Despite rising interest rates and a lack of inventory, new home sales are still going strong, and actually increased another 10% in May.
Historically low-interest rates, high buyer demand, and a low inventory of homes have converged to form a strong seller’s market.
According to a 2021 analysis of home buyer demand by Clever Real Estate, the percentage of houses on the market for less than two weeks was consistently higher than the numbers in 2019. Moreover, a study from the National Association of Realtors revealed that the median existing-home price for all housing types in July was up 8.5% from July 2019.
People are scrambling to buy homes, even taking risks like not getting a routine home inspection, and offering cash well above asking prices.
Experts warn there may be a housing market crash on the horizon. If you are a homeowner looking to take advantage of the current seller’s market, then read on for a step-by-step guide on how to sell your home and turn the highest profit.
Step 1: Find a Real Estate Agent
If you are already a home-selling pro who knows how to put your house on the market, then you might forego an agent and use a local MLS company to list your home for a flat fee. However, if you’re like most home sellers and aren’t a real estate professional, then using an agent is highly recommended.
A good local real estate agent helps clients navigate selling a house and deals with the details such as listing the home on the MLS, marketing the property, and negotiating closing costs for the seller.
Traditionally, agent commission rates range between 5-6% of the final sale price, split between the buyer's and seller's agents. If you’re looking to save some money, though, you may be able to negotiate with your agent for a lower rate.
Sellers looking to reduce their costs can also work with a discount real estate broker and pay a flat fee for their services instead of a percentage-based commission.
For example, clever Real Estate offers a full-service sales experience for a flat fee of $3,000 or 1%, if your home sells for more than $350,000. These brokers negotiate on the seller’s behalf for better rates, and agents benefit because what they sacrifice in commission, they make up for in volume.
Step 2: Prep the Property
Once you have chosen the right agent, next, you’ll want to make sure your house is in the best shape possible.
Buying a home is an emotional process, especially in a seller’s market when buyers have to make a split-second decision to beat the competition. That’s why the first impression of the house could make or break the sale. If there are leaky faucets, chipped paint, or cracked tiles, buyers may pass on making an offer to fear what other unseen problems plague the property.
Although one of the benefits of a seller’s market is that buyers are more willing to overlook cosmetic or structural flaws, it is still beneficial to renovate and repair minor defects to get the highest bids. Some relatively low-cost updates with high ROI include installing new windows, repainting the interior and exterior walls, and updating the landscaping.
Staging your home is also critical if you want to attract high-quality offers quickly. According to the National Association of Realtors' 2019 Profile of Home Staging, 83% of buyers’ agents said home staging made it easier for buyers to visualize the property as their future home.
When staging, focus on the rooms that buyers interact with the most, such as the living room, kitchen, and master bedroom. A staged home also makes for better photographs, and better photos make for faster sales. In fact, professional photography has been shown to sell homes up to 32% faster than homes with low-quality images.
Step 3: Put It on the Market
Besides selling your home, this next step is the most exciting — listing the property for sale. This is where those professional photos you took in Step 2 will come in handy.
There are a few strategies you can use when listing a property in a seller’s market. If your end goal is to get as many offers as possible, then listing your property below fair market value could be a good approach. If you don’t mind waiting a bit longer for the right buyer and live in an area with low inventory, you can list your home at or above fair market value. This will also help ensure you only receive quality offers.
Sellers can gauge whether their listing price is competitive by comparing home values in their area over time and the asking price versus the selling price of similar homes in their neighborhood.
Step 4: Learn How to Negotiate
There are several tactics that buyers use to get a better deal on a home. For instance, some buyers ask for seller concessions, which can entail paying a portion of the buyer's closing costs, offering credits for repairs, or purchasing a home warranty policy for the buyer. These concessions are usually capped at 6% and are more common in a buyer’s market.
However, in a seller’s market, the homeowner has more leverage in the negotiation process — especially if it’s a hot property with multiple offers. When the tables are turned, the seller may ask the buyer to cover certain costs.
You should know some fees and figures before negotiating with buyers, including average closing costs for sellers, cost of renovations and repairs, and unpaid interest on your current mortgage.
Step 5: Choose the Best Offer
In a seller’s market, it’s not uncommon to get multiple offers on a property. If you do find that you’ve started a bidding war, don’t get overwhelmed. In fact, you should get excited!
To choose the best offer, there are a few key things sellers can focus on, such as:
- Whether the offer is all cash
- Type of financing proposed by the buyer
- Size of the down payment
- Amount of earnest money deposit
- Any unusual requests or allowances the buyer makes
The most important thing to remember when choosing an offer is to keep emotions out of the equation. Treat the sale like a business transaction, and don’t be afraid to walk away from offers that don’t suit your goals.
Step 6: Close the Deal and Move Out
Once you’ve chosen the best offer, it’s time to close the deal and officially sell your home; but don’t be surprised by the closing costs.
Closing costs for sellers represent many fees that range between 6-10% of the home’s final sale price. But, you might be wondering, what is included in closing costs for sellers? These fees consist of:
- Real estate agent’s commission
- Attorney fees
- Title insurance fees
- Loan payoff costs
- Transfer and property taxes
Knowing how to calculate closing costs for sellers upfront will make the closing process much smoother and easier. Make sure you also take moving fees into account as well. Before you know it, you've sold your home.
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