Selling Your Home in a Shifting Real Estate Market
The marketing in Santa Clara has evolved. Homes are taking longer to sell, and there are more available on the market. Home values have fallen from their peaks and are expected to continue to fall. What do you need to do as a home seller to get your home sold and at a good price in this market?
The Market Shifted- What Happened?
To understand how the Santa Clara market has changed, we must first understand how we arrived at this position. In general, our local real estate market is a seller’s market, with little inventory and high demand. The Federal Reserve’s monetary policy of low-interest rates and quantitative easing has produced an environment that has resulted in substantial asset depreciation in recent years. As a result, stock prices and real estate prices are at all-time highs. Local real estate values are influenced by interest rates and stock prices. When covid struck, the FED’s swift and forceful policy response exacerbated the situation.
Our market’s seasonality is also something we should be mindful of. After the holiday season, we typically see very low inventory levels at the start of the year. This pushes up prices in a market with decent demand, and we often see the strongest rates of price rise during the first quarter of the year. Due to unusually limited inventory, low-interest rates, and a record-breaking stock market, the market was overheated this year. This resulted in a very hot market at the start of the year, with local real estate values reaching all-time highs and making Santa Clara and The Valley’s real estate increasingly unaffordable.
Simply put, the shift was triggered by affordability, or the lack thereof. The vigorous action taken by the Federal Reserve to curb inflation exacerbated the problem. Rising interest rates and a sharp and deep stock market slump happened as a result of this. Both of these factors have resulted in a substantial decline in buyer affordability in our market, which, when combined with record house prices, has resulted in a sharp correction in local real estate values. In some cases, homes were sold for half a million dollars less than the peak sale prices just a few weeks before. In fact, I’m noticing a greater impact on higher-end homes than on lower-end ones.
What to Expect Moving Forward
Like other markets, the real estate market is driven by supply and demand. Homes have been hard to come by over the past few years, and demand has outpaced supply. As a result, annual increases in real estate values can be seen. Due to the current market conditions, homes are selling more slowly. This, combined with the normal increase in properties for sale that we see in the spring and summer markets, will put additional downward pressure on property values.
With the economy still in flux, buyers are treading carefully. Sellers who are seeking to recoup sale prices from months ago are ignorant of the market’s transformation. More homes will sit on the market as buyers and sellers hash out the pricing for the current market.
Markets that become overloaded with homes for sale will eventually tumble further as home sellers lower their asking prices to sell their properties. This will continue until the number of homes for sale falls below the level required to meet demand.
What You Need to Do to Get Your Home Sold in this Market
A successful real estate sale is often determined by two factors: seller expectations and realtor communication and market knowledge. Sellers need to understand the market to modify their expectations. To advise or educate their sellers, real estate agents and brokers must be able to articulate market trends. Sellers and agents can have a successful plan if everything is done correctly.
It’s crucial to accurately price your home in a changing market. You don’t want your house to be on the market for an excessively long time because demand is waning and prices are falling. What motivated buyers that are out there making offers, you’ll want to capture their attention in hopes of getting a strong offer and selling your home quickly.
* Total commission 4% including buyer side agent commission of 2.5%, offer varies by value of home.
Here are a Few Tips to Ensure Your Home Sells in the Current Shifting Real Estate Market
#1 Hire a realtor with experience in your neighborhood
A Realtor with experience in your local market will have a deeper understanding of what is happening in the current market, and how your home will relate to what is happing. Your agent will know how strong buyer demand is right now, what’s your competition, and how to price your home effectively for a successful sale. If you price your home too high, your home will sit on the market longer, and eventually, you will only receive offers from opportunistic buyers who will make you a lowball offer.
As the market drops, and new listings come in undercutting your home’s price, you will eventually have no choice but to drop your price or take your home off the market. The first week your home is on the market is critical in a shifting market. Make sure your realtor knows their stuff and has a solid plan to get your home sold.
#2 Make your home look great
In a shifting market, there are lots of homes on the market, and that means lots of competition and options for buyers. You want to grab buyers’ attention online BEFORE they ever step foot through your door.
Your Realtor should give you great advice on how to make your home stand out. Your Realtor should also have a team of experienced contractors, stagers, and tradespeople to get you home ready, at a reasonable price, and with a quick turnaround. You don’t want to be spending too much time getting your home ready as the market is softening and prices are dropping.
#3 Be prepared to negotiate
A few months ago a seller would list their home, and they would end up selling it with multiple offers and for a record price. In our current market, sellers will need to work hard to get multiple offers and will need to be prepared to negotiate.
This gets back to the agent you work with. Not only should they be a top-notch negotiator, but they must understand the current market, and be able to calculate risk. As a seller, you shouldn’t be afraid of losing a buyer if you counter. If a buyer has made you an offer, they want your home. Trust that your agent will guide you through the best process to get your home sold for the best terms and price that the market will bear.
It can be shocking how quickly and dramatically the market can turn. If you find yourself in a situation where you had your home listed on the market and the market had shifted, your agent didn’t do a good job of informing you and protecting you from the decline in the market.
Now that the market has shifted, it’s essential to know exactly what is going on? Where is demand, and how does your home stack up? Working with a professional who knows your area, will be your best asset in a successful sale of your home.
If you have questions about the market, and your Santa Clara home, I am happy to talk with you.
Feel free to call or email me. I look forward to hearing from you and helping you in any way that I can.
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