Mistakes when selling in a slowing market
The other day I was researching housing market statistics in the local area and I have good news for you. The housing markets in Elkhart, Mishawaka, Granger, and South Bend that I looked up, show continuation as sellers markets heading into 2017.
Each of these markets continues to have limited inventory of homes and lots of buyers, which pushes prices higher and keeps the average days on market down for homes for sale. Currently the average days a home is on the market is around 55 days. Homes are selling much faster than they did in 2013 when the average days on market was closer to 85 days (almost 3 months).
But today’s article is to inform you what happens when the housing markets shifts and slows down so that you are prepared as a home seller. Hopefully this isn’t the case for awhile but when it comes, you’ll be prepared and understand what can be done so that your home still sells for top dollar and as quickly as possible!
So what is a slow housing market?
Indications of a slow market may include a rising inventory of homes and a decreasing number of buyers. This puts downward pressure on home prices as seller’s have to compete with each other by lowering their home prices to generate more buyer offers.
Why do some homes get more offers while others sit on the market? It likely relates to poor marketing efforts rather than anything to do with the home itself. Let’s discuss some bad marketing practices you and your real estate agent should avoid.
Bad Marketing 101:
#1: Withholding important information
Seller’s want to include good quality information that will tell the buyer why he or she should purchase the home. Good marketing tells the buyer why a particular home is better than the competing homes on the market.
Good Marketing Questions to Answer for Buyers:
- What motivated the seller to buy the home in the first place? Why did you fall in love with this home?
- Why is this home unique?
#2: Using very few or very poor quality photos online
Today most home buyers start their shopping experience online. It’s important to take several high quality photos to upload online that will give buyers a great inside and outside view of your home. We recommend not only photos, but having the real estate agent film a video tour of your home that gets edited into a professional marketing video to entice buyers to set up a showing or make an offer.
Bad Photo Examples:
- Photos of messy or cluttered rooms
- Dark photos/lack of lighting in the room
- Uncropped photos or photos with unnecessary elements in the picture
- Photos that are turned sideways
- Photos that failed to adjust pixilation for the interest
- Only including 1 or 2 photos (Shoot for at least 10 photos)
#3: Restricting an Agent from Showing Access
If your realtor/agent can’t easily show your property then you’re going to have a tough time having agents want to come show your home to their prospective buyers. They will go show another listing to their buyer instead. Here are some downsides to try and avoid:
- Restricted hours to show
- Lead time/24-48 hour notices
- No lock box
- Showing by appointment only
#4: Offering an Agent Less Commission Than Other Listings
In a slow housing market, real estate agents have to work even harder to market your home and get it sold. Buyer’s agents will be looking up houses to show their buyer clients and will see the commission rate that the you signed with your listing agent. If a buyer’s agent sells your home to his client, the listing agent will have to split the commission with the buyer’s agent.
So what do you think a buyer’s agent is going to do when he sees your home is offering a lower commission percentage than the other homes for sale?
The buyer’s agent is going to view a lower commission listing as a seller who isn’t very motivated to sell.
If a seller isn’t motivated, agents also may assume that the seller won’t be willing to negotiate on price which is crucial in slow moving markets because buyers want/expect to negotiate price. Therefore, agents who have buyers that want to negotiate price will tend to show only listings where negotiation is possible.
Key lesson here: Be careful about trying to nickel & dime on the commission rate when you negotiate it with your listing agent because it could impact the attractiveness of a listing when buyer’s agents are screening through the MLS to find homes for sale for their buyer clients.
#5: Failure to Offer Buyer Incentives
A seller should account for an incentive by structuring the home price accordingly. Consider a store that prices an item slightly higher only to stick a discounted sign in front of the item so that the buyer thinks they are getting the item for a steal and on sale.
In real estate this sort of marketing would equate to the following types of incentives:
- Money/Credit toward the buyer’s closing costs
- Pre-paid fees for a year
- Buy down the buyer’s mortgage interest rate (discount points)
- Paying for a vacation for the home buyers
- Paying for the home protection plan/warranty
- Offering to leave some home furnishings you’d normally take with you
If you decide to pay for some of the buyers closing costs, here are typical costs to consider:
- Title insurance & title search fees
- Escrow fees
- Inspection fees
- Homeowner’s Insurance
- Property Taxes
- PMI
- Home Warranty
- Mortgage Payments
- Moving Expenses
Overall, consider the marketing effort of your home when competing for buyers with other sellers. Those who effectively market their homes or set up solid plans with their real estate agent will likely see better results and have more offers come in for the home. Hope today’s article helped! You now have the knowledge and are prepared in case the current seller’s market shifts to a buyers market in your city.
Contact Kevin Foy, Broker with RE/MAX Oak Crest Realty in Elkhart Indiana
Kevin is a real estate broker-associate with RE/MAX Oak Crest Realty in Elkhart, Indiana and has served real estate clients for over 35+ years in Northern Indiana and Southern Michigan.
To get a hold of Kevin for real estate services:
- Phone: 574-536-9218
- Email: Kevin@TeamFoy.com
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