In a buyers market, there are more homes for sale than there are buyers shopping for homes. This gives buyers the negotiating power, because many listings are currently competing with each other to get the attention of relatively few buyers. A buyers market is often prompted by low interest rates. Another indication of a buyers market is a having a high percentage of distressed properties available, such as foreclosures and short sales.
In contrast, a sellers market happens when the number of listings on the market is limited, so many buyers are competing for fewer homes, and sellers hold the negotiating capability.
To figure out the state of your local market, you can look at current inventory, or talk to your real estate agent.
Expectations when selling a home in a buyers market
While most major metropolitan areas have been sellers markets lately, buyers markets are out there. If you find yourself selling in a buyers market, it is important to be realistic about the way the market will affect both the price that you can sell your home for and the amount of time it will take to market.
In a buyers market, homes generally stay on the market longer, price cuts happen frequently, and homes are sold for less, relative to their listing price.
As mentioned earlier, when inventory is large, there are also a great deal of foreclosures and short sales on the market. If you have a well maintained, cared-for home, this can actually benefit you, because your house will look better than the many “sold as-is” homes flooding the market. Bear in mind, other sellers know this too, so that you can still expect loads of competition.
Preparing to market in a tough market
Selling a home in a buyers market can be an uphill battle, so it is important to mentally prepare yourself for what can be a stressful procedure. Make certain you’ll be able to emotionally separate what you love about your home from the feedback you get from buyers, and remind yourself that it’s normal to receive lowball offers in a buyers market.
If and when an offer does come in, do whatever you can to keep the negotiations going, staying open and flexible. Remember to consider the full package. There’s more to selling a home than just the sale price, and entertaining low offers doesn’t make you a desperate seller — it makes you a smart one, as you’re making the most of a trendy market.
If you don’t have wiggle room on price, consider other concessions that you could make to your buyer, including appliances, offering a suitable close date, or waiving contingencies.
If you are selling and buying at the same time — selling your current home so as to get a new property–you may want to wait to purchase your house until after your current house has sold. Purchasing is easy in a buyers market, so you should be able to find and purchase a new home quickly.
Home selling tips for listing in a buyers market
Sometimes, waiting for market conditions to improve isn’t an option. Here are a few steps to follow to successfully sell your home in a trendy buyers market.
Hire an experienced agent
Navigating a catchy local real estate market is infinitely easier with an experienced agent . A great agent can advise you on home updates local buyers lovepricing, successful marketing strategies, and negotiating tactics.
FSBO alternative: If you’re worried about having to accept a low sale price, you could consider listing your home for sale by owner. You won’t have the expertise of a veteran local agent, however you’ll eliminate the standard 3-percent commission an agent would receive.
Inspect and make repairs
More and more sellers are paying for a home inspection before listing their home so they know ahead of time what challenges they’ll come up against during the negotiation procedure.
With a comprehensive inspection report in hand, you can make any deal-breaking improvements before listing, and you’ll be able to identify repairs that might necessitate a price reduction.
MAKE THE NECESSARY REPAIRS
Tackle any major repairs found on your inspection — like a roof, furnace, or water heater — or expect to come down in price later in the process.
Fix cosmetic items that might keep your home from making a fantastic first impression. Common — and relatively affordable — fixes include painting, repairing window screens, and updating fixtures.
Update your home to attract buyers
Since your home will be competing with other homes in your area for a limited pool of buyers, making the updates that today’s buyers are looking for can really make your home stand out.
While there are some trends that may be more or less popular based on where you live (and your agent is an amazing resource to identify what buyers in your particular area are in search of).
Maximize marketing tactics
In a buyers market where your home must look its absolute best, drawing attention to your home’s most attractive features is more important than ever.
EXTERIOR HOME UPDATES
Your home only gets one first impression with a buyer, and usually it’s the view from the curb. Focus on:
Landscaping: Tidy up garden beds, plant colorful flowers, mow the lawn, and remove any leaves or debris. Twenty-nine percent of recent sellers said they improved their landscaping before selling.
Pressure washing: Make sure the driveway, walkway, and sidewalk are neat and clean.
Painting: Take a critical look at your home’s exterior and see if it has to be repainted. If not a full paint job, perhaps just a new coat of paint on the walls, doors, or window frames could freshen things up. Twenty-one percent of recent sellers reported painting the exterior of their homes.
Decorative flourishes: Budget-friendly updates like new house numbers, upgraded light fixtures, or a new mailbox can demonstrate that your home has been well maintained.
INTERIOR HOME UPDATES
On average, 79 percent of recent buyers said taking a private tour was extremely or very important to their home-buying decision. And 45 percent said the same of having the home free of the seller’s possessions.
Make certain your home’s interior looks its best for each and every showing.
Clean and declutter: Do a deep clean on your house, while also decluttering every room. Remove excess furniture that may be making a room seem small, pare down trinkets, and remove personal belongings such as photographs and keepsakes.
And don’t forget about closets and pantries. Sixty-four percent of buyers said that ample storage space was extremely or very important. Consider getting a storage unit and keeping items off-site while your home is on the market.
Stage the home: In a competitive market, home staging can be an important tool in making your home attractive to buyers. Consider hiring a professional stager to provide their unbiased input and expert recommendations on making each room look its very best.
Wash windows: Make sure that all windows are thoroughly cleaned, both interior and exterior, to let in as much natural light as possible.
ONLINE DETAILS THAT HELP YOU SELL FAST
Sources say that 79 percent of recent buyers reported searching for homes on the internet, so having a complete online listing that really shows off your home’s best features is an absolute necessity.
Get professional listing photos: Almost half of all recent buyers said that viewing professional pictures was extremely or very important to their home-buying decision. For only a few hundred dollars, a professional real estate photographer can capture your home in a way that makes it really stand out.
Have a complete listing description: In addition to photos, the listing description that shows up for your house on the MLS and online listing sites should be comprehensive, clearly written, and packed with key words about the features that buyers love the most. Your real estate agent should be able to help you identify the most popular home features locally.
Add video tours: Virtual tours, video walkthroughs, drone videos, and 3D Home tours are increasingly popular with younger buyers, and millennials now make up 42 percent of all home buyers and 61 percent of all first-time buyers.
The way to price a house in a buyers market is especially challenging. You want to price it competitively to attract buyers. Price it a little too high and shoppers won’t visit. Price it a little too low, and it can make you appear desperate and restrict how much profit you can turn.
The best way to know how to price your house to sell is to look at comparable homes that have recently sold in your area. Focus on homes that are similar in size, location, and features, and work with your real estate professional to think of a pricing strategy that works.
UNDERSTANDING YOUR PRICING STRATEGY
With assistance from your agent, think about which pricing strategy will work best for your home:
At market value: You aim to price your home at exactly what the market says is fair, which sets you up for a smooth, successful appraisal.
Below market value: Another strategy in a buyers market is to price your home a little (but not too much!) below market value to attract shoppers.
Above market value: Usually not your best option in a buyers market. When you list above market value, not only are you going to have a hard time attracting buyers, but if you do find a buyer, your home may appraise too low and the deal could fall apart, as lenders won’t finance homes that appraise lower than the sale price.
Avoid stale listings
A stale listing is a listing that has a DOM longer than other comparable homes for sale at the same time.
WHAT IS DOM?
DOM refers to”days on market,” and is a measurement of the number of days between when a home is first listed and once an offer is accepted. In a competitive sellers market, the DOM on area homes can be as brief as a few days. In a balanced market, it is likely a few weeks. And, in a buyers market, it can be a few months.
HOW DO I KNOW IF MY LISTING IS STALE?
While the average days on the market varies based on the state of your local real estate market, your listing may be considered stale when most of the other comparable properties have sold, and your home is still available. Another sign is when you encounter a significant drop off in online views, tour appointments, and open house attendance.
If your home listing has turned stale, consider removing it.If your schedule and finances allow, consider waiting a few months and re-listing your home when market conditions may be more favorable.
TRY TO OFFER BUYER INCENTIVES
An aspect of winning the sale in a trendy market is understanding the needs of your buyer. Look at sweetening the deal with incentives that speak to common buyer challenges.
Include add-ons: First-time buyers make up 46 percent of all buyers, so throwing in some extras — such as window treatments, lawn equipment, grills, or a home warranty — can make your home really stand out.
So, if there’s something on your home that appeals to your buyer and it is something you’re willing to part with, think about adding it into the negotiations.
Pay closing costs: In buyers markets, it is more common for buyers to ask (or sellers to offer) to pay some or all of the buyer’s closing costs. This is especially attractive to buyers who may not have a lot of liquid cash available.
Pay for repairs: If the buyer’s inspection turns up any issues, you can make the negotiating process a little easier by offering to make repairs before closing, or by lowering the price to cover the cost of the repairs.
Allow rent to own: Offering a rent-to-own agreement — where a future buyer pays monthly rent, a portion of which goes toward an eventual down payment — can be a good way to open the door to potential buyers who may not have the money to buy at the moment, but may down the road.
Owner financing: In a seller financing agreement, you accept a larger down payment on the property, but assume the risk of the buyer defaulting, as you are essentially serving as the lender. This can appeal to buyers who want to avoid high financing fees.
Pay discount points: When you offer to pay discount points for the buyer, you are essentially giving them money to lock in their interest rate at a lower rate than what they’d be able to get without those extra funds. It’s also called “buying down the rate.”
One point costs the equivalent of one percent of the sale price, and it typically helps the buyer lower their interest rate by one-eighth into one-quarter of a percent. This sort of incentive is appealing to borrowers looking to lower their monthly payment and the overall interest paid over the life of the loan. It can also make a mortgage more attainable for people with less-than-perfect credit scores.