We’ve been very fortunate that the real estate market has been on the rise during the last number of years. However, in 2022 with the rising interest rates, it seems as though we’ve reached the peak of the housing market and are entering a declining market. While we’re not expecting drastic “fall off a cliff” price drops in New York in the upcoming years, this will be the first time we’re seeing a declining market since the 2008 housing crash.
It was easy to sell a home in recent years when housing demand was greatly outpacing the number of homes listed for sale. However, if you are looking to sell your home in a declining market, you need to be more thoughtful as to how you approach the situation. Here are some tips about how to have the most success when selling your home in a declining market.
Have Reasonable Expectations
Know that selling in a down market won’t be as easy as selling in an up market. A down market is also known as a “buyer’s market” for a reason – the buyers are sitting in the power position and will have the upper hand during any negotiations. If you need to sell during a declining market, and can’t wait or don’t want to wait for the market to rebound, you have to go into the process by acknowledging that you may get a lower price than what you were hoping for prior to the downturn. In this kind of market, don’t let your pride get in the way, it’s not worth losing a sale over a few thousand dollars.
Price Your Home Correctly & Aggressively
Probably the most important factor when selling your home in a declining market is to price the home correctly. If you are overpriced, or even at the top end of the market price, the very real risk is that the market continues to decline while your home is listed.
Here’s an example that we see all too often in a down market. The house was originally listed at $700k when it was really worth $650k in the current market conditions. Then after sitting on the market for 60 days, you reduce the price to $650k, but by this point, the house is only worth $600k. And this cycle can continue as the market continues to drop.
If you want your home to sell in this down market, you want to be very aggressive with your price so that you don’t get stuck trying to catch a falling knife. Making the decision early on to take a bit less money than you were hoping for, often results in receiving more money than you would have received if you had listed your home at a higher price.
Invest in the Home
We don’t normally recommend fixing up your home prior to a sale because there is not a good return on investment for homeowners. However, in a down market, you may want to consider some small cosmetic upgrades in order to help the house sell quickly. Since time is not on your side in a declining market, the speed of the sale may offset your investment. You can consider repainting, decluttering, and resealing the driveway. Additionally, if you are not living in the property, you may want to consider staging the home to help attract more buyers. In a buyer’s market, the buyers are looking for perfection and have the ability to be picky, so it’s important to make the best impression possible.
Consider not Selling in a Declining Market
You may not want to hear it, but sometimes the best option is to sit and wait. If you don’t need to sell, evaluate whether selling is the best option for you. If you are looking to upsize your home to a more expensive property, having the ability to purchase a more expensive home in a declining market will offer some benefits. However, if you are downsizing and looking to move into a less expensive property, selling during a declining market will not be advantageous.
The Highest Offer Isn’t Always the Best
Especially in the rising interest rate environment that we are in, the highest offer isn’t always the best. In a market where prices are declining, you are losing money every day that your house isn’t sold. When evaluating offers you receive, cash is king. Offers that come with appraisal and mortgage contingencies come with their own risks. In a declining market, your home may fail to appraise by the time it is set to close and with rising interest rates, buyers are failing to qualify for mortgages they were qualified for under lower rates due to no fault of their own. This can leave you having lost 2-3 months pursuing a buyer that fails to close while being left to start over again after prices have eroded during that period.
For this reason, you may want to consider selling to an all-cash buyer as-is. If you are looking to sell your home and close quickly to avoid the declining market, contact us for a no-obligation cash offer on your home.