A house sale is a major life decision, and it’s not always one we get to make voluntarily. Life can happen to us sometimes, and in many cases, our only option is to sell in a down market. In this article, my goal is to reduce the added stress that often occurs when we make decisions from a place of anxiety.
Trimming expenses, talking to an adviser, sacrificing the immediate ‘lifestyle’ hits to maintain financial capability – yes to all that good stuff first, but then what, if that’s not enough. Get out, repay the debt – build again when you can. It’s not at all ideal, but it doesn’t have to be terminal either.
Currently, there are more homes for sale than buyers, and the real estate market is now unfavorable for many sellers/vendors. As a result, the time it takes to sell a home has increased, further exacerbating the impact of a decreasing values over time (sounds depressing just writing this!). Nonetheless, selling at a fair price is still conceivable even in such a market.
The best way to sell a home in a sluggish market is to get many offers. In this situation, two or more bidders are competing for the same item. There are a few factors to think about if you want this to happen.
Step one in selling a home successfully, is deciding on the best method. What has to be done to sell a particular home will vary. If you are selling a two-bedroom property in a higher density area full of investment properties, for instance, you might want to set your asking price at a tad below the average sale price of similar homes in the region. What’s the cost of getting out while you can right? Buyers will likely believe it’s a steal after hearing this and will want to investigate further. Yet, if you’re trying to sell a mansion, an auction or negotiated price could be the way to go. This is where having an honest and upfront discussion with 2-3 real estate agents in your area can be incredibly fruitful.
Second, even if it’s a pig, get’s good lipstick on that bad boy. There are a lot of houses on the market right now, so you have to find a way to make yours stand out. One option is to hire a professional home stager, although cleaning and decluttering the place may also help. More potential buyers will be drawn in, raising the price at which the home may be sold. Remember, most buyers cannot or will not want to imagine the possibilities – make it easy for them to see themselves moving in.
Next up, marketing is of paramount importance. With a larger audience comes a greater chance of achieving a higher price. Real estate agents are negotiators, facilitators, and marketing experts – often viewed as opportunistic ticket clippers, in this market, a good real estate agent actually makes a massive difference.
Finally, it’s important to weigh up all the costs before selling your property. For example, consider the opportunity cost: The market will shift again, and when it does, are you really going to be in a position to purchase again? Can you obtain funding from the bank to get through, or family, or even a non-bank lender.
Even when you’re marketing your home, you have to be aware of the costs and trade-offs: It may be tempting to accept the highest bid, but in a sluggish market, assurance is more important than saving a few bucks. A offer subject to solicitors approval, a builders report, finance, or conditional on an existing house sale – some of these conditions are low risk, yet others, not so much. There’s often a relationship or tradeoff between certainty of outcome, and chance of a negative outcome (bird in the hand). Being stubborn around what your home’s worth and arguing with the market can be expensive currently (much like in a rising market, it’s foolish to argue with it again!)
To sum up, selling a home during a down market might be difficult, but it’s not impossible. Getting a sale is easier if you consider the above. Putting your home on the market is a process that might take days, or even months, so remember to be patient.
If you’re considering a sale from a financial planning perspective, do reach out to us, or someone without a financial interest, to have a chat about what all your options may be.