As a result of stay-at-home orders and rising economic uncertainty, this spring has seen a rapid drop in homebuyer activity. As April comes to a close, many homeowners who have delayed putting their house on the market in what is traditionally prime homebuying season are wondering what their next step should be.
Home sellers have a few choices: They can put their house on the market amid the pandemic, wait until stay-at-home orders are lifted or put off their plans indefinitely. The decision you make as a homeowner must be based on the unique details of your current situation.
Here are three reasons you should sell your home in 2020, along with three reasons you may benefit from waiting:
Even before the first known coronavirus cases in the U.S., economists and real estate professionals predicted mortgage interest rates would remain, on average, below 4% for the majority of 2020.
The average mortgage rate hit a 50-year low on March 5, when the average mortgage rate for a 30-year, fixed-rate mortgage was 3.29%, according to Freddie Mac. Such low rates initially led to an overwhelming amount of interest from homeowners and buyers, with many lenders lacking the resources to process so many loan applications. Most appear to have since stabilized their operations to handle the volume.
“Lenders are lending money, and they will do so if you want to refinance and if you’re looking to purchase,” says Patrick Boyaggi, co-founder and CEO of Own Up, a mortgage technology company and marketplace based in Boston. “Rates are near historic lows, and lenders now have the ability to underwrite and process loans in a timely fashion.”
On April 23, Freddie Mac reported the average mortgage rate was 3.33%. Even if a rapid economic recovery took place after stay-at-home orders are lifted for most Americans, the expectation is that interest rates will remain low. That’s good news if you’re looking to finance a home purchase or need interested buyers to be able to secure an affordable mortgage.
Especially if you live in a city where home prices were climbing fast and bidding wars were common in recent years, homes at entry-level prices – often purchased by first-time homebuyers – are likely to still see buyer activity through the rest of the year.
“It’s the upper end of the market that might be harder hit,” says Ron Abta, Realtor and founder of Polaris Realty in San Francisco. He notes that even with stay-at-home orders, entry-level homes in San Francisco are seeing more activity than the higher end of the market.
The price range that’s considered entry level depends on where you live – typically it’s considered the lower third of home sale prices for an area.
Even if you’re trying to sell an entry level home, you may see fewer active buyers than you would normally. Boyaggi says many lenders are tightening their underwriting standards a bit due to the economic uncertainty. People with lower credit scores or smaller savings for a down payment may find it harder to be approved for a mortgage.
If you need to move regardless of stay-at-home orders, it’s still possible to sell your home and find a new one. You certainly wouldn’t be the only one moving for a variety of reasons, explains Barbara Fox, licensed real estate broker and president of Fox Residential Group, a boutique real estate firm in New York City. For example, “there are always people who need to move before their kids start school,” she says.
If you’re able to wait a bit longer, listing your home once the isolation orders lift would be ideal, Fox says. Buyers may not immediately rush back into the market, but as long as the economy sees positive gains, the housing market could see some rebound.
“I would certainly hope that over a period of a few months we see a semblance of normalcy returning and the market picking up to a more normal level,” Fox says.
Of course, the need to move isn’t always positive. If you lost your job, you may be worried about your ability to continue to pay your mortgage.
“There’s this looming potential foreclosure crisis. A lot of people – 26 million – have lost their jobs. How many of those people are going to get their jobs back?” Boyaggi points out.
If you’re worried about continuing to afford your home, selling it may be a valid option. However, the more Americans that attempt such a sale, the more likely that there will be a glut of inventory, which can lead to a drop in home values. At that point, the number of foreclosures will rise throughout the U.S.
If you’re one of the many homeowners who have refinanced recently, there’s no reason to consider selling your home in the immediate future. Hopefully, your refinanced mortgage has helped ease financial woes by lowering your monthly payments, which helps to keep you more securely in your home.
Even if you’re not unemployed, you may be furloughed from your job, have taken a pay cut or have been warned about layoffs on the horizon. All of these scenarios cast uncertainty on the future of your income, and in most cases you’ll be better off delaying the sale of your house and purchase of another until you know what the future holds.
“You need to think about all the extreme scenarios and consider all the data, and make a decision from there,” Boyaggi says.
It’s also a good idea to be in contact with your lender if you’re experiencing any reduction or loss of income to discuss options for deferring mortgage payments for a short period of time or modify your loan to ensure you can remain in your home for the long term.
If you were looking forward to selling your home in a spring seller’s market, where buyer demand is high and likely to drive prices up, you can throw that dream out the window – at least for now.
It remains unclear what the immediate future holds for individual housing markets when stay-at-home orders end. It’s possible markets will see eager buyers rush onto the market all at once, but the longer quarantines last, the more likely that homebuyers will delay their purchase longer.
“We don’t know if the number of buyers that come back to the market will be enough to absorb the supply – that is still an unknown,” Abta says.
If you don’t like the idea of settling for a price slightly lower than you may have gotten in a normal spring season, you’re better off remaining in your home and waiting until there’s data that provides you with new price expectations. If you’re unwilling to waver on a sale price, you may have to wait out the recession that the U.S. economy currently appears to be enduring, and there’s no telling how long it will last – and how it will affect home prices.
10 Secrets to Selling Your Home Faster
Ensure a quick sale.
Selling your home quickly not only allows you to move on with your life, it also means fewer days of keeping your home in pristine condition and leaving every time your agent brings prospective buyers for a tour. According to real estate information company Zillow, the best time to list a home for sale is on a Saturday between May 1 and 15; homes listed during those times sell six days faster and for 0.7% more than the average annual home price. But how fast your home actually sells, and at what price, depends on factors beyond timing. Here are 10 secrets to selling your home faster, no matter when you list it.
Updated on March 20, 2020: This story was published at an earlier date and has been updated with new information.
Pick a selling strategy.
Before putting a for sale sign in your yard, it’s important to pick the selling strategy that will work best for you. The for-sale-by-owner option may be best if you feel confident in your ability to market the home and negotiate. If your time is better spent on other details, a real estate agent could be best. If you need to sell the home quickly, you may want to inquire with an iBuyer, an entity that can make the deal close faster than the typical homebuyer. You should feel confident in the selling strategy you choose, and avoid switching from one to the other while your house is on the market. Buyers could be turned off by the constant changing of circumstances.
Invest in a professional photographer.
According to NAR’s 2019 Profile of Home Buyers and Sellers, 44% of recent buyers started their search online. Of those, 87% found photos very useful in their home search. If your listing photos don’t show off the features of your home, prospective buyers may reject it without even taking a tour or going to the open house. Hiring a professional photographer and posting at least 30 photos of your home, inside and out, is a good way to attract buyers. Photography is often free for home sellers, as shoots are often conducted at the expense of real estate brokers as part of marketing the property.
(People Images/ Getty Images)
Nothing turns off buyers like a dirty house. Hire a company to deep clean if you can’t do it yourself. “When the (home) is on the market, no matter what time of day or night, it should be clean and neat,” says Ellen Cohen, a licensed associate real estate broker with real estate brokerage Compass in New York City.
Key places to clean while your home is on the market include:
- Kitchen countertops.
- Inside cabinets and appliances.
- Floors and room corners where dust collects.
- Bathroom counters, toilets, tubs and showers.
- Inside closets.
- Windows, inside and out.
- Scuffed walls, baseboards and doors.
- Basement and garage.
Depersonalize the home.
Remove all your family photos and memorabilia. You want buyers to see the house as a home for their family, not yours. Remove political and religious items, your children’s artwork (and everything else) from the refrigerator and anything that marks the house as your territory rather than neutral territory. The same goes for any collections such as figurines, sports memorabilia or kids’ toys that can make a buyer think less about the house and more about you. Family photos can be replaced by neutral art or removed entirely – just be sure to remove any nails and repair nail holes where any hanging photos used to be.
Let the light in.
People love light and bright, and the best way to show off your house is to let the sunshine in. Open all the curtains, blinds and shades, and turn lights on in any dark rooms. If the natural light situation is lacking in any room, strategically place lamps or light sources throughout to set the mood. And while your house is on the market, open all curtains and turn on lights every time you leave your house for work or errands in case you get word that a buyer would like to tour the space before you get home.
Be flexible with showings.
Buyers like to see homes on their schedule, which often means evenings and weekends. Plus, they want to be able to tour a home soon after they find it online, especially in a hot market where they’re competing with other buyers. If your home can be shown with little or no notice, more prospective buyers will see it. If you require 24 hours’ notice, they may choose to skip your home altogether. “That’s one less person who gets to see the property,” Cohen says. Be ready to leave quickly as well – if you’re still cleaning up or hanging around outside when the buyer arrives, it can make for an awkward interaction.
Set the right price.
No seller wants to leave money on the table, but the strategy of setting an unrealistically high price with the idea that you can come down later doesn’t work in real estate. Buyers and their agents have access to more information on comparable homes than ever, and they know what most homes are worth before viewing them. A home that’s overpriced in the beginning tends to stay on the market longer, even after the price is cut, because buyers think there must be something wrong with it. “Pricing correctly on the lower side tends to work much better,” Cohen says.
Remove excess furniture and clutter.
Nothing makes a home seem smaller than too much big furniture. Rent a self-storage container or a storage unit and remove as much furniture as you can. It will immediately make your home seem calmer and larger. Remove knickknacks from all surfaces, pack them away and store the pieces upon which you displayed them. Take a minimalist approach to books, throw rugs and draperies, and clear off your kitchen and bathroom countertops, even removing appliances you normally use. If you can scale down the contents of your closets, that’s even better, because it makes the home’s storage space look more ample.
Repaint in neutral colors.
A new coat of paint will do wonders to freshen up your home, both inside and out. This is the time to paint over your daughter’s purple bedroom, nix the quirky turquoise bathroom and cover up the red accent wall in your dining room. Busy wallpaper can also turn off potential buyers. Your goal is to create a neutral palette so buyers can envision incorporating their own personal touches in the home. “You just want people to see the space for what it is,” Cohen says. Rather than a stark white, consider neutral shades of gray, taupe and cream on the walls.
Spruce up the front of your home.
You’ve heard it 100 times before, and it’s still true: Curb appeal matters. You don’t get a second chance to make a first impression. A new or freshly painted front door, new house numbers and a new mailbox can breathe life into your entryway. Fresh landscaping and flowers in beds or in pots also enhance your home’s first impression. Trim trees and bushes, tidy up flower beds, remove dead leaves from plants, clear out cobwebs from nooks near the entrance and pressure-wash walkways, patios and decks. Leave the outdoor lights on, too, because prospective buyers may drive by at night.
Here are 10 tips to sell your home faster:
- Pick a selling strategy.
- Invest in a professional photographer.
- Clean everything.
- Depersonalize the home.
- Let the light in.
- Be flexible with showings.
- Set the right price.
- Remove excess furniture and clutter.
- Repaint in neutral colors.
- Spruce up the front of your home.
Updated on April 28, 2020:
This story was published at an earlier date and has been updated with new information.