Selling a home is a stressful business. It’s probably the single largest transaction you’ll make in a lifetime. Add in the fear of a downturn, a possible recession and market uncertainty and you’ve got a recipe for anxiety.
And it’s not like this fear and anxiety isn’t substantiated. According to recent data released by Statistics Canada, the percentage of households that own their home fell to 67.8% in the 2016 census, down from 69% in 2011.
The largest declines were found in cities that have experienced the largest growth in housing prices, such as Toronto, Vancouver and Victoria, B.C. This means that fewer buyers are getting into the market at a time when the market favours buyers, in general. Worse, there’s every reason to believe that the decline in homeownership rates will continue, at least for the foreseeable future.
These are the moments when armchair real estate experts will tell you to hold off selling. Unfortunately, many people can’t just sit around and wait for market conditions to change. New jobs, changing financial circumstances and other life events won’t allow it. Thankfully, selling a home during uncertain market conditions or during a buyer’s market doesn’t necessarily equate to doom and gloom. There are time-tested strategies sellers can use to mitigate the downside of a slow market.
Here are eight essential steps for selling a home in a buyer’s market.
Step #1: Analyze current market dynamics and trends
As a seller, the first essential step is to assess the current housing market.
In 2019, both sales volume and prices will barely keep up with inflation. According to the Canadian Real Estate Association (CREA) sales volume will increase by an estimated 2.1% while housing prices, on average, will climb only slightly more than inflation, at 2.7%. (Unless you live in Ontario, where prices are predicted to increase by 3.3% this year.) While these predicted increases aren’t the double-digit increases we’ve seen in recent years, these far-more subdued gains can certainly offer confidence to sellers that Canada’s housing market isn’t heading for a market crash.
But sellers shouldn’t be relying on national averages. Home sellers need to go beyond general national statistics and drill down into precisely what is selling in your specific geographic location.
“While starting with an overview of Canada’s housing market is nice, it doesn’t give you the granular detail required to make educated decisions,” explains Mustafa Abbasi, President of Zolo Realty. “To get a true picture of what is happening in your neighbourhood and in your city you need more detailed information. You want to know what property types are selling, how much more will an extra bedroom or bathroom will get you, and whether or not buyers are more interested in a garage or an in-law suite.”
In short, you need insightful, relevant data before sticking a “For Sale” sign on your home.
Step #2: Get a killer agent on your side
Want to sell your home in a down market? Then you’ll need to pick the right agent.
Ask friends and neighbours for references and interview at least three agents, if not more, before making a selection. Ask each agent specifically what they will do to market your home, who will be working with you (some high profile agents get your business and then ask a junior associate to do all the work), and how many clients they are currently working with.
Avoid agents who promise a fast sale or guarantee an above market price for your home. They can’t. It’s just a cheap ploy to get your listing.
In the end, you want a professional that is dedicated to their career and puts the time and energy into becoming an expert. This doesn’t mean you need an industry veteran; sometimes agents earlier in their career are better, as they are willing to hustle.
No matter who you shortlist, be sure you feel comfortable with working with them and you are in tune with their communication style. There’s nothing worse than talking and deciding on massive sums with someone you feel isn’t listening to you!
Step #3: Price it right
Perhaps the single most important factor when selling a home in a down market is to list it at the right price. Price it too high and your home will sit on the market, becoming a comparison show-home that helps sell other properties on the market.
To set the right price, sellers need exact information on properties that recently sold, the similarities and differences in those properties to their home and the market conditions for their community and property type.
For sellers choosing the do-it-yourself option (known as For-Sale-By-Owner), you can find sold information on many real estate brokerage sites, including Zolo.ca (virtually nationwide), Bungol.ca (restricted to the Greater Toronto Area), as well as HouseSigma and TOsolds (both restricted to the GTA).
If you opt to work with a Realtor, ask this professional for a comprehensive Competitive Market Analysis (CMA). Most agents will limit this analysis to no more than six or so properties — primarily because too much information can be overwhelming for most people. If, however, you prefer more info rather than less then don’t be afraid to ask for it. Good agents are only too happy to help engaged and motivated sellers.
For more on the strategies for pricing your home right, read “How to Price Your Home for Sale” on page xx.
Step #4: Put on your best face
A first impression is often a lasting one and, as sellers, the same applies to how buyers first see your home. You want to really leave an impression; remind the buyer what they could get if they are willing to take the plunge and buy.
While some sellers will be ready to go — with manicured yards, up-to-date home maintenance and much-needed updates — others will need to consider spending a bit of time and money investing in beautifying the home before listing it for sale. While some updates are sunk costs, typically the money spent on creating curb appeal is a good investment.
Consider your property’s gardens and lawns, as well as the hardscaping (these are patios and stone walkways). Spend an afternoon or pay a company to power wash your home and pathways (as well as the driveway) and consider painting the exterior if this job hasn’t been done in over a decade.
When it comes to inside the home, don’t bother spending large sums on major renovations (unless you plan to gut and redo the entire home to the current standard of home buyer desires). Instead, consider spending on strategic updates: update old-fashioned light fixtures, wall plates and drawer knobs to more contemporary selections. Replace carpets (or, at the very least, steam clean them to within an inch of their life) or pay to refinish rough or stained hardwood floors. Once done, spend time (or pay professionals) to really make your place sparkle and shine. Don’t forget to remove the cat box from the kitchen. While pets are cute, too many would-be buyers can get turned off when there is evidence of a pet (such as food or smells).
Step #5: Declutter and depersonalize
Want a cheap way to add value to your home? Get out the boxes and start packing. According to professional organizers, each box of clutter that’s packed away before listing your home for sale can add about $500 to the value of your home. Pack 10 boxes and you add approximately $5,000 to the sale price of your home. Why? Because many prospective buyers find it tough to look past the clutter and personalized memorabilia. Rather than focusing on how much light the family room gets, these buyers are drawn to the family photos, spoon collection and the pile of tax papers on the coffee table.
So, remove your personal memorabilia so that a potential buyer can easily imagine living in your space. While you’re at it, declutter your home by taking away unnecessary furniture and nick-nacks (these items can make your home look smaller than it is). Box it all up and pack it away. Remember, if you want to sell your home in a buyer’s market, you need to convince the buyer that your home offers the best value on the block.
Step #6: A picture is worth a thousand words
Most buyers begin their search online — and survey after survey shows that buyers consider photos as the single most important feature that drives them to book an appointment to view a home.
While hiring a professional photographer is ideal (they’ll know when to turn on the lights, when to draw the curtains and what angle is the best for each room), it isn’t 100% necessary. Any good camera (either digital or on a smartphone) can take great shots as long as you follow these simple rules:
- Always turn on all the lights before taking the shot (even it it’s daylight outside)
- Don’t bother taking shots of standard rooms (if your bathroom doesn’t photograph well, then don’t bother show it)
- Remove all hints of pets
- Clean and organize all clutter, including removing all appliances from the kitchen and bathroom counters
- For outside shots, consider taking the pictures just before dusk, when most photographers would agree that outside light is perfect for contrasting your picture subject (in this case, your home)
In the end, you want to make your home look like a Hollywood star. No joke.
Step #7: Add financial incentives
In slow housing markets, sellers may need to put some financial skin in the game in order to close the deal. This doesn’t always mean knocking down your asking price. Instead, consider other financial incentives that could sweeten the deal for would-be buyers. For instance, offer to pay all closing costs. While this may mean a few thousand out of your pocket, it could mean a done deal without reducing your asking price. Other options include paying for a mover, providing a year of Netflix or cable TV services or throwing in a flat screen TV.
The idea is to nudge the on-the-fence buyers into making a deal.
Step #8: Bird in the hand
In a buyer’s market, you have to be prudent and quick. This means offering counters to all offers, even if the buyer offered a low-ball bid.
Remember, most buyer traffic will come in the first several weeks of a listing, so it’s never a good idea to ignore a bid even if it does feel insulting.
While a low-ball offer may hurt, emotionally, it’s still a clear indicator that a buyer is interested in the property. Keep that interest going until you can help them see that your price and terms are reasonable (assuming you priced the property competitively in the first place).
Another reason is that an offer in-hand can entice other buyers to move quicker. No one wants to feel like they lost out, so adding a bit of urgency can prompt buyers that are on the fence to act.
Since a formal counter-offer can legally bind you to negotiate with just one seller, consider talking with your agent about how to keep your options open. Perhaps your agent can have informal chats with the buyer’s agent about possible terms and conditions that both parties will agree to; or you could add in a clause to a formal counter-offer that frees you up to negotiate with other possible buyers, as their offers come in.
Either way, don’t ignore an offer based on a hope that something better will come in. Instead, be proactive and be smart and negotiate your way to a better sale price.