As the U.S. and other parts of the world continue to struggle with inflation across all sectors, the threat of a recession looms ever larger. It’s only natural to wonder about the practical impacts a recession would have on your finances and investments. After all, recessionary economics can dramatically affect the perceived value of many kinds of assets.
That’s especially true of your most valuable investment: your home. What would a recession mean for homeowners seeking to sell their homes in the next several months? The primary impact is uncertainty and possible loss of value as interest rates rise and buyer activity consequently begins to cool off.
To make the most of your home’s potential selling price, attract qualified potential buyers, and get to a successful closing as quickly as possible during a recession, avoid these seven costly home-selling mistakes.
One of the best things smart agents can do for their selling clients is to manage expectations by educating the sellers on the current realities of the local real estate market. It’s easy to fall into the trap of expecting quick closings and all-cash offers with over-asking-price premiums, but if your local market is already rebalancing itself after a spate of hot activity like that, you might be disappointed. Buyers in many locations are holding back now, while others are forging ahead but with more reasonable or traditional financed offers. Take the time to educate yourself on your local market’s current conditions before you price and list your home.
Speaking of pricing your home, a recession’s uncertainty can lead sellers to err on the side of protecting profit by setting an inappropriately high price for their property. Overpricing your home might seem like a strong negotiation tactic to set yourself up well for an eventual final offer that will still provide a healthy profit margin. However, setting your listing price too high can actually work against you by driving off otherwise qualified and interested potential buyers. An experienced listing agent can help you set the “Goldilocks” price—not too high, not too low, but just right.
Curb appeal is vital in attracting buyer attention. Even in a market with depressed inventory levels, you still need to help your home stand out in a positive way. Clean up your yard, trim overgrown bushes and tree limbs, and remove any toys or clutter in the yard. If possible, give your home’s exterior a good power wash to remove grime and dirt.
Turn that same attention to your home’s interior, too. A fresh coat of paint, freshly shampooed carpets, and completed minor repairs will help focus a visiting buyer’s eye on the home’s good qualities. If you can afford to upgrade dated appliances and light fixtures, especially in the kitchen and baths, try to get that work completed before you list the property.
Your potential home buyers don’t want to see a house filled with reminders of someone else’s family and presence in the house. Aim to create an interior that “reads” like a well-staged model home: clean, attractive, and free of personal items. Clear out family photos and personal belongings. Get a head start on packing up by renting a small storage unit and filling it with boxes packed with as many of your belongings as possible.
A home inspection can tank a closing pretty quickly. Avoid any unpleasant surprises by retaining the services of your own property appraiser well before the buyer’s inspection occurs. A pre-listing inspection will only set you back a few hundred dollars, but the information it reveals can save you thousands and protect your closing.
Any major issues revealed by this inspection should be addressed before listing, but bear in mind that in most states, sellers must disclose known issues to the buyer. Failure to do so can result in significant legal exposure for you. If your pre-listing inspection reveals a problem that isn’t repaired for some reason, you’ll have to let prospective buyers know about it and that can dramatically lower the offer or even prevent an offer from occurring in the first place.
In a competitive real estate market, it’s entirely possible that the house down the street might attract the buyer you’re courting with nothing more than an agreement to fix one minor item in need of repair where you’re resisting making similar concessions. In a recession, a lack of flexibility and refusal to give can mean the difference between a quick closing on a cash sale and several more months of paying the home’s carrying costs, unable to unload it. Stay open to buyer requests and be willing to give a little if you want to get your home sold quickly.
With such fluctuating markets, still, in the process of rebalancing themselves, it’s important to make sure you’ve got the right team helping you. That means at a minimum securing the help of a local realtor who understands your market and is familiar with what buyers are looking for and expecting. And if you’re not sure whether your real estate agent is skilled and experienced enough to help you sell quickly, remember you can and should interview agents before selecting one.