AARP Eye Center
Getting ready to sell your home? Brace yourself. The housing market is cooling due to a steep rise in mortgage rates, which make owning a home more costly. So, keep your expectations in check. Don’t assume that you’ll get bidding wars, multiple offers, and buyers willing to pay way above asking price like your neighbors did when they sold a year ago.
“It’s gotten a lot more expensive to buy a home,” says Jeff Tucker, senior economist at Zillow.
AARP Membership — $12 for your first year when you sign up for Automatic Renewal
Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine.
And that means selling a home is a lot trickier. The culprit? Buyer sticker-shock caused by a one-two punch of higher home prices and higher borrowing costs. At the end of October, the median price of an existing single-family home was up 6.6 percent to $379,100 compared with a year ago, according to the National Association of Realtors (NAR). And in early November the 30-year fixed-rate mortgage hit a two-decade high of 7 percent, up from 3 percent a year ago, according to Freddie Mac.
As a result, monthly mortgage payments have become a lot less affordable for prospective home buyers, making it tougher for home sellers to find buyers and get deals done. At the end of September, the monthly mortgage on a typical existing single-family home with a 20 percent down payment was $1,840, up about 50 percent, or $614 per month, versus a year ago, NAR data show.
But that doesn’t mean selling a home in a slowing market is impossible. What it does mean is you will have to go the extra mile to make your house stand out from the crowd by pricing it right and spiffing it up.
Here are 10 tips to help you sell your home in a slowing real estate market.
1. Price it right.
You can’t price your home based on peak prices. Those days are gone. You must accept that the market is slowing.
So, avoid setting a high price that’s stuck in the past when homes were selling like hot cakes, as you risk having your property sit on the market. Another piece of advice: The hot-market strategy of pricing your home a tad below comparable properties with the goal of generating multiple offers and triggering a bidding war that results in a sale price way above ask price could backfire. “Today, that’s a risky move since you may only get one offer if you’re lucky,” says Judy Dutton, executive editor at Realtor.com. “If that one offer comes in at your list price and you’d strategically priced low with the hopes to sell high, you may not be happy.”
Given that peak comps are no longer realistic for many parts of the country, a better strategy is to set an asking price you’d be happy to accept, experts say. A prudent approach that should spur a faster sale is to base your ask price on the last three to five comparable sales in your neighborhood, says Angela Allison, listing agent specialist at Houwzer, a discount real estate brokerage.