If you’re considering selling your home now, you might be thinking, Why didn’t I do this a year ago? The 13-year residential real estate bull market came to an abrupt end in 2022 as skyrocketing mortgage rates undermined would-be buyers’ purchasing power. A buyer who can afford a $2,500 monthly mortgage payment could have borrowed around $600,000 when mortgage rates were at 3%…but can borrow only about $370,000 with today’s rates at 7.25%.
Many buyers have retreated to the sidelines, leaving sellers with fewer offers than they would have fielded not long ago. And some homeowners have put their home-selling plans on hold, but not everyone has that luxury.
Real estate agent Michael B. Bell explains how to get as much as possible for your home if you must sell in 2023…
Find the Right Agent
Any agent can sell a home when the market is hot, but significant skill and experience are needed when it’s not. How to find the best agent for your home sale…
Call three of the top real estate firms in your area—the firms that seem to have for-sale signs on every street. Ask for the manager…then ask him/her for the names of the firm’s top one or two salespeople. Specify that you’re looking for the individual(s) who dominate the firm’s annual sales awards.
Confirm that those salespeople have numerous active and recent listings. Enter their names into real estate websites such as Zillow.com. Read the reviews of these agents on real estate websites and elsewhere online—while online reviews always should be taken with a grain of salt, multiple poor reviews or no reviews at all are concerning.
Examine these agents’ current and recent online listings. Are they concentrated in your area? It’s a plus if the agent knows your neighborhood well. Do the listings make properties seem desirable? The way the agent markets these listings is the way he is going to market yours. The Internet is where the majority of potential buyers will encounter your home for the first time. If they don’t like what they see, they won’t bother to visit in person. Most important factors…
Photos. Top agents inevitably work with the best real estate photographer in the area. The photos on the listings should look as good or better than the photos on other agents’ listings.
The first two sentences of written property descriptions. If these initial sentences don’t hook potential buyers, they rarely read any further.
Floor plan. Floor plans offer a summary of the home—but not all agents include these in listings. Successful agents spend money on floor plans.
Helpful: Video and virtual-reality home tours were necessary during the pandemic, but in today’s world they have upsides and downsides. Some buyers like them…but even the best video or virtual reality tour tends to make a home seem less attractive than it looks in great still photos. If an agent’s listings include these, confirm that they make the properties seem desirable.
Ask a friend to pose as a buyer and call the agents with a question about one of their listings. Do the agents return these calls promptly? Did your friend form a favorable first impression?
Invite the strong candidates to examine your property, then ask…
What asking price would you recommend? Be concerned if an agent recommends an asking price above those of comparable homes for sale in your area—he is probably telling you what he thinks you want to hear.
The key to landing the highest sales price for a home isn’t setting a high asking price. It’s getting the largest possible number of buyers to bid on the property. The best way to accomplish that at times like these is to set the asking price slightly on the low side to attract attention. Most experienced agents know this, but many still try for above-market asking prices because it increases their odds of landing the listing.
Caution: Sellers often assume that they can set their asking price high at first, then lower it if necessary. But that’s not how the real estate market works. The most appealing buyers pay attention only to homes that are brand new to the market—once a home has been for sale for more than two weeks or so, most buyers assume there’s something wrong with it. Then the only interest will come from bargain hunters who offer well below even the lowered asking price.
What will you do to sell my home that other agents won’t? An agent might reasonably respond by pointing you to aspects of his current online listings that stand out from the competition…or by citing an impressive track record of selling homes in both hot and cold markets.
Be concerned if an agent instead promises lots of open houses or print advertisements—research by the National Association of Realtors has found that these tactics are not effective in this era of online listings.
Also be wary if an agent says he already has a potential buyer lined up. As tempting as it can be to choose an agent who promises a quick sale, this answer likely means he intends to sell your home to a buyer he also represents so he doesn’t have to split the commission—an unethical conflict of interests. Such an agent might not aggressively market your home to other potential buyers.
What are my home’s top selling points and challenges? Follow this question up with, “How will you prevent those challenges from standing in the way of sales?” The agent should be able to provide a well-thought-out plan of action.
What’s your commission? Follow this up by asking, “Are you willing to come down on that?” This is a trick question—the agent will think you’re looking for a bargain…but really you’re testing his negotiation skill. What does it say about an agent’s negotiation skills if he immediately backs down and offers a discount as soon as the topic is broached?
If I sign with you and it doesn’t go well, will you let me out of the contract? Write down what he says, along with the date and time of this conversation—a verbal promise can carry legal weight later.
Three ways sellers and agents can improve the odds of sales today…
Offer to pay down the buyer’s interest rate. Steep mortgage rates are a big reason buyers aren’t buying these days. But there’s something sellers can do about this—kick in cash to secure your buyer a significantly lower rate for either part or all of the loan’s term. Example: The buyer is approved for a 30-year loan at 7% for a $600,000 purchase with 20% down. The seller could pay $11,000 from the home-sale price to the buyer’s lender to reduce the buyer’s rate to 5% for the first two years. Doing this can reduce the buyer’s monthly payments from $3,200 to $2,600…and transform a buyer who felt like a sucker for paying 7% into one who feels like a financial genius for paying only 5% in this market.
Get your home into ready-to-move-in condition. Fixer-uppers sold well during the pandemic real estate rally, but that was because there weren’t enough homes in great condition to go around. The supply/demand balance now is tipped the other way in most markets, and the buyers who remain are shunning homes that require repairs. (For more on pre-sale DIY home projects that can be worth the effort, see page 12.)
Confirm that your home’s online listing hits the mark. If you have any doubts, raise them with your real estate agent. Your first showing is online—you have only one chance to make a first impression with buyers.
Improvements That Sell Your Home
Home sellers shell out an average of $14,163 on updates for homes they plan to sell, according to The Wall Street Journal. But it makes no sense to spend on improvements that don’t allow you to recoup your costs.
Example: Prospective buyers place a heavy emphasis on the kitchen and bathrooms, but according to the 2022 National Association of Realtors Remodeling Impact Report, sellers recoup only 67% of the money spent on renovations to kitchens and 71% to bathrooms. Shrewder strategies…
Ask your real estate agent for a comparative market analysis (CMA) to see the sales prices and photos of comparable homes for sale in your neighborhood. If their condition is similar to yours, you may need to make only minimal improvements. Discuss with your agent what upgrades might be necessary.
Splurge on upgrades that look great in online photos. More than 40% of home buyers say their first step in house hunting is searching online. Gleaming, Instagram-worthy floors provide an impressive pop in website photos, virtual video tours and 360° wide-angle photos. A hardwood flooring refinish costs an average of $3,400, but owners recover 147% of that when they sell the home…the average cost of new wood flooring is $5,500, and owners recover 118%.
Go for “HGTV” curb appeal. Buyers expect the front of a home to look pristine. Worthwhile improvements to consider…
Roofing costs an average of $12,000 with 100% of costs recovered.
Garage-door replacement. Average cost: $2,000…percentage of value recovered: 100%.
Standard lawn-care service (including fertilizer and weed control). Average cost: $375…percentage of value recovered: 267%.
Landscape maintenance program (including mulch, pruning of shrubs, planting of perennials or annuals). Average cost: $3,000…percentage of value recovered: 100%.
Tree care (including spraying, pruning and removal of one 30-foot-tall tree). Average cost: $2,000…percentage of value recovered: 100%.
Upgrades that are not worth it: Any that overly customize your house, such as an outdoor patio kitchen and fire pit, will recoup just 71% and 67%, respectively, of your costs.
Prioritize energy-saving improvements, especially in older homes. Adding batts of fiberglass in the attic or blowing foam into walls can cost $2,500 or more, but you recoup 100% when you sell.
Address high-visibility cosmetic problems. Left unfixed, they stoke buyer concerns that your house has more significant maintenance issues. Minor problems include: Peeling paint…water stains…loose or broken handles and pulls on cabinets, sinks and toilets…wobbly closet doors on tracks…torn window screens…pet damage such as scratches on doors.
Clean up the clutter—most buyers are looking for storage space. Uncluttered shelves, drawers and closets give the impression of more storage.
Have the home professionally cleaned. Steam-clean soiled carpets and curtains…power-wash your driveway…make sure front and entryway windows are dust-free.