If you are a home owner currently, you probably know the real estate market has slowed down. With rising interest rates, this was inevitable. It is basic economics…when borrowing money is cheap, more people will be buying stuff, including real estate. When borrowing money costs more, this greatly affects how much people can afford, whether that be a house, a car, a vacation, etc.
The real estate industry had a run for many years with historically low rates, easy money to access and therefore this made it, in part, a seller’s market because home buyers were plentiful. Now that rates have increased to a 22 year high, buyers are less prevalent, making it more challenging for home sellers to actually sell their homes. For years, buyers were at the mercy of sellers, but now it is essentially the opposite (with a few exceptions here and there of course).
So if you are a home owner right now and your property is not moving, what are your options (I am assuming your house is staged correctly and priced accordingly)? Of course, you can chase the market and lower your price until a buyer just can’t pass on it any longer. That is one option (an old broker friend of mine has reminded me that in real estate, at some price, everything will sell no matter the market conditions…so yes, pricing your home to sell is vital in this market). The days of just putting a for sale sign in your yard and expecting it to sell in a few days are long over! Chasing the market (starting out with an unrealistic asking price and continuously reducing the price) is not much of a strategy if you truly want to sell your home.
Another strategy you can consider would be to advertise that you are willing to help buy down a buyer’s interest rate to make your home more attractive to buyers. You can essentially buy down a buyer’s interest rate by offering a credit at closing from your proceeds to go towards a buyer’s loan costs (interest rate reduction, closing costs, pre-paids, etc.). many buyers are sitting on the sidelines right now because rates have increased substantially and therefore cannot afford what they could have even 6-12 months ago, so if you are willing to offer some credit to a buyer, this can make you possibly stand out from your competition.
A third option is to carefully study the market trends within your community and just make a strategic decision to price your home lower than all other homes in order to try to knock out the competition and stand out from the pack. If you bought your home more than 3 years ago, you probably have some pretty good equity built-in. Sure, you may not make quite as much as we all hope to, but look at it this way: if you are able to sell (and make a decent profit during the process), you will be in a position to find a good buy, as many sellers are or will be lowering their price. My point, sometimes it is all relative…sure, perhaps you didn’t make as much on your home as you wanted to, but when turning around and buying, you should be able to drive a great bargain, essentially making up for what you didn’t make on the sale of your home.
The last option some sellers are considering these days is leasing out their homes for a year or so and carefully watching the market trends (interest rates, sales prices, overall market activity). In this case, especially for homes that are sitting on the market and that are vacant, this may be a seller’s best option (to at least realize some sort of revenue rather than just incurring holding costs). We do offer property management services as well and a few of our seller clients are choosing to have us lease out their homes for them if they are not selling. Our website for property management is www.830management.com
In conclusion, we all had been pretty spoiled the last 20 plus years with historically low interest rates, which made buying a home very attractive and qualifying quite easy. Now that rates have increased and thus are affecting buyer’s purchase abilities and comfort levels, seller’s must be prepared to have their homes sit on the market for longer periods than we have seen in quite some time and may need to get creative or strategic in their pricing approach. The market is not dead by any means, but it is not what it has been for the past decade and beyond. You can still sell your home, but realistic pricing and expectations are a must, along with a strategy to make your home stand out from the competition.
Hill Country Flat Fee Realty proudly serves the communities of Boerne, Fair Oaks Ranch, San Antonio, Austin, Dripping Springs, Blanco, Round Rock, Cedar Park, Georgetown, Leander, Kerrville, Fredericksburg, Bulverde, Spring Branch, New Braunfels and Comfort. Our flat fee model that saves sellers a ton of cash and is simply the smarter way to sell a property these days. Simply put, there is no need to pay high commissions these days to sell your property…save the money, after all-it’s yours!