wait things out a few years until you can get your money back. Or if you are not in that position, it may be best to minimize your losses, take what you can get and move on as quickly as possible. What may have been realistic and expected a few years or even months ago is no longer realistic. The rules have changed! Just like buyers struggled for years, so now must sellers take their turn as the pendulum swings in the opposite direction. Just because a neighbors’ home sold 2 years ago for an outrageous amount, that doesn’t mean you will get the same price. Don’t expect it and blame the Realtors because they are telling you, your home’s evaluation is below what you hoped or expected. Isn’t it better to work with someone who will be honest with you up front? There are some who will promise you the unrealistic list price you want, then once they have the listing, continually drop the price by tens of thousands of dollars until it is sold. This is not in your favour! It’s nothing more than a strategy to secure a listing.
I recommend, you discuss the top asking price and the lowest asking price you are comfortable with before you list. Nothing bugs me more than someone who promises a ridiculously high price, knowing it’s over-priced, just to get the listing. Then they proceed to drop the price $40,000, $50,000, $60,000 or more, until it’s sold. This is not sales, its trapping someone into a contract and seriously under delivering in service, just to get a commission. Rather than dropping the price repeatedly, consider staging. We could do a real top notch stage job for well under $5000 in most cases, so why drop the price $10,000 or $20,000 before looking at all the other options?
When your Realtor asks for a price drop, they often recommend this based on the feedback of other Realtors and their clients. However, if they have dropped the price substantially and repeatedly on you, it may be better to withdraw the listing and once the waiting period has expired, look for a new Realtor. Depending on the price of your home, a drop of 5-10% may be quite reasonable. However, a price drop of $60,000 on a $250,000 property is not! It simply wasn’t priced right to begin with!
Pricing will be the first key factor to get people’s interest. So make sure you are priced fairly. If your Realtor recommends $299,900 and you want $310,000 to pay for the Real Estate Commissions – you have just eliminated all the buyers who were looking at $300,000 and down. It also means your home will now be competing with the other homes in the 300,000 – 350,000 price range which may be nicer than yours, bigger, or have some other important features that justify the additional price. When buyers compare your home to these, it will come up lacking because it’s in the wrong price range for comparable properties. However, if you’re Realtor suggests $299,900 it’s because your home is in the top of its comparable price bracket. This means your home will look more desirable than others in the price range. It will have more features, square footage or a better layout that buyers are willing to pay more for than the other homes. Chances are it will sell faster and closer to the price you are asking. So don’t out price yourself, or you may not be selling your home anytime soon.
There are many things sellers can do to get their homes sold, quickly and at a fair market price! Take the time to get your home ready for sale. Cleaning, de-cluttering and basic repairs and maintenance may have been able to be overlooked in the past, but no longer! If every other home you are competing against has made the effort and yours is only minimal effort (or none at all) – it will show and buyers will move onto the next home! These will continue to be discussed over the next few weeks as now more than ever, it takes 2 things to sell a property – the condition and the price!