Even though the home-sale market is slow, some listings sell quickly. Others don’t. What accounts for the difference?
The volume of homes sold is down as much as 20 percent or more in some areas compared to a year ago. Concurrently, the listing inventory has increased 40 percent or more in some markets. The odds of having a quick sale decrease when lower sales volume is combined with more listings of homes for sale.
In this kind of market, buyers have a lot of choice. The sense of urgency to buy is less. If buyers don’t see exactly what they want, they are happy to wait until the right house comes along.
To sell in this market, you need to be realistic about the market dynamics in your area. And, you need to be brutally honest with yourself about the positive and negative features of your home.
It’s useful to consider the features of listings that sold recently in your area. In a low-inventory seller’s market, most listings sell. The best houses sell faster, often attracting multiple offers and a higher price. But, even the less-desirable listings sell when the appreciation rate is so robust that buyers feel the risk is higher if they don’t buy than if they do.
In a soft market, subtle differences between one listing and another can explain why one sells quickly and another doesn’t. For example, in the Oakland/Berkeley area of Northern California, the features that command a premium are a location within walking distance of a commercial district with shops and cafes, level outdoor living from the main living level, a sunny exposure, three-plus bedrooms and at least two bathrooms. If your home lacks these sought-after features, the list price of your home will need to be calibrated in order to compensate for the deficiencies.
Analyzing your competition is necessary to see how your home stacks up in comparison. To do this successfully, you need to divorce yourself emotionally from your home, and look at it from a prospective buyer’s view point. For most home sellers, this isn’t easy.
HOME SELLER TIP: It helps if you choose an agent who is experienced in the area and who feels comfortable speaking candidly to sellers about what they need to do to their home to prepare it for sale. This includes helping you understand why your home might not warrant as high a list price as your neighbor’s home.
It’s frustrating to see other houses sell with multiple offers when your home doesn’t even receive a nibble. Why wouldn’t one of those buyers who lost out consider your home?
The answer is that buyers are less willing to compromise in a soft market. In a hot market, by contract, the sense of urgency is heightened because buyers fear that the longer they wait to buy, the more they’ll have to pay.
One way to make your house stand out is to offer a home in prime condition that’s listed at a price that’s in line with the most recent comparables sale, or less. In a softening market, you need to undercut your competition to grab buyers’ attention. The risk of holding out for a price that’s too high in a softening market is that you will end up having to make price reductions and chase the market down.
THE CLOSING: Sellers with homes that have incurable defects, like a lot of stairs to the front door or a location on a busy street, will need to make significant price accommodations to make their homes appealing in a slower market.
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.