What home sellers should do in a buyer’s market
The market has shifted: are we still in a seller’s market? And if not, what should sellers do in a buyer’s market? At Showhomes, we closely follow the Houston luxury market in order to better understand the external drivers for our business, and see encouraging trends for 2023 that we’d like to share with our agents and clients. Let’s take a look.
Figure 1 shows the number of home sold (in the previous 30 days) that were listed at $1M or higher. We have found this to be a good indicator of luxury market activity. The graph shows a strong, regular annual cycle, and the negative impact of interest rate hikes in the 2nd half of 2022. If 2023 cycles are similar to prior years, we are poised to see a strengthening market through the next 6 months or so.
Figure 2 shows the difference between the number of homes listed and the number of homes sold (in the previous 30 days), so is a good proxy for the total home inventory in the Houston market. By extension, it is also an indicator of Buyer’s (high inventory) vs Seller’s (low inventory) markets. The graph clearly shows the strong Seller’s market from mid-2021 to mid-2022, but also shows we’ve emerged from that now into pre-Covid inventory levels.
In other words, people selling homes now should view this as a Buyer’s Market.
So we’re in a buyer’s market: what does this mean for you as a seller?
Lets look at the characteristics of a Buyer’s market:
- Homes sell slowly
- Homes sell at or below list price
- Home prices are falling
- Plenty of homes are on the market
If you’re a seller, this means there is even more competition for buyer attention and you MUST stand out. Presentation is critical to attracting buyers, making a great impression, and selling your home for top dollar in less time. That means pro staging, pro photos, and a dedicated online strategy with an experienced realtor. Forbes suggests the following:
1. Highlight Your Home’s Competitive Advantage (this is where staging makes the difference)
Before you list your home, see what else is on the market in your asking price range. What does your home offer that buyers will find more attractive? Maybe you have a convenient first floor unit or a quiet top floor unit, a house with convenient freeway access or a perfect backyard for dog owners.
Don’t have a competitive advantage? Create one. Pack up your personal possessions and have your home professionally staged. Get the interior and exterior painted in up-to-date, broadly appealing colors. Hire a handyman to finish all those nagging projects you never got around to.
2. Budget for Concessions
Many sellers need to clear a certain price for their home so they can pay off the mortgage, make a down payment on their next home and cover closing costs and moving expenses. But if you’re in a market where buyers are likely to ask for help with closing costs or repairs, plan ahead. Figure out how you can afford to offer this sweetener if buyers ask for it. Maybe you can get a better deal on your next mortgage or finance your own closing costs.
3. Do a Pre-inspection
One way to make your home more attractive to potential buyers is to hire an inspector yourself to identify problems that you should fix before listing. Taking this extra step will theoretically allow your home to sail through the appraisal and inspection process once you have an interested buyer.
Read more tips here: 7 Sins that Sink a Sale
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Source: Data is from Redfin for the area inside the Houston City Limit from June 2020 to Feb 2023.