The onset of COVID created a strong seller’s market that saw housing prices go through the roof. However, as more inventory has come on the market and the Bank of Canada has raised interest rates, there’s been a shift, and we’re now firmly in a buyer’s market. There’s a lot of remorse out there. Buyers who’ve recently purchased and missed the price drop are disappointed that they didn’t wait. Sellers also regret missing the peak and are nervous if they haven’t closed yet. Only one thing is sure; the market is impossible to predict.
Today, we’ll look at three critical areas for selling in a buyer’s market.
Pricing: How important is setting the price of a home?
The shift in the market requires a mindset readjustment for both homeowners and real estate agents. If homeowners know that their neighbours sold their home for $300,000 more two months ago, it can be tough to lower their expectations and get them to realize a lot has occurred in the last two months.
Pricing is critical. In a declining market with a downward trend of value, you have to price ahead of the trend. The price you list your home at today may seem low, but in two weeks, houses may likely be selling for $10,000, $20,000, or even more significant amounts less. You also start seeing homes selling for less than the listing price.
When you see homes still on the market from three months ago, it could signify that the realtor is in denial or unable to convey the bad news to their client. Maybe they gave the property owner high expectations, and they don’t want to let them down now that the market is starting to cool off. Real estate agents need to educate their clients about what’s happening in the market now, especially in their immediate area.
Sellers need to be realistic and stick to the price point of what homes sell for in their neighbourhood. You can ask for more, but how many serious buyers will you attract when more homes show up on the market unless you have a home that stands out? It can be a shock to the system, but things have shifted. In many cases, buyers have the upper hand.
Offers: What is considered too low or too high?
Over the last few years, when it was a seller’s market, all the homes were priced low because there were tons of buyers, not enough inventory, and sellers knew there would be bidding wars.
The approach was to price the home at an arbitrarily low number, schedule an offer date and presentation time, get as many people as possible to see and then fall in love with the house to get the maximum number of offers on the offer night. Price wasn’t as important as making the house as presentable as possible and knowing how to negotiate when the bids came in. Now, pricing is a much more important aspect because if the house is priced incorrectly, the buyers won’t be coming.
The seller may think their price is low and they’re still hoping for more, but homes holding offers aren’t selling on offer night, and sellers aren’t changing the price. It’s a mistake to think you can put pressure on buyers in the current climate because there is more choice for buyers, and you’re not offering them anything they can’t next door where the house is priced at what it should be.
Price it right and take offers anytime, or price it low and schedule a date. On the rare occasion of a unique and desirable home, holding offers in a buyer’s market doesn’t usually work. This is why during the initial transition to a buyer’s market, you’ll see houses increase their price after a week. What happened? They held offers, didn’t receive any, or none were satisfactory and adjusted their strategy. Ask your realtor about what types of homes may be able to benefit from the various offer strategies to ensure you position your home correctly.
Presentation: What is the key behind a home’s presentation?
It would be unfortunate if the buyer bought one of the first houses before getting out to see yours.
Presentation is always important, but it’s the most crucial element in a buyer’s market. Showing the home in its best light can mean selling for ten, twenty, fifty, or even one hundred thousand more.
In a market where no homes are available, everyone will come to see it, but when competing against 30, 40, or 50 comparable houses, you may only see five prospective buyers. You have to give people a reason to come to your home. Real estate agents typically show clients no more than five homes in one day. People are busy, and bombarding them with too many viewings at once can be overwhelming. Even when you take pictures and notes, it’s easy to forget what each home looked like.
When you see only five houses, it also means that there are potentially dozens you haven’t seen. When the realtor is booking appointments, they choose the ones that look the most appealing. And that means presentation and being staged well is paramount. It would be unfortunate if the buyer bought one of the first houses before getting out to see yours.
You may see a house online that looks impressive, perhaps smaller than what you want, but it looks great, and you get excited, and when you go to see it, you fall in love with it so much that you overlook any shortcomings –this happens OFTEN! But, if it didn’t look nice online, you would never have noticed it because the deficiencies were too prevalent.
The first photo is usually of the home’s façade. An ugly exterior will make people think the worst about the interior before stepping inside. At this time of year, it pays to spend a few hundred dollars on landscaping, paint your garage, and hang planters filled with colourful flowers. You can do these easy and cost-effective things to make a great first impression. Presentation is vital in everything we buy. And in the current market, it plays an enormous role in attracting a buyer.