Selling a home is no longer the easy feat it was last year—or even six months ago.
Between the news that we already seem to be slipping into an unofficial recession and a serious home market slowdown, many sellers feel like they’re facing a Sisyphean task. The Federal Reserve’s latest interest rate hike of 0.75% is expected to push up mortgage rates that had already reached a 20-year high, putting further pressure on a stressed market.
But if you’re in a position to sell, there’s no reason to give up hope.
You might not be able to bank on receiving multiple offers over your home’s asking price. But with a little foresight and strategic thinking, you’ll be scheduling the moving trucks in no time.
Below, we hear from real estate pros who have weathered much worse markets than this.
Consider offering an interest rate buydown
Chances are, many of your potential homebuyers are struggling to balance their home goals with the reality of ballooning mortgage rates. A great way to put them at ease is by offering an interest rate buydown to help make their mortgage payments more manageable.
An interest rate buydown is typically negotiated between a buyer and the buyer’s lender. But sellers may also offer to buy down a buyer’s mortgage. In a seller-paid buydown scenario, the seller will pay a certain amount of money to the buyer’s mortgage lender to lower the buyer’s interest rate.
“A rate buydown can be a specific amount of money credited at closing that the buyer can use toward points on their mortgage,” says Michelle Mumoli, a broker-associate with Compass in Jersey City, NJ. “And because buyers have the option to refinance once rates go down again, they can use that to cover their closing costs.”
You can also offer to structure a buydown by percentage points.
“Offer to pay down their interest rate by a point or two at closing,” suggests Doug Greene, owner of Signature Properties Philly. “It directly addresses a pain point that many buyers are facing and will likely make less of an impact to you than you think. One or 2 percentage points is always going to be less than dropping your price $30,000 to $50,000 on an average-priced home. Buying down points is working well in today’s market.”
Help homebuyers with big-ticket items
If your home isn’t newly built, there’s probably a big-ticket item—your boiler, your roof, your HVAC—that needs replacing now or in the near future.
“If you have, say, a roof that’s over 15 years old, it will have to be replaced pretty soon,” says Brenden Rendo, a real estate agent at NextHome Neighborhood Realty in Winter Springs, FL. “It’s a huge bonus if you offer to do it before the sale, or offer to escrow funds to cover the costs from the proceeds of the sale.”
Strategically reduce the asking price
Some sellers have had to cut prices right now, but you can do it in a shrewd way that will be more likely to actually land a buyer.
“Over the years, I’ve learned that discounting your home once in a large chunk, like 5% to 10%, will stir up a lot of interest,” says Greene. “This works in any market. If you adjust the listing, you’ll find you get action quickly and often yield multiple offers and a flurry of showings.”
Or, you can trigger interest with strategic micro price drops.
“Start by doing plenty of research on pricing in your area in order to establish a baseline price, and list your home at that price for starters,” advises Martin Orefice, CEO of Rent to Own Labs in Orlando, FL. “And savvy homebuyers will often look for homes that have recently dropped in price, because this can indicate a seller who is eager to move their property. Triggering this interest is a great way to get people in the door, so time your price drops carefully.”
Go down by 1% each month, Orefice suggests, and schedule those price drops for times when you’ll be available for showings.
Throw in something unexpected
If you’re selling your home and downsizing, you might be ready to part with any number of assets that aren’t normally included in a home sale. Consider offering one of these as a tantalizing tidbit for buyers.
“Competition is so tight right now,” says Robert Johnson, marketing director at Coast Appliances, whose work often involves strategizing on home sales with real estate agents. “Capturing a buyer’s interest is the first step to landing a sale, and sometimes that can be as easy as offering and highlighting high-end appliances or unexpected items like a car, big-screen TV, solar panels, even gardening tools.”
Market your assumable VA loan
VA loans are backed by the U.S. Department of Veteran Affairs and don’t require down payments or mortgage insurance, making them hugely popular for those who qualify. But one bonus that few are unaware of is that VA loans can be assumed, or taken on, by buyers.
“If you have a VA loan that can be assumed, you should definitely market that,” says David Hampshere, founder and CEO of Purple Egg Real Estate, which covers Florida and Alabama. “VA loans can cover 40% or more of the sales price and are usually at a very low rate.”
Offer a home warranty
Because the housing market is so uncertain right now, adding a layer of predictability can be a huge boon.
Sellers may opt to attract buyers by offering to pay for a home warranty that would cover the home’s systems (like the electrical and plumbing) and appliances while it’s on the market. A warranty can also be transferred to the buyer once the home is sold.
Most home warranty contracts are 12 months and cost $250 to $1,500 per year, depending on your warranty provider.
Theron Smith, a Brown Harris Stevens real estate agent in New York, has found that homes with a warranty sell significantly faster and for more money than comparable homes that don’t offer a warranty in the same market.
“By offering a home warranty during your home sale, you give your buyer peace of mind that they are protected financially if anything were to go wrong in their new home,” Smith says. “As a result, they feel more comfortable and confident taking the leap and making a big decision about their home.”
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