The number of home sales in July was the third highest ever recorded, according to the National Association of Realtors. But anecdotal evidence suggests that the market is changing. In some areas of the Midwest, home sales have slowed considerably. In California, home sales remain brisk, but the market is cooler than it was in early spring.
It’s still a great time to sell provided you have realistic expectations. Interest rates are low, which means that buyers can afford to pay more than they would if rates were to rise significantly.
Here’s what home sellers should consider if the market shifts from a strong seller’s market to a more sensible balanced market.
You will probably face more competition than you would have if you sold last spring. Other homeowners also think now is a good time to cash in on the phenomenal appreciation that has occurred over the past few years.
This doesn’t mean it’s not a good time to sell. But it does mean that you might not sell with multiple offers, so don’t count on extreme overbidding. It could also take longer to sell. You might face more negotiation.
Until recently, many sellers in the San Francisco Bay Area exposed their homes to the market for a week or two before entertaining offers. This was done to generate multiple offers, which often resulted in higher sale prices. When the inventory of homes for sale is very low, this can be a very productive strategy.
Lately some sellers who waited to hear offers ended up with none on the designated offer date. In most cases, this was due to over-pricing. The listings that are still attracting multiple offers are those that are priced competitively. With all the talk about home prices being over-inflated, it’s easy to understand why buyers would have no interest in making offers on overpriced listings.
Sellers who overprice their homes have two options: They can either play the waiting came, or they can reduce their asking price to a level that attracts buyers’ interest. It’s risky to wait. If the market slows further, you could have to make a much larger price reduction.
Think big when you consider discounting your price. A reduction of less than 5 percent of the purchase price is not likely to have much effect. If you’re going to lower your price to ensure a sale, make a meaningful price reduction.
You might reconsider your offer strategy midstream. At the end of July, sellers in the Oakland Hills in Oakland, Calif., put their home on the market. They initially planned to have two public open houses before hearing offers. Two people expressed interest in the property several days after the listing showed up on the Multiple Listing Service. The sellers changed their game plan and decided to hear offers early. They received two offers and accepted one from well-qualified buyers who offered a good price. Sometimes it pays to be flexible.
When the inventory of homes for sale increases, buyers have the luxury of being more discriminating. They will also tend to be less forgiving on inspection issues. During a hot seller’s market, buyers often agree to purchase listings in their “as is” condition regarding such things as wood pest damage. So if you have the time, you might consider making some repairs before putting your home on the market.
THE CLOSING: Don’t waste your time testing the market at an unrealistic price. This market is for serious sellers. There are plenty of serious buyers for listings that are priced for sale at current market value.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.
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