5 ways to shift seller strategy in an increasing inventory environment
The softening of record high home prices and inflation at its highest level in 40 years have dominated the summer housing market. Homes that were becoming increasingly out of reach just a few months ago are becoming more attainable as the housing market goes through a dramatic rebalancing. In some dynamic markets like Phoenix, home prices are adjusting amid an increasing inventory, the result of which is sellers being forced to revisit their listing strategy to stay competitive. As a seller, you may have missed “the peak” but that does not mean you are out of luck when it comes to landing fantastic terms for the sale of your home.
Robust Inventory Across Phoenix
Our expert housing market analysts at the Cromford Report note that active listings are up 152% compared to the same time a year ago. The monthly median sales price now sits around $452,000 – down about 4.5% since July. Cromford adds that modestly priced neighborhoods like Buckeye, Maricopa, Florence and Queen Creek have an abundance of active listings while higher-end areas like Paradise Valley, Fountain Hills, North Scottsdale, Carefree and Cave Creek are also rising in inventory.
Cromford says sellers are lowering their asking prices and accepting offers that are sometimes well below their list price. Such maneuvers can be attributed to a decrease in buyer demand and an increase in the number of homes listed on the market. As a seller, it’s important to be strategic to stand out. Here are some expert tips from our team at Halpern Residential:
Do Not Overprice Your Home
We get it; you want to get the most value from selling your home, but overpricing is a bad idea because it doesn’t make you competitive with the other sellers whose lower prices are more attractive to buyers. By doing this, you risk having your home sit on the market for weeks without offers. In this shifting market, buyers can be a lot pickier to get the best deal for their money. The longer your home sits on the market, the more buyers will think something is wrong with your property and focus on other listings. Ultimately, pricing high may end up costing you more because your hold costs will continue and you may have to aggressively lower the price to counter the market stigma associated with the high number of days on market that buyers will see.
Halpern Residential can help you land on a competitive sales price based on the recent sales of comparable homes in your neighborhood. We can work through your home value, local market value and buyer demand to come up with the listing price that benefits you.
Adjust Home Price Based On Market Conditions
If your original list price is not eliciting action after a few weeks on the market, the market is telling you that your home is overpriced. Digging in your price wont increase activity and will ultimately create a drag on your listing. The last thing buyers will do in a shifting market is jump up and grab an overpriced listing and drag it down. After all, outside of buying a car, the home purchase is about the only time in American life that we get to negotiate. Most consumers are somewhat intimidated by negotiating and if they sense a home is dramatically overpriced, they not only won’t offer, they likely won’t look.
If you’re not getting showings or if you are getting showings, but no offers, you must adjust your price to try to bring more buyers in and elicit offers. Standing firm will not create activity.
Offer The Buyer’s Agent Reasonable Commission
Traditionally, a seller’s agent will split a commission with the buyer’s agent for a home sale. For example, let’s say your agent takes a 6% commission for selling your home, your agent will then split that commission with the buyer’s agent 50/50, each keeping 3%.
The days of offering agents reduced commissions is over. If you are offering a buyer’s agent 2% when surrounding listings are offering 3% you are sending a message to the market that you are shrewd, cheap and unwilling to negotiate. Similarly, if you hire a “discount agent” to list your home, expect discount service. After all, if the agent is unwilling to negotiate for their own pay with you, do you think they’ll negotiate hard when it comes to your money?
Offering more incentive to the buyer’s agent can help put you at the top of the stack of houses that the agent will now be more eager to take their clients to see. Although bound by ethical rules that prevent agents from directing their clients around listings with lower commissions, the agent will not be motivated to fight hard to get their clients to buy your home.
If you offer competitive commissions and work with agents who offer value in exchange for their pay, you will end up earning more than the savings you perceive you’ll gain from using an agent willing to discount their commission.
Choose An agent With A Digital Marketing Plan
Simply putting a sign in the ground will not work anymore. Marketing is a major part of a real estate agent’s job. At Halpern Residential, we know we must reach people where they are, and these days, that’s more likely on people’s computers, phones and digital devices.
A great agent will have a strong digital marketing strategy. Aside from great photos and a dedicated website, they’ll need to build you a comprehensive digital strategy that includes blog posts, social posts, and paid digital ads that display on devices. An agent may deploy a suite of digital ads that include social media ads, search engine marketing ads, pay-per-click ads, retargeting and remarketing, and native ads. Throw out these terms to any realtor you interview that you’d like to represent you, and if they don’t understand what you’re talking about, move onto a modern realtor who gets digital marketing.
Voice of Reason In This Housing Market
Whether you’re buying or selling a home, you must stay on top of the latest trends and market conditions in your local area, regardless of what the national press reports. For example, Forbes and New York Times are reputable and balanced with their analysis on housing trends on a national scale, but local media outlets and housing blogs will paint a more accurate picture of what’s happening down to the macro-level. Sometimes it’s hard to know what to read or who to listen to. That’s why you can’t do it alone.
A licensed realtor is the best source for the latest information that’s accurate, timely and relevant to the market you’re trying to buy or sell your home in. An expert real estate agent can also loop you in with a circle of lenders, appraisers, home inspectors and financial advisors who can help you navigate the buying and selling process step by step.
Author: Trevor H. Halpern, J.D. is the #1 independent agent at Phoenix-based North&Co. and the CEO of Halpern Residential. As a Phoenix native, Halpern’s deep knowledge of both people and property has allowed him to create client success in all areas of town. A graduate of ASU’s College of Law, Halpern prides himself on delivering high-level strategy, efficient negotiations, and precise tactical execution. Since 2011, Halpern has sold over $130 million in real estate and has been in the top 1% of real estate agents in the Greater Phoenix area.