The coronavirus crisis has thrown a number of wrinkles into the home-selling process. Stock market fluctuations and job layoffs have some buyers rethinking whether to commit to a property purchase. Meanwhile, social distancing efforts to curb the spread of COVID-19 has put many in-person open houses and home showings on hold.
All of which would seem to suggest that the strong seller’s market where sellers enjoyed bidding wars and top dollar for their home are over. But is this true?
Not necessarily. Even today, there’s room for sellers to negotiate. In the fourth part of our series “Home Selling in the Age of Coronavirus,” we offer insight into what sellers should know about getting the best deal for their home.
The coronavirus effect on housing supply and demand
For starters, sellers should take heart that buyer interest may not be dwindling as much as they might think.
“While some agents have reported diminished interest from buyers and sellers, there are still buyers and sellers who either want or need to buy or sell now,” says Danielle Hale, chief economist at realtor.com®.
Your own situation will hinge greatly on where you’re selling, and how far along your area is in its COVID-19 contagion cycle. If cases are peaking, that’s way different from an area where cases are dwindling or near nonexistent.
“Real estate is always a local business, and that’s going to be even more true now,” Hale adds. “The impacts of COVID-19 on the housing market are going to hit each area slightly differently, and with different timing.”
So far, nationwide, housing inventory remains low. The number of homes for sale in March fell 15.7% compared with the same time a year ago, according to realtor.com’s March Housing Trends Report. During the week ending March 28, the number of newly listed homes dropped 34% compared with a year earlier.
Ordinarily, fewer homes on the market means less competition for sellers, which is a good thing for people who’ve listed their property.
Should home sellers reduce their price?
Some buyers may look for deals, thinking all sellers are desperate to sell. But if this isn’t you, there’s no reason to cave or whittle down your home’s price. In fact, the median home price increased 3.8% in March, to $320,000, according to realtor.com’s trends report.
“Regardless of the events, there will always be buyers who will write a lowball offer,” says Ressie Krabacher, a residential broker with the Chicago Home Partner team of At Properties.
Meanwhile, a report by the National Association of Realtors® in March found that 72% of agents surveyed have noted no reduction in seller’s prices.
But even if you think you need to take any offer and sell soon—due to job loss or other economic hardship—make sure you explore all your options first.
“Banks have rolled out mortgage forbearance programs, so most sellers are not in immediate danger of losing their home, even if they just lost their job or their income has been significantly cut,” points out Caleb Liu, who flips homes in Southern California with HouseSimplySold.com. “Other sellers have opted to pull their listings and wait for better market conditions, so inventory remains tight.”
Another option if you need to sell quickly is to entertain offers from iBuyers—companies that can buy your home quickly, although typically for a bit less than you’d fetch on the open market. Bottom line is, options abound that could fit for you depending on your circumstances.
“I would advise sellers to step back and figure out their situation and timeline,” Krabacher says. “I would challenge and encourage them to look at the big picture, and we’ll figure out if it makes sense for them to take the offer now or to sit tight.”
How to negotiate an offer on your home today
Now is the time for home sellers to get their priorities in order. How low are you willing to go? What counteroffer strategies make sense based on your individual financial situation and motivations for selling your home? In the current market, you can—and should—get creative.
“Maybe you can negotiate a more extended closing date ideal for buyers to get your price, or agree to a lower price with the condition of a quick closing or that buyers take the place as is rather than make repairs,” Krabacher says.
Another good thing to ask for during such touch-and-go times? A solid earnest money deposit from buyers to show they’re serious.
“I also advise sellers to negotiate on higher earnest money between 3% and 5% of purchase price to ensure the buyer has more skin in the game,” adds Krabacher.
Depending on your individual market and its balance of buyers and sellers, you’ll want to at least be open to all offers on your home, even if they aren’t as high as you’d like.
“As a seller, if buyers in your area have decided to put the brakes on their home searches, you may want to entertain offers that you hadn’t previously considered, especially if you need to sell quickly,” Hale says. “However, it may be that buyers are still shopping in your market, but other sellers have decided to hold off on jumping into the market now. In that case, you may still see strong offers.”