According to recent research, around 25% of home sellers have dropped their asking prices as the real estate market starts to cool. This is in stark contrast to the last two years, which saw record high prices across the country amid a home-buying frenzy.
Now, as buyers back off due to rising interest rates, sellers need to put a lot more thought into how they price their homes. Read our real estate sellers' guide to find out why pricing is so important, regardless of when you want to sell your home.
In the last two years, the real estate market saw unprecedented demand for homes, thanks to the lowest interest rates in history. Across the country, home prices increased by almost 20% in 2021.
This hefty increase is due to the sudden demand for houses amid an ongoing housing shortage in the USA. When you add challenges in the construction industry, you've got the ideal circumstances for a seller's market.
These conditions allow sellers to dictate home prices. Now that buyers are backing off a little, home sellers need to rethink their pricing strategies to attract their attention.
The principles of supply and demand are simple enough, but things are seldom cut and dried in the real estate industry.
For instance, in December 2021, luxury homes for sale in Delaware sold at a rate 32.2% higher than in 2020, despite a decline of 23% in sales of moderately priced homes.
That's because multiple factors can impact home sales and pricing in real estate.
When you decide to sell your home, it is vital to set a reasonable asking price, i.e., one that appeals to as many prospective buyers as possible.
This figure also called the 'list price', depends on the home's location, square footage, age, condition, and any upgrades you've completed while owning it.
Prevailing market conditions in your geographic area also have an impact on setting a reasonable asking price. The best way to determine this is by comparing your house to recently sold homes in your area.
While a buyer's or seller's market can impact home prices overall, some hot property markets remain in high demand regardless of this phenomenon.
That's why looking at recently sold homes in your area is the best way to come up with a price that is fair to both seller and buyer.
You can find lists of recently sold homes on the MLS by narrowing your search criteria down to recently sold homes of equivalent size in your area. It's best to limit your search to homes sold in the last three to six months.
Then, look more carefully at these properties to find a few with many similarities to your own home, e.g., a swimming pool, home office, recently upgraded kitchen, and more.
Pay attention to homes that sold for less than the others, too. An awkward layout and small rooms can put buyers off.
The quickest and easiest way to get accurate house comps is by asking an experienced real estate agent to do the comparison for you and provide you with a home valuation.
Remember, you'll also incur some costs when you sell your home. You must keep the following costs in mind if you want to profit from the sale:
Closing costs include necessary fees, taxes, prepayments, and services involved in selling a home. They can amount to around 10% of the selling price.
In Delaware, you'll also need to pay 4% of the purchase price of the property when you transfer the title deed to the new owner. The state takes 2.5% of this amount, while the rest goes to your county.
Typically, the buyer and seller each pay half of this amount.
Sometimes, the buyer will ask for a home inspection before agreeing to buy your home. They pay for this service, and it helps them determine whether they'll need to undertake any major repairs to the house soon after moving in.
If the home inspection reveals serious issues, the buyer may withdraw their offer or ask the seller to pay for the necessary repairs.
In a buyer's market, the selling price rarely equals the asking price for a home, although prospective buyers will try their luck regardless of market conditions.
Typically, interested buyers will offer a slightly lower amount than the list price. They often attach terms and conditions to this offer, too.
The seller can accept, reject, or negotiate this offer, until both parties agree on a price. Often, this takes several bouts of counter offers.
In a seller's market, you might even end up with a bidding war on your hands. A bidding war involves one or more interested parties offering more than the listed price on a home they want.
Unless you're selling your home for cash, the buyer's mortgage lender will insist on a home valuation before they agree to finance the sale. That's because they can't lend more money than the home's worth.
If your home's valuation comes back less than the asking price, you will need to rethink your options.
Determining a fair price for your home is a juggling act between all the above factors in our real estate seller's guide.
As a homeowner, you're entitled to set your asking price as low or high as you want to, but you're bound to get the best price by working with an experienced and motivated real estate agent.
When you choose our team to sell your home, we will exceed your expectations. We offer extensive marketing, home staging, and sales services to ensure your home attracts more interest, faster.
We use Compass award-winning technology to sell Delaware luxury homes as quickly as possible for the best price. Get in touch today for an effortless and effective home sale.