Let’s talk home selling tips. While the recent stock market gloom and much higher mortgage rates will undoubtedly make prospective home buyers feel poorer, there’s still hope for home sellers in 2023!
Sure, the lofty asking prices of 2021 and early 2022 have long since disappeared, but if you pan out a bit, property values are still up a ton over the past five years.
While you may have missed a chance to sell at the top of the most recent housing boom, the majority of homeowners remain in a really good spot equity-wise.
Regardless of what happens to the economy this year, chances are those who are planning to buy a home will, assuming they can find one that suits their individual needs.
There isn’t a total lack of appetite from home buyers, so sellers who list right should fare OK in 2023.
1. It’s Finally Becoming a Buyer’s Market
If you happen to be selling a property in 2023, conditions might be a little different this year than in past years. And not in a good way.
The main culprit, and really only culprit, has been mortgage rates. The 30-year fixed climbed from the high-2% range to over 7% last year. The worst year on record.
Rates have since settled down into the high-5% to low-6% range, but the damage is done. The seller’s market of the past decade is now becoming a buyer’s market.
Despite that dramatic increase, home prices are still forecast to rise 2.8% in 2023 (from November 2022 to November 2023), per CoreLogic.
Now let’s talk about that and some potential home selling tips to help you get top dollar if you do decide to list.
Similar to talk of the low mortgage rates going away, which finally did, we were told year after year that the seller’s market was coming to an end. And it finally did.
What this means is increased inventory, lower listing prices, fewer bidding wars, more seller concessions, and increased desperation from home sellers willing to drop their prices.
This will be especially true if the the 30-year fixed ticks higher and heads back towards 7% as a buyer won’t want an elevated purchase price AND an inflated mortgage rate. Heck, they may not be able to afford it.
In other words, expect fewer offers, more days on the market before an offer arrives, and more demands from the home buyer.
You need to be more reasonable this year and think about listing below a key pricing threshold to drive interest and get your property to achieve “Hot Home” status.
2. Know Your Buyer Well and Appeal to Them
Along those same lines, if you’re selling a home in 2023 you’ll want to ensure it is well-maintained and on point design-wise.
The types of homes you see sitting on the market these days are consistently not updated and often not priced to take that into account.
Sure, home buyers are still hungry, but they know a junker when they see one and those can and will still sit. Don’t get too arrogant here.
If there are doilies everywhere and silly curtains on all the windows, younger buyers (namely Millennials and Gen Z) may not be able to look beyond that.
In my mind, if these properties simply got a fresh coat of paint and underwent some minor tweaks, perhaps a little modern staging too, they could command the price being requested.
Heck, even the addition of a Nest thermostat and other smart home gadgets can get otherwise disinterested buyers excited in a hurry.
Same goes for little touches like new wall outlet plates, faucets, knobs, and other finishes that can make old fixtures look new. Cheap but very effective.
Of course, it will all depend on your unique property and individual housing market.
Properties in the first-time home buyer category will likely remain hot, regardless of whether they’re updated or not because there will always be more eligible buyers in that category.
More expensive homes may sit longer unless the seller (and agent) really take the time to determine what a prospective buyer looks like in their area and caters to that.
Still, it could still make sense to make these small adjustments to garner even more interest and a higher final selling price. The ROI could be well worth it.
Zillow recently noted that backyards are big still in 2023, so if you’ve got a nice one, highlight it and even lead with it in your listing/photos. Find out what else is on-trend and bring it.
3. Photos and Staging Matter, More Than Ever
Real estate is very emotional, whether prices are high or low. While economists talk numbers, home buyers and sellers lead with their hearts.
One of the most important things you can get right (or very wrong) is photographs. Ultimately, unless you or your real estate agent is a photographer by trade or serious hobby, you’ll need to hire a pro.
The good news is it should be a small price to pay for a very meaningful return. After all, buyers now peruse listings online or via their smartphone, and pictures pretty much take the lead.
An appealing cover shot will stand out in the crowd. A professional photo taken with the right camera, right lighting, and right angle/composition can work wonders.
Conversely, a poorly-lit photo that’s crooked or out of focus (and complete with a timestamp) could sink your listing even if the house itself is great.
One actionable tip is to make your best photo the featured one, even if it’s the kitchen. It doesn’t need to be the front of the house. It could be a sitting room or family room too.
If the outside of your home is ugly, use an interior shot that is more appealing.
Really, whatever pops the most. Because some prospective buyers may not bother clicking through to see the rest if they don’t like the first.
The same goes for home staging, which can make an enormous impact. It’s all about perception. Two identical houses can look completely foreign thanks to staging alone. Or simple decluttering. Or even a simple cleaning!
With the real estate market a lot cooler these days, the seemingly small details matter more than ever, especially if COVID means buyers only venture out to properties deemed worthy of an in-person visit.
4. Steer Clear of Discount iBuyers
Because it remains a
great good time to sell, there’s really no sense in using a discount iBuyer like Opendoor, or the now defunct Redfin Now or Zillow Offers. You know, the companies that can apparently sell your home in a week or less.
While the housing market isn’t as strong, why resort to a veritable fire sale? Sure, it might take a little longer to sell via traditional means, but it can be well worth your time and energy to do so.
You shouldn’t feel desperate in today’s climate, though I suppose there are always going to be situations that might warrant a very fast home sale, such as if you’re also buying or relocating for work.
In those cases, you might have to make some concessions, which is understandable, but still give a traditional listing a shot.
If you can, the conventional route should be the way to sell a home in 2023, even if you have to pay a real estate agent a commission.
As noted, just be more mindful of your listing (and list price) and be willing to negotiate with the home buyer. In fact, expect to negotiate.
5. But a Discount Real Estate Brokerage Might Work
On the other hand, it might be worth looking into a discount real estate brokerage, those that charge less than the typical 2.5-3% listing fee.
A few examples include Redfin, which charges just 1%, but you’ve also got the buyer’s agent fee to worry about, and REX, which charges 2% total by eliminating the buyer agent commission entirely.
There are many others, including some that charge a flat fee or nothing at all, with the latter requiring that you use them on your next real estate transaction.
This is always a controversial topic because full-service real estate agents will argue that they provide more for very little cost that is often recouped via a higher sales price.
In other words, a full-service agent may sell your home for more money and their higher commission is essentially absorbed, but whether that actually happens isn’t guaranteed.
Just know what you’re getting and if you do decide to go it semi-alone – you’ve got to know what you’re doing and know your property and real estate market really well.
Home sales are forecast to fall to around 4.5 million units in 2023, per the MBA, so you can and should negotiate with your real estate agent.
6. Consider Pricing Your Listing Below a Key Threshold
This should go without saying, but I constantly see homes listed above certain psychological pricing tiers.
For example, should you list a property at $405,000 or $399,000? While it’s perhaps debatable, you’ll probably get more eyeballs on your listing if you list just below $400,000.
This is partially to do with how filters work on popular home listing websites and apps, and partly to do with how the human mind works.
At the end of the day, the final sales price could go higher, even if you list lower.
But you may never get your property in front of the users who set their maximum purchase price filter to $400,000 on Redfin or Zillow.
Also note that buyers are keenly aware of things like Zestimates and Redfin Estimates, whether accurate or not. So listing below these numbers might also boost buyer appeal.
Just be sure you get enough interest to sell above list if you desire that higher sale’s price and are attempting to lure in frugal buyers.
You could argue that listing low is risky, but the same can be said about listing high, then having to reduce the price after the fact.
Tip: If you hold an assumable mortgage, highlight that in your listing too!
7. Vet Your Real Estate Agent Hard and Have a Plan
If and when you decide to list your home for sale, vet your real estate agent and ask them what the game plan is.
While it was a no-brainer to list and get top dollar in 2021/2022, those days are over. As such, you need a solid pain.
Always be frugal, and always pretend every dollar counts, even if you feel flush with cash thanks to surging home prices.
Your agent should know what price points work for certain neighborhoods and layouts, and list accordingly.
In fact, you might want to hire a local real estate agent who works almost exclusively in your neighborhood as the details will matter a lot more in 2023.
You’ll want to know the exact approach the real estate agent plans on taking to get your property sold quickly (if you want it sold fast) and for an optimal price.
Are they going to list low and hope it becomes a “Hot Home” on Redfin, or hold their ground at a higher price point and be patient?
Also talk concessions – what can they throw in to lure in a buyer? Maybe a mortgage buydown.
You should discuss all these particulars early on before you list and have regrets. Getting these details right matters even more because of how the real estate market is at the moment.
8. Find Out How Home Prices Will Fare in Your City
It’s one thing to work with a good real estate agent, and another to be an informed home seller. Do your own research on your local market to see how home prices will fare in 2023.
Take a look at your city and metro too, along with national home price projections. Get a feel for the market temperature so you can set a realistic listing price with your agent.
Don’t just take their word for it. There are plenty of websites that offer up free home price projections, including the usual suspects like Zillow and Redfin, along with state Realtor groups, NAR, and private companies like CoreLogic and First American.
Pay attention to the news, but also keep an eye on recent comparable sales in your neighborhood.
Fire up Redfin to see what sold nearby your property in the past few months. Check out how long it was listed, what it sold for versus the list price, and how it compares to your home size, condition, and feature-wise.
You might even gain some valuable insights into what your home lacks that can be easily remedied before throwing it on the market.
If a nearby home sale did particularly well, determine how you can emulate it or even beat it!
While 2023 real estate isn’t forecast to be as strong as preceding years, there are markets that will fare better than others.
For example, Charlotte, Cleveland, Pittsburgh, Dallas, and Miami are still hot, while Phoenix, Boise, San Jose, Sacramento, Minneapolis–St. Paul, and Denver are cold.
9. Make Your For Sale Listing Exclusive
I’ve seen this done – and it worked beautifully. The real estate agent held a single open house. Just one. The property was packed that day. It felt like a circus and created a lot of buzz.
If you’re a prospective buyer and you see other potential buyers inside the very home you’re thinking about bidding on, emotions run high. And fear of missing out runs even higher.
It can be a successful strategy if the property is in a desirable area and meticulously updated. The one example I mentioned ended up going under contract in a few days and went something like $100,000 over asking.
In reality, the property wasn’t all that amazing or unique, but the agent created a feeling of exclusivity.
The same effect can be delivered by deferring any showings to a particular date and time, with only qualified buyers who are represented by agents allowed to view the property.
The goal is overlapping buyer traffic and hopefully multiple offers all in the same small window, which could result in a bidding war.
While they watch others tour the home, they may become increasingly anxious about the competition, even if none of those other buyers actually express any interest.
If combined with a relatively low list price, you could get a nice response and your choice of buyer.
10. Wait for the Right Time of Year to Sell Your Home
Another important consideration is timing. We’ve got another 350 days or so to list properties in 2023. Not all days are created equal!
Conventional wisdom says to list a home in spring if you want to fetch the highest sales price for your home. Day of week can also matter.
However, this can and will vary based on your market and property type. Zillow has a handy feature for sellers on the owner view of their website.
Once logged in, you can scroll down to “Best Time to List” to find out when they think you should sell, based on their machine learning and data crunching.
It will tell you which month has been best historically based on seasonal patterns of similar properties.
Of course, if you’re also buying a home at the same time, you’ll have to factor that in too, as the best time to buy a home might be in late summer.
If in doubt, selling a home in spring is typically the best in terms of buyer traffic and fetching a high sales price.
It’s also good to list on a Thursday, assuming you really want to fine-tune things. With less demand in 2023, it’s not a bad idea to do all you can to improve your odds.
11. Qualify Your Home Buyers Before They Visit
Even though the housing market has cooled, you still shouldn’t want randoms or unqualified buyers in your home.
While your real estate agent should be on top it, certainly make sure prospective buyers are fully vetted before they arrive.
This means absolutely no lookie loos of any kind, and a verified pre-approval letter in hand. Ideally, one that has actually been underwritten by a mortgage lender.
Sure, you want as many potential buyers as possible, but you also need to limit the foot traffic.
This means only the very serious and qualified buyers should step foot in your home.
While you’re at it, take a hard look at their pre-approval letter beforehand to see how strong of an applicant they are.
Can they put down 20% on the home purchase, or is a 3% down payment all they can muster?
It might matter more in 2023 if the appraised value comes in low, requiring more funds from the buyer.
This situation isn’t uncommon, and could require the buyer to increase their down payment to make the mortgage financing work.
Those with only a small amount of assets may need to walk away in these cases, which can hurt your home’s marketability.
While a cash offer might be tempting, a strong borrower who needs a home loan to get the deal done can be nearly as good. And should result in a higher sales price.
Pay attention to their FICO scores, income/employment, and assets in the bank to determine their strength.
12. Be Prepared for Your Next Home Purchase Too
A common, yet tricky move at the moment, is selling and buying a property concurrently. It can be especially difficult thanks to the lack of inventory that continues to plague the market.
And because mortgage lenders aren’t as liberal as they once were, getting a home loan, or floating two at the same time, can be a deal breaker.
One thing I’ve seen people do recently is sell before buying a replacement home. This makes their property a little hotter because there are fewer contingencies.
But it also means finding a new house quickly, assuming their temporary digs aren’t ideal.
[When should you start looking for a house?]
Another alternative is to ask for a rent-back from the buyer where they allow you to stay for a month or two until you find a new home to purchase.
Of course, selling contingent on finding a replacement isn’t out of the question if the property/market is hot enough, but most will try to avoid it.
The property aside, make sure you’re pre-approved for a mortgage and ready to go on the financing front yourself.
You should have a good idea of what the sales proceeds will look like and how much you’ll be able to afford on the next purchase.
Begin looking at homes immediately as if your property has already been sold and you’re in panic-mode.
In summary, I believe 2023 will be a decent year for home sellers, though nothing like 2021 or early 2022. But those years were ridiculous historically.
If anything, there’s more of an equilibrium in the housing market, which is a good thing overall.
In summary, home prices are still projected to rise about 3% this year and if mortgage rates fall back to more reasonable levels, increased affordability may allow for stronger listing prices.
While there has been a lot of pessimism on the economic front, I still believe 2023 can exceed expectations if the right things fall into place.
Sure, it’s not an absolute guarantee that your home will sell for top dollar, but if you do your homework, focus on the seemingly small details, and take the time to do things right, it should pay off big time.
Read more: 11 home buying tips for today’s market.