Some Homeowners Will Benefit from Other Sellers Going on a So-Called “Strike” This Spring (Are You in a Position to Take Advantage?)
The Lighter Side of Real Estate • April 16, 2023
The spring real estate market isn’t necessarily the best time to sell your house; you can get your house sold quickly and for top dollar at almost any time of year if you price it appropriately and it’s marketed correctly. But spring is definitely a time of the year many homeowners opt to sell their house.
It’s not a bad choice, since there are typically more buyers active in the market looking to buy a home. Plus, there’s a certain energy to the seasonally-driven market which just makes it feel like the perfect time of year to get your house sold quickly and for as much money as possible.
Then again, there are usually also more sellers to compete with in the spring as well, which can take away a bit of the edge you might have when selling during a time of year with less competition. But not this spring…
According to this Yahoo article, many sellers have gone on “strike” this spring, opting to not put their house up for sale.
It’s not that prospective sellers have all colluded as a group to do so; it’s that there’s a good amount of homeowners who have incredibly low mortgage rates on the house they currently own. This is causing some people to hold onto their current house because buying another one would mean taking on a higher mortgage rate.
That’s a fair reason for certain people not to sell this spring, but it’s also the exact reason it makes sense for other people to sell their house now!
Who Should Consider Selling This Spring?
Whether you have a low mortgage rate on your current house or not, there are still some reasons you might want to consider selling now, such as:
- You’ve been considering moving to a lower cost area. If you live in a high-priced area and have been thinking about moving to an area with lower priced homes or living costs, now is a great time to sell and reap the benefits of selling high and buying low somewhere else.
- Moving out-of-area for work. While moving for a job isn’t something you can always time, now is a great time to do so if you have any say in the matter. So if there’s been any hint of having to move for your career, you might want to put that into motion now.
- Moving closer to family. Whether you have aging parents, kids, or grandkids you need (or just want) to be closer to, selling this spring could be the perfect timing.
- Divorce. Deciding when (or even if) you’re going to sell a house due to divorce isn’t always an easy decision. But if you’re in the process of divorcing and it looks like you’ll have to sell your house within the next year, it might make sense to do it during this spring market if all parties can agree to do so.
- Downsizing. Whether you’ve had too much space for quite some time, or are a recent empty-nester and just know you should eventually downsize, you should think about putting your bigger house on the market to capitalize on a pool of buyers hungry for a large home. (This is especially true for anyone who’s been living in their house for decades and has no current mortgage, has a second home to move into, or is planning on moving into a retirement home or assisted living facility.)
- You simply don’t like where you live. Life is too short to live somewhere you don’t love.
Why Should You Consider Selling This Spring?
If you fit into any of those categories, you might want to seriously consider putting your house on the market this spring and take advantage of the current market conditions, such as:
- House prices are still historically high. While there is data showing that prices have come down a bit in certain areas, they are still higher than they were just a few years ago. In fact, according to Robert Shiller — a Yale University professor of economics and co-founder of the Case-Shiller Index — “Home prices are very high by historical standards…”
- Prices could come down in the near future. There’s been a lot of talk about home prices coming down, yet it just never seems to happen on any catastrophic level. Hopefully it won’t happen to that degree. But while there’s no way to predict when or how much they’ll come down, historically the market eventually takes a dip every so often, and we’re probably due for one sooner than later.
- Less competition from other sellers. There hasn’t been enough houses for sale to satisfy the number of buyers looking to buy a home for the past few years, but the number of listings is down even more this year. CNBC reported that listings are down 20% from this time last year, and that it’s half the amount of homes available at this time of year in 2019, before the pandemic-driven real estate market took off.
- Eventually more Baby Boomers will decide to sell…and there are a lot of them. Economists and real estate experts have been predicting for years that there would be a lot of Boomers selling their houses at the same time. But every year it seems that the majority of them continue to hold onto their homes. At some point there will likely be a wave of their homes hitting the market, which could possibly impact how quickly you could sell your house, and the price you could get if the amount of listing exceeds buyer demand at that time.
The Takeaway:
Many homeowners have a low mortgage rate, which makes them hesitant to sell their house. This creates an opportunity for other sellers to capitalize on less competition and historically high home prices during this spring market.
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Thinking About Renting Your House Instead of Selling? Read This First. If your house is on the market but you haven’t gotten any offers you’re comfortable with, you may be wondering: what do I do if it doesn’t sell? And for a growing number of homeowners, that’s turning into a new dilemma: should I just rent it instead? There’s a term for this in the industry, and it’s called an accidental landlord . Here’s how Yahoo Finance defines it: “These ‘accidental landlords’ are homeowners who tried to sell but couldn’t fetch the price they wanted — and instead have decided to rent out their homes until conditions improve.” Why This Is Happening More Often Right Now And right now, the number of homeowners turning into accidental landlords is rising. Business Insider explains why: “While there have always been accidental landlords . . . an era of middling home sales brought on by a steep rise in borrowing rates — is minting a new wave of reluctant rental owners." Basically, sales have slowed down as buyers struggle with today’s affordability challenges. And that’s leaving some homeowners with listings that sit and go stale. And if they don't want to drop their price to try to appeal to buyers, they may rent instead. But here’s the thing you need to remember if renting your house has crossed your mind. Becoming a landlord wasn’t your original plan, and there’s probably a reason for that. It comes with a lot more responsibility (and risk) than most people expect. So, if you find yourself toying with that option, ask yourself these questions first: 1. Does Your House Have Potential as a Profitable Rental? Just because you can rent it doesn’t mean you should. For example: Are you moving out of state? Managing maintenance from far away isn’t easy. Does the home need repairs before it’s rental-ready? And do you have the time or the funds for that? Is your neighborhood one that typically attracts renters, and would your house be profitable as one? If any of those give you pause, it’s a sign selling might be the better move. 2. Are You Ready To Be a Landlord? On paper, renting sounds like easy passive income. In reality, it often looks more like this: Midnight calls about clogged toilets or broken air conditioners Chasing down missed rent payments Damage you’ll have to fix between tenants As Redfin notes: “Landlords have to fix things like broken pipes, defunct HVAC systems, and structural damage, among other essential repairs. If you don’t have a few thousand dollars on hand to take care of these repairs, you could end up in a bind.” 3. Have You Thought Through the True Costs? According to Bankrate, here are just a few of the hidden costs that come with renting out your home: A higher insurance premium (landlord insurance typically costs about 25% more) Management fees (if you use a property manager, they typically charge around 10% of the rent) Maintenance and advertising to find tenants Gaps between tenants, where you cover the mortgage without rental income coming in All of that adds up, fast. While renting can be a smart move for the right person with the right house, if you’re only considering it because your listing didn’t get traction, there may be a better solution: talking to your current agent and revisiting the pricing strategy on your house first. With their advice you can rework your strategy, relaunch at the right price, and attract real buyers to make the sale happen. Bottom Line Before you decide to rent your house, make sure to carefully weigh the pros and cons of becoming a landlord. For some homeowners, the hassle (and the expense) may not be worth it.
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More Contracts Are Falling Through. Here’s How To Get Ahead. When you sell a house , the last thing you want is for the deal to fall apart right before closing. But according to the latest data from Redfin, that’s happening a bit more often lately. The good news is, it’s completely avoidable if you lean on an agent for insight into why that is and how to avoid it happening to you. This June, 15% of pending home sales fell through . That means those buyers backed out of their contracts. That’s not too much higher than the norm of roughly 12% from 2017-2019, but it’s still an increase. And it’s one you don’t want to have to deal with. The key to avoiding this headache is knowing what’s causing the issues that lead to a buyer walking away. A recent survey from John Burns Research and Consulting (JBREC) and Keeping Current Matters (KCM) finds that agents reported the #1 reason deals are falling apart today is stemming from the home inspection (see graph below): Here’s why. With high prices and mortgage rates stretching buyers’ budgets, they don’t have a lot of room (or appetite) for unexpected repairs. Not to mention, buyers have more options to choose from now that there are more homes on the market. So, if the inspection turns up a major issue, they may opt to walk away. Afterall, there are plenty of other homes they could buy instead. Or, if the seller isn’t willing to tackle repairs , a buyer may back out because they don’t want the expense (and the hassle) of dealing with those issues themselves. The good news is, there’s a way you can get ahead of any unpleasant surprises as a seller, and that’s getting a pre-listing inspection. It’s not required, but the National Association of Realtors (NAR) explains why it’s helpful right now: “To keep deals from unraveling . . . it allows a seller the opportunity to address any repairs before the For Sale sign even goes up. It also can help avoid surprises like a costly plumbing problem, a failing roof or an outdated electrical panel that could cause financially stretched buyers to bolt before closing .” What’s a Pre-Listing Inspection? It's exactly what it sounds like: a professional home inspection you schedule before your home hits the market. Here’s what it can do for you: Give you time to fix what matters . You’ll know what issues could come up in the buyer’s inspection. So, you’ll have time to take care of them before anyone even walks through the door. Avoid last-minute renegotiations . When buyers uncover unexpected issues after you’re under contract, it opens the door for concessions you may have to make like price drops or repairs, or worse, a canceled deal. A pre-listing inspection helps you stay ahead of those things before they become deal breakers. Show buyers you’re serious . When your home is clean, well-maintained, and already vetted, buyers see that. It builds trust and can help you sell faster with fewer back-and-forth negotiations. The bottom line? A few hundred dollars upfront can save you thousands later. Should Every Seller Do This? Not necessarily. Your real estate agent can help you decide what makes the most sense for your situation, your house, and your market. If you decide to move forward with a pre-listing inspection, your agent will guide you every step of the way. They’ll: Advise on whether to fix or disclose each issue Help you prioritize repairs based on what buyers in your area care about Make sure you understand your local disclosure laws Bottom Line If you want to avoid potential snags in your deal, a pre-listing inspection could be the way to go. Let’s talk about whether a pre-listing inspection is the right move for your house and market. Would you rather find out about a major repair now, when you can handle it on your terms – or after you’re under contract, when the clock is ticking?
