5 Rules for Selling in a Recession
Selling your house & all you keep hearing on the news is about potential recession, inflation and market crash?! What does that mean to you & what do you need to do differently if you are thinking about selling your home? In this article I’m going to share our best top 5 rules for selling your home in a recession.
This current market as of mid-2022 it has changed since the last 12-24 months and what you might have gotten used to for selling your home and the high demand has decreased. So what I'm going to go over to you today are my five rules.
What is a recession?
First and foremost, what is a recession? The textbook definition of a recession is a significant decline in economic growth that lasts months, even years. During a recession, a country's overall economic output declines. The unemployment rate goes up. Retail sales fall. Businesses cut their spending and manufacturers produce less goods. And then, of course, are we in a recession? Depending on who you ask, we'll give you an answer. We don't know if it's a recession. What we can say is that if it is one, it's not like anything we've ever seen before. Businesses are investing in America at record rates.
In a recession, we have two quarters of negative growth. So we got. It. So regardless of what the media says, it's important to understand the fact that in the last five recessions, we had a decline in property values only twice. 2008 recession was almost 20%. And then 1991, we were at 1.9% decline. So just because we are in a recession, or not, depending on who you ask, it doesn't mean that property values will go down. So the sky is not falling. However, it is very important not only to not overreact It's also very important to not under react.
Rule #1- Clarity it Power
Rule number one, clarity is power and means that it is an imperative that you understand exactly what's going on in your local market. Stop paying attention to the national media. You need to focus on your area, your subdivision, your county, your city, figuring out exactly what is going on and what you're looking for are things like the absorption rate, how long our house is taking to go under contract, how much our house is selling for, versus how much they're listed for. That clarity will give you an accurate idea of what the landscape is looking like in regards to your market, which will then give you the ability to create a strategy in order to place your home on the market and for it to sell at top dollar.
Rule #2- Find your home’s perfect buyer
Rule number 2 is a question to answer, who is your perfect buyer? This is very important, and I see a lot of agents missing this opportunity to reverse engineer the perfect buyer. So what does that mean? So let's say if you have a four bedroom, three bathroom, home, are you also competing with three bedroom homes? Possibly. But you want to see what the difference is between a three bedroom and the four bedroom in regards to demand. If you're comparing yourself to a three bedroom, you are many times doing you or your client. If you're an agent, a disservice because there are people that do not want a three bedroom but must have a four bedroom. But there are very few people that must have a three bedroom that wouldn't consider a four bedroom. What it is, is that's making sure that we target our perfect buyer, the person that must have a four bedroom, that must have three bathrooms.There must be in this county, in this area, what is the competition look like? How many of them are under contract? How many have sold in the last two months? That's going to give us an idea of how fast things are going under contract. Ultimately, you're looking for that. There is a buyer out there that, let's say, for example, there's ten homes on the market and last month, five of them went under contract. The month before, five of them went on their contract. Those are strong numbers so that at any given month, five of them will go under contract on average. So it's important to understand what that looks like.
Rule #3- Prep your home to sell online & in person
Prep your home to sell online and then in person, the majority of the people are going online to see the home, to see the pictures, videos, to read the description. So it's super important to have professional photography, to have a real estate agent guide you in regards to how to set up your space, how to set up rooms, perhaps do virtual staging, perhaps do real staging. It's very important that we sell the house first online. The description should be as thorough as possible. People's attention span are so limited these days that they're just skimming through pictures. I have a rule in regards to pictures.
Rule in Regards to pictures, there are three types of professional pictures:
There are pictures that highlight the home. There are pictures that are neutral that really don't add or take away, and there are pictures that are negative that could shed a negative light on the property.
I'll give you a perfect example. If the kitchen perhaps is small, I would prefer to post a picture of the kitchen at an angle that perhaps will make it seem a little bit bigger. Now, obviously, the kitchen size is what it is, but people are always filtering out homes to not consider by not giving them an opportunity to filter it out. We're hoping that they'll go to take a look at the house and then fall in love with perhaps the other features that the house have. No, obviously, notice a smaller kitchen. But you know what? I'm glad I came because I love the art. Another example are stairs. So some people don't like stairs as soon as you open the door. Some people aren't necessarily a fan of that. So why put a picture of that there? There are certain people that might argue, well, you want to show all the pictures because then they're wasting their time looking at the house. You know what? I think that you want people in the house so that they can fall in love with the home. And it's happened plenty of times where I have been very selective in the pictures that I've posted, really highlighting the beauty of the home and discarding the neutral pictures are the ones that don't really favor the home very much. And it's helped. We've got a lot more showings, a lot more interest. And I think that you have to make sure to sell it online.
Now, when you sell it in person, you have to make sure your house is not smell like pets. Many people that have pets are used to that smell. So it's important to have another person perhaps come by the house and let you know, does my house smell like cat or dog or anything like that? And remember, the way you live in the house is not necessarily the way you sell a house. So it's important that prior to putting on the market that you declutter as much as possible. If you're going to be moving anyways, get boxes, start packing things out, you want to showcase your home now more than ever because buyers have other options. Two, three, four months down the road, it almost didn't even matter. You were going to get multiple offers regardless. But now, because they have options, you need to showcase your home.
Rule #4 Pay attention to the market
Pay attention to the market. It's extremely important that you just don't put the house in the market and then you just fold your hands and just wait almost every day you're looking to see what the competition is looking like. So if you're listed at 500, but the neighbor down the road saw that you're listed at 500 and they want to be the next one to sell. And then they listed there's at 490. You need to know that that doesn't mean you necessarily have to lower the price, match theirs or go lower, but you need to know that. You need to see that. You need to be able to have that option to have a strategy to handle that. The strategy could be just let that one sell first. But what I'm saying is, is that you can't be passive to the market. You have to pay attention of what's going on the market and what's coming off the market, what is gone under contract. Just like your house, the same exact house went under contract down the road, but that agent didn't see your house. He didn't show his buyers your house. Why not? That's an answer that the real estate agents should be answering. The real estate agent should call and say, I have a house right down the road just like this one. Why didn't you take a look at it? It could be a good answer. It's very important to be proactive. You need to hunt these agents down for feedback.
Agents, any feedback you need to figure out what's going on. If the house smells funny, if there's something wrong with the backyard, what are the issues with the house? Because it can give you an opportunity to counter. I called up this agent one time looking for feedback, and she said that the house was too far from the amenity center. There was one 4 minutes away. She just didn't know that. So then that's what she shared with her client. You can't expect a buyer's agent to know everything about the house, so it's a listing agent's responsibility to explain it as thoroughly as possible so that that agent could possibly share that with their buyer. I have done this and I see other agents doing it as listing agents. They're actually there at the house so that when the agent is there with their buyer, that agent can showcase the property much better than the buyer's agent.
Rule #5 Bullet Proofing the Transaction
Bulletproofing the transaction so you get an offer which is exciting and meets the terms you want. You want to make sure that the financing is not going to be an issue with for the buyers . If it is, then you need to address that upfront. You want to make sure that your listing agent is contacting the lender for that buyer, saying, hey, how old is this pre-approval for? Or is this a pre-approval versus a qualification? Have you pulled up all their information? Hey, this property is in an area that has a highway or a fee. Is that going to affect how much they can possibly afford? It's very important that you do your due diligence upfront before going on their contract because the last thing you want is to go under contract and then it gets canceled and you have to go back on the market and start all over. There's no telling what's new on the market and how it will be perceived and regards, say, coming back on the market. It could be something where people are like, well, what's wrong with the property? Why? To go back on the market? So usually you get the most attention and the excitement as soon as you hit the market. So you don't want to miss that opportunity to secure a great contract.
There's other ways to bulletproof the transaction is just disclosing things up front and having a strategy to deal with that. If something does cross, something happens or something is going to come up. Sometimes home warranties can be used in order to mitigate any kind of major requests. So instead of fixing, let's say, a refrigerator and then a dishwasher, just providing a home warranty will allow that buyer to get those things addressed at their closing along with other items that might show up as well. So that's a great strategy that we use. Plenty of time having as many things addressed upfront versus later on down the road. It's very, very important in order to make sure you bulletproof the transaction, especially now. Attention to detail is important as a seller. You want to make sure that you're working with a real estate team that knows what they're doing and knows how to maneuver in this new market. There's a lot of agents that come and go in our industry because they come and they're part of a certain market and then it changes and they become extinct because they don't adapt.
It's important to adapt to today's market and not live in yesterday's market because unfortunately, those people are the ones that stay on the market and rarely ever net as much as they would like to net that in regards to the sale of their home, I hope this was a value to you. And if you have any questions, please do not hesitate to reach out. Our team will be more than happy to talk to you to see how we can help you either buy, sell or invest in real estate here in Northeast Florida.
