That means any homeowner can sell their house fast and for the most money, right? Maybe not.
Just because real estate markets are hot in the majority of the country doesn’t mean your region is a seller’s market. Even in major metropolitan areas there are neighborhoods slumping home sales.
A recent report by National Mortgage News identified ten cities facing buyer’s market conditions, including neighborhoods in Houston, Philadelphia and Chicago.
The homes in these ten sluggish neighborhoods stayed on the market an average of 90-140 days and sold below the list price by $10,000 to $25,000.
But it’s not just location that can trigger buyer’s market conditions—in some cases your home’s market value can make it harder to sell. According to Gladys Blum, the number one agent out of 629 realtors in the Salem, Oregon area:
“Homes in our average price range, if it’s done right—if it’s priced right, if it’s staged, if it’s marketed—it will be gone within five days. But for homes $500,000 and above, we’re going to be sitting on it.”
Blame it on a sluggish neighborhood market or your home’s high-end price point—either way, selling in a buyer’s market is scary. But it doesn’t have to be. The first step is understanding exactly what makes for a buyer’s market.
What is a Buyer’s Market?
Simply put, the term buyer’s market refers to conditions of supply and demand—there are simply more houses for sale than there are buyers. Available inventory, interest rates and the economic outlook all factor into determining market conditions.
Blum explains, “A buyer’s market is when there’s six months of inventory and people aren’t getting their homes sold. It’s a tougher market, but you have more time. It’s going to take 120 or 130 days to get you an offer.”
Time is one of the biggest benefits for sellers listing in a buyer’s market. In a seller’s market, buyers are snatching up new listings within a week or two. Once you accept an offer, you’ll need to move within 30-60 days—unless you include lease or purchase contingencies in your contract. Then you’ll become a buyer in a seller’s market.
In a buyer’s market, you list your home knowing it’ll be two or three months before you get an offer. That gives you plenty of time to pack and to line up a place to move into—which is another big bonus. After selling, you get to reap the benefits of being a buyer in a buyer’s market.
Of course, market conditions also impact your home’s value. It all boils down to the scarcity principle. In regions with low inventory, prices are rising. But if you’re selling in a buyer’s market, your home may not be worth much more than you paid for it. It may even be worth less than you paid—leaving you upside-down in your mortgage.
If you’re facing a buyer’s market and you don’t have a hard sell-by deadline, you may want to consider waiting the market out. The data shows that there is a best time to sell your house that’s often region-specific.
Economic factors in your area may also indicate that waiting a few months before selling is your best bet to get your top offer. Recent tax reforms are set to boost the economy, but in most areas that benefit won’t be felt in the first quarter of 2018.
Job creation also plays a role in the housing market as workers relocate for career opportunities. With job growth continuously fluctuating, major corporations like Apple promising future job creation, and reports of millennials moving into unexpected markets, it may just be a matter of time before more buyers enter your market.
Unfortunately, waiting isn’t always an option. Luckily, for homeowners who have to list in a buyer’s market, there are ways to ensure you sell in a timely manner and for a respectable price.
The Importance of Prepping Your House to Sell in a Buyer’s Market
In a frenzied seller’s market, buyers are willing to snap up as-is properties at top dollar. But if you’re listing in a buyer’s market, your home needs to be the best on the block just to have a chance at a good offer—or any offer.
The first step every seller needs to take before listing is a deep clean both inside and out. You’ll need to do more than just straightening up for company or even a good spring cleaning. Approach the project as if you’re out to eliminate every last speck of dust from your house—even the crumbs under your refrigerator.
Why? Because buyers are apt to look in, around and under things that typical guests would leave alone—and if they find dirt, they’ll suspect your home isn’t properly maintained.
If a buyer has doubts about your home’s condition in a buyer’s market, they won’t make an offer. They’ll simply move on to one of the many other homes available.
While you’re cleaning, pack up knickknacks and depersonalize (hide family photos, bills, toiletries, etc.) to cut down on clutter. Also be on the lookout for necessary repairs you’ll need to tackle before listing and potential upgrades (link to ROI article) that might attract buyers in a tough market.
One surefire way to ensure your home shows well is staging. The basic idea is that you’re styling your home’s interior to look like it’s ready for a department store catalog shoot. You can hire a professional stager to do the whole job or get a staging consultation—which runs an average of $150-400 for two hours—and do the job yourself.
Curb appeal is even more important in a buyer’s market when offers are apt to be scarce. If your home is the most attractive one on the street, that ‘for sale’ sign in the yard might just inspire passersby to become home buyers.
The other big reason to make sure your home stands out from the crowd is to avoid offers with tons of credits and contingencies. If your home shows at its best, potential buyers may not even ask for things like flooring allowances, closing costs or post-inspection renegotiations—which are typical of buyer’s market offers.
Blum says, “The offer is going to be much better if it’s looking good. So, the staging, cleaning and photography are all so important in a buyer’s market. And staying in tune. If we get feedback about a certain negative, we need to address it so that we won’t get that same response at the next showing.”
After you get your home into its best shape, it’s time to decide on the list price.
Pricing Strategies for a Buyer’s Market
Proper pricing is key in a buyer’s market. You need to make sure that your price matches or undercuts local comparable homes—even if you think your home has nicer features or is in better condition.
In order to determine the right asking price, your real estate agent will look at both currently listed and recently sold homes that are comparable to yours. Those comps will have a similar lot size, square footage, number of rooms and location.
Sellers can get a general idea of how much their property may sell for by typing their address into a home value estimator, but that estimate is just the beginning of the pricing process.
With a baseline price to work with, your agent will then factor in little details like age, condition and upgrades. In a seller’s market, you’d then be ready to list, but not in a buyer’s market.
When the market is slow, the few buyers out there will be looking to get a good deal—they may even want to pay less than recent comps sold for. That means you’ll need to price competitively.
The last thing you want to do in a buyer’s market is overprice.
According to Blum, there’s an easy way to tell if you’ve overpriced: “If we’ve had no showings in six weeks or if we’ve had twenty showings and no offers, we’ve got a problem. We must be priced too high. We’re going to have to bring the price down to attract buyers.”
Time is the luxury of the buyer’s market, so sellers who are no hurry to move can afford to price at or just below recent comps. Unlike a seller’s market—when 30 days is too long for a home to sit unsold—in a buyer’s market houses are expected to be listed for a while.
Since days on the market isn’t as important in a buyer’s market, sellers can afford to wait for a buyer willing to meet their price—as long as it’s reasonable. But it’s a different story for homeowners who need to sell fast.
One question Blum asks her clients is, “What’s more important, money or time? If the seller needs to move out in two months, then we’ve got to do an aggressive price. We’re going to price well below the comps that have sold to get a sale to close within 30-45 days—by at least five to ten percent less.”
Proper pricing will only help you snag an offer in a buyer’s market if buyers know about your listing—and that’ll take more work than putting a for sale sign up.
Buyer’s Market Marketing Strategies
With so many houses available and so few house hunters in a buyer’s market, you need a smart marketing strategy to stand out over the competition.
The minute your home is staged and your curb appeal is on point, you need to bring in a professional real estate photographer to photograph your home. These photos will be the foundation of your marketing materials.
Why? Because the National Association of Realtors’ 2017 Profile of Home Buyers and sellers found that 42% of all recent home buyers began their search online. Break that down into age demographics and that number is even higher, reaching 99% for millennials—the biggest buyer pool in 2017.
And out of all those buyers house hunting online, 89% found the photographs to be the most useful feature.
In a buyer’s market, agents recommend utilizing as many marketing strategies as you can, like listing with multiple MLS services and sending out e-flyers to local buyer’s agents.
Selling in a buyer’s market requires a long game marketing strategy, as it may be months before you get your first offer. Given the length of time the marketing materials need to work for you, it may be worth the expense to build your home its own website and create video walkthroughs.
When it comes to marketing in a buyer’s market, time can actually work against you. With so many houses sitting unsold for so long, it isn’t easy to keep your listing fresh in the minds of local buyer’s agents.
Luckily, if you’ve listed with a top notch seller’s agent, they’ll be working to keep your listing active. That’s what Blum does when she’s selling in a buyer’s market:
“We do a lot more calling to investors, past buyers and clients to see if they know of buyers that would be interested—just getting the word out. It’s more word-of-mouth versus just putting it on the internet.”
When your hard work finally pays off and you get an offer—take it.
“Often the first offer in a buyer’s market is your best offer,” Blum says, and with good reason. Buyers are so hard to come by in a buyer’s market that you may not get another offer—especially if word gets around that you turned down a good one.
Selling a house is a nerve-wracking undertaking in the best of circumstances, and in a buyer’s market it can be even more stressful. But with the right mindset, proper pricing and an aggressive marketing strategy you’ll soon be getting your best offer.