The housing market is shifting from a red-hot seller’s market to one where buyers have some power. After nearly two years of a housing-supply shortage and bidding wars for most homes that did come on the market, higher mortgage rates and surging prices have put a damper on homebuyer demand.
For homeowners thinking of selling, strategies are shifting. To sell homes quickly for top dollar, sellers should stay one step ahead of the current housing market. We’ve compiled tips from Redfin economists and real estate agents on how to sell a home in the changing market. We advise sellers to contact a local Redfin real estate agent to come up with the best plan for their unique home and situation; the tips below are general.
Pricing and timing are always critical when it comes to selling a home, but especially in the current market. Redfin economists advise listing your home as soon as possible, and pricing it slightly lower than you would have earlier this year.
“During the pandemic-fueled housing frenzy, sellers could count on getting more money for their home than a neighbor who sold last month,” said Redfin Chief Economist Daryl Fairweather. “Those days are over. Now, you should expect to get a bit less than what your neighbor got a month ago–and in a month, you may get less than you would get now.”
“We don’t expect prices to fall lower than they were a year ago, but price growth will likely slow as the year goes on,” Fairweather continued. “Sellers should list their home as soon as they reasonably can.”
Sellers should also price accordingly. A good strategy is to price your home slightly lower than what comparable homes in your neighborhood sold for about a month ago, according to Fairweather. That should give sellers an advantage because their price will be slightly lower than comps in their area, drumming up interest from potential buyers. You want your home to be the obvious choice in your neighborhood. As prices decline slightly on a month-to-month basis, due partly to typical seasonality, a small discount from the previous month may be close to fair market value. Talk to your local Redfin real estate agent about pricing in your area, as prices may not decline from the month before in every part of the country.
For example, this Seattle condo sold for $450,000 in May. If you’re planning to sell a comparable condo in the same building in June, consider listing it for around $430,000–slightly less than the one listed a month earlier.
“Homes tend to sell for what they’re worth,” Fairweather said. “If your asking price is truly too low compared to other similar homes in the area, buyers will bid it up to a fair price. It’s better to price slightly low than receive zero offers.”
Rising mortgage rates are a major reason why sellers should price their home lower than they would have earlier in the year. Sellers should keep in mind that buyers are sensitive to mortgage rates, which have risen from about 3% to over 5% since the beginning of the year, bringing monthly mortgage payments up near record highs. Even if the price of a home is the same as it was earlier in 2022, monthly mortgage payments will be higher.
Other timing tips: Consider selling to an iBuyer, avoid listing your home before a holiday weekend and be ready for showings
Because selling your home fast is so important in today’s market, consider selling to an iBuyer like RedfinNow. iBuyers make all-cash offers–which aren’t impacted by mortgage rates rising–and close transactions as quickly as 10 days, so deals are unlikely to fall through.
It’s better to list sooner rather than later. But if you’re going to list your home later in the summer, avoid the week before holiday weekends. Homes listed just before holiday weekends tend to get less online pageviews and less interest from buyers, so don’t list right before the 4th of July or Labor Day.
Remember that access helps sell homes. Accommodate every showing request. If you’re living in your home while it’s on the market, try to always be ready to briefly leave the house–and leave it in a clean, uncluttered state–when last-minute tour requests come in. Hold an open house if you need to. If you’re not living in the home, consider a lockbox that lets prospective buyers enter the house on their own timeline. The more showings, the more likely you are to get an offer.
To keep the ball in the seller’s court, it’s best to avoid a price drop. But that’s not always possible: Nearly 1 in 5 home sellers dropped their price last month, not necessarily because they were overpriced, but because the market–and what buyers are willing to pay–has shifted since the beginning of the year.
If you need to drop the price of your home, be strategic. Have an ongoing conversation with your local agent about which comparable homes in your area are selling, what they’re selling for, and how to be competitive. Make sure your price remains slightly lower than the homes that aren’t selling.
A good rule of thumb is to look at the typical number of days homes stay on the market in your area. If that number has come and gone and you haven’t received any offers, it’s a sign you may need to lower your price.
Showings and tours are also strong indicators of when a price drop may be necessary. If your home is sitting on the market for two weeks and nobody has toured it, prospective buyers are probably passing over it because it seems too expensive. And if you’ve had 30 showings in two weeks and nobody has made an offer, the price may need to come down.
Get back to the roots of what sells a home. At the height of the market, strategies like staging and painting often weren’t critical for nice homes in desirable neighborhoods–sellers could expect to get multiple offers even without staging and with some visible flaws.
Now, sellers need to be thorough when it comes to preparing their home for photos and tours. But keep in mind that getting your home on the market quickly is key, so be reasonable: Make small repairs, stage your home and make sure the yard is clean, but don’t waste time with more time-consuming renovations.
“We’re in the middle of a housing-market correction. Sellers can still get an excellent price for their homes with the right strategy, but buyers are also able to be more discerning,” said Los Angeles Redfin agent Heidi Ludwig. “Buyers aren’t going to overpay for a home that needs a ton of work anymore. Give your home a deep clean. Stage it. Consider a fresh paint job. Do some landscaping. Put effort into selling your home, and you’ll attract a small pool of tenacious buyers.”
Redfin agents recommend the following strategies to prepare your home to show:
It may be a tough pill for sellers to swallow, but buyers have some power in today’s market. Just like they may pay less for a home than when mortgage rates were at a record low, buyers may be tougher negotiators–and sellers should make some concessions.
Sellers can no longer expect offers that waive inspection, financing and/or appraisal contingencies. With those contingencies in place, there’s room for a deal to fall through–and in most cases, it’s better to negotiate with the buyer and perhaps give up a few thousand dollars than search for a new buyer. Time is of the essence, and you don’t want to put the home back on the market and start over.
If a buyer requests repairs or money to do repairs themselves based on the inspection report–maybe the roof needs some new shingles or there’s a faulty drain in the bathroom–it’s in your best interest to say yes.
One perk that sellers can offer to sweeten the deal: Pay the buyer’s closing costs. If a negotiation has started, paying closing costs could be exactly what you need to close the deal.
While there isn’t as much demand from homebuyers as there was earlier this year, demand is still up from pre-pandemic levels.
People buy homes every day for all sorts of reasons. People move for new jobs, to be near family, to be in a different climate or because they recently retired, among many other personal reasons. Not everyone can drop out of the market because mortgage rates are up.
“One piece of advice for sellers: Remember that there are buyers out there looking for a home just like yours,” said Austin Redfin agent Crystal Lopez. “I can’t promise multiple offers anymore and they may not come on the first day, but we are getting strong offers when the home is priced right. Trust that you will find the right buyer for your home.”
