Home Sellers Can’t Be Greedy Anymore
As escalating mortgage rates and home prices shrink the pool of buyers, help your sellers understand why they’ll likely need to readjust their expectations. Key takeaways: Today’s sellers are seeing the market cool considerably from the homebuying frenzy just months ago and need greater education in order to price their home appropriately so it won’t linger. It's still a seller's market, but buyers are regaining negotiation leverage. Those who are relocating or need to sell quickly may not have time to test a high listing price. Home sellers had gotten used to setting sky-high asking prices, and voracious buyers were eagerly bidding them up even higher—until now. As the market shifts more in buyers’ favor, over 25% of homes on the market have experienced a price drop as of mid-June, according to data from Altos Research. In some areas of the country, price reductions are even more commonplace--most notably in Provo, Utah, where nearly half of homes on the market had a price reduction in May. Redfin data pinpoints other cities where 40% or more of listed homes are experiencing price drops: Tacoma, Wash. Denver Salt Lake City Sacramento, Calif. Boise, Idaho Ogden, Utah Portland, Ore. Indianapolis Philadelphia Rumblings of a housing slowdown are growing as higher mortgage rates and double-digit annual home price gains deal a blow to buyers’ budgets. Housing analysts are warning home sellers that they may need to readjust their expectations, but many are still holding on to hope for a big resale profit, after seeing their neighbors generate a bidding war and sell in mere hours in a bidding war for well over the listing price just months ago. In the spring, nearly 6,000 homes sold for $100,000 or more above asking price, according to Redfin data. “Sellers could do no wrong over the past two years and have become overconfident,” says James McGrath, a real estate broker and co-founder of New York–based real estate brokerage Yoreevo. “They could take the price their neighbor just got, bump it up 5% and still have a line out the door. But with the surge in mortgage rates, those days are over.” Some home sellers are now having to reduce their price 5% below nearby comps to sell quickly, McGrath adds. Economists are quick to note that overall home prices are not likely to fall precipitously. In fact, the national median home price reached an all-time high of $447,000 in June, according to realtor.com®. An increase in listings for larger homes may be skewing that figure even higher, realtor.com® economists note. Housing inventory is slowly increasing, giving home buyers more selections in many markets and home sellers some extra competition. Meanwhile, buyers are showing greater concern about affordability. Realigning Expectations Even when the housing market begins to soften, sellers tend to hold on to the original price they had in mind, McGrath says. “Only after sitting on the market for a few months do they acknowledge their expectations may need to come down,” McGrath says. “Realistic sellers will get ahead of their neighbors with realistic prices to sell first.” Real estate pros may need to have more upfront conversations with sellers about the list price so a later price reduction isn’t necessary. “Agents may have to do a better job in the current market of educating their sellers,” says Tansey Soderstrom, president of the Orlando Regional REALTOR® Association in Florida. “Homeowners can’t just sell for double what they paid for it anymore. Some sellers may have shown up late to that party.” Still, some sellers may insist on a certain price against their agent’s advice, risking a feeling of shame if their home lingers on the market. “The pricing will greatly depend on how motivated the seller is,” Soderstrom says, adding that though the market has weakened, it’s still tilted toward sellers. “Some sellers may want to throw out a high price just to see if they can get it. But that strategy is likely different than a person who is relocating or someone who needs to sell quickly.” Homeowners looking to sell fast need to carefully review competitive prices in the current market with their agent and be prepared when it may not exactly match up with their expectations. Why Buyers Are Growing Wearier Higher mortgage rates are shrinking the buyer pool, says Lawrence Yun, chief economist for the National Association of REALTORS®. The 30-year fixed-rate mortgage jumped from 2.93% one year ago to 5.78% as of the week ending June 16, according to Freddie Mac. On a $300,000 mortgage, the average monthly payment has increased from $1,265 last December to about $1,800 at today’s rate, Yun says. Consumer confidence drives real estate activity, and with inflation at a 40-year high, stock market uncertainty and higher mortgage rates, more buyers are getting priced out, McGrath says. “Even if they can afford it, a buyer isn’t going to make one of the largest purchases of their life if they’re not confident and comfortable with their financial and employment situation,” he adds. As such, “smart sellers will reduce their pricing expectations and sell quickly.” But home buyers haven’t abandoned the housing market. Demand is still strong and likely will remain so given improving inventory, which particularly will help first-time buyers, says Glenn Brunker, president of the mortgage servicer Ally Home. “Strong homebuyer demand will continue to support higher home price appreciation going forward, but likely at a much slower level,” Brunker says. “Certainly, we’re still in a seller’s market, but the buyer is starting to have more control and negotiating ability than they did six or 12 months ago. We’re seeing healthy examples of customers not buying as frantically, like ‘sight unseen’ offers or waiving their appraisal or home inspection. Those practices are beginning to stall, and it’s a return to a more normalized market with a more logical buying process.https://magazine.realtor/sales-and-marketing/feature/article/2022/06/home-sellers-can-t-be-greedy-anymore Caption
4 VALUABLE TIPS FROM A PROFESSIONAL STAGER
Professional home staging in the luxury market greatly impacts buyer decisions. Home staging is perhaps the most effective way to showcase a particularly desirable property, no matter the existing market conditions. Statistics confirm that professionally staged properties sell more quickly and for higher prices than unstaged properties. Effective staging highlights the house’s architectural strong points, minimizes awkward spaces, and capitalizes on the ability to create a vision of a luxury lifestyle in the minds of potential buyers. The stager should know proper furniture placement, how to mix color palettes, and adding aesthetically pleasing home decors to create this vision. Something to keep in mind (and remind your clients) is that designing to live is very different from staging to sell because you’re trying to appeal to as many buyers as possible. WORKING WITH A PROFESSIONAL STAGER When inquiring about professional staging to enhance their property’s values, most home sellers will lean on their real estate professionals. Therefore, it’s imperative for real estate professionals to understand the basics of home staging and what to expect when hiring a professional home stager on behalf of your client. It’s also a great skill to have in your back pocket if you have to work with clients who don’t necessarily want to hire a professional home staging service (and you need to convince them otherwise). In a recent episode of our Estate of Mind podcast, Lori Pedersen, owner of Lori Pedersen Home Staging + Styling, explained why professional staging is crucial in luxury real estate and provided four valuable tips: Blending neutral palettes with accessories in bold colors: Contrasting colors are aesthetically pleasing and could create a memorable first impression for potential buyers. Don’t be afraid to mix and match the colors of the walls with the furniture for maximum vibrancy. Showcasing the property’s potential: Ask the professional stager for creative ideas to illustrate alternative uses for each room in the house, such as a yoga workout room, a meditation space in the little-used storage area, or transforming the garage into a home gym. Identify areas to declutter: Depersonalizing is perhaps the most challenging task for a professional stager. While it can be essential to protect the identities of current owners, removing all traces of “personality” from home can make it feel sterile and uninviting. The best professional home stagers strike a balance between family memorabilia, a lived-in space, and model homes! Add or remove furniture: A part of the decluttering process is determining whether your client should remove or add certain pieces of furniture to balance out “negative space” and create an impressive vision for the buyers. THE STATISTICS DON’T LIE The 2021 report from the National Association of REALTORS® pointed to the increasing number of buyers who plan to remodel immediately after purchasing a home. Interestingly, 93% of buyers report that “it’s easier to visualize their future home” if it is staged. In addition, 44% of sellers’ agents believe that staging increased the home’s value on the market by up to 20%, even in a hot market. On average, most staged homes remain on the market for about half as long as unstaged homes, which is good news for your clients as it’s commonly known that the selling price drops the longer a home remains on the market. Luxury real estate professionals have arrows in their quiver of marketing tools. One of them should be a roster of professional home stagers with knowledge and expertise to help you showcase your properties. Home staging has become a highly specialized field with proven advantages. Want to learn more about luxury real estate and gain valuable insights from industry experts? Tune into our Estate of Mind Podcast Series about motivating, inspiring, and educating you in the art of selling luxury real estate. Ready to take the next step in your luxury real estate career? Reach out to our team for more information on taking your career to the next level.
Is AB 1771 a good idea????
Is AB1771 a good idea? The California Association of REALTORS® strongly OPPOSES Assembly Bill 1771, authored by Assemblymember Chris Ward, which attacks private property rights by imposing high taxes on the gain from selling a home or other property -- diminishing wealth opportunities, the freedom to move or relocate, and the housing supply. AB 1771 proposes an unprecedented tax on the sale of a home in the first seven years after purchase. If the home was sold within the first three years, the tax would impose a punitive 25% tax. AB 1771 proposes to punish homeowners for simply deciding to move, all while the State of California enjoys a $45.7 billion surplus this year! AB 1771 seeks to raise taxes on our state’s diverse communities as they are entering the housing market and securing homeownership opportunities. Specifically, AB 1771 would result in: increased taxes on homeowners; higher prices due to a reduced supply of homes as investors hold on to properties and homeowners are trapped in their homes; limited wealth-building opportunities for California’s new and more diverse population of homeowners.
Categories
Recent Posts
