How to Sell your House in a Slow Market
Have you heard the news? The property market is slowing down, and house prices are dropping. It’s the news that was heralded by the media long before the effects of a downturn were even felt. If you have any sort of remote interest in property, then you will have undoubtedly read or heard about this latest turn in Australia’s property market. But what does a ‘slow’ market mean if you’re looking to sell your property?
A ‘slow’ market is the term used for a property market where prices are decreasing or stagnant. In the current property downturn, sellers have been branded as the ‘losers’, while first-time property buyers are coming out on top. But the current climate doesn’t have to spell bad news if you’re selling your home. We take a look at how to sell your property in Australia’s current property market.
What is a slow market?
For many years, Australia’s national housing prices have been increasing. In some areas, growth has been rapid. Over the past five years we’ve seen property prices grow by up to 75% which hasn’t been good for housing affordability.
The property market, like any market, is subject to periods of growth, decline and stagnation. This latest downturn is a natural progression in the property market cycle because what goes up, must inevitably come down, or in this case, correct itself. For many experts, the slowing market is simply a ‘correction’ of ever-increasing property prices and they forecast that a period of growth will soon follow again.
There are a number of factors that have contributed to Australia’s slow housing market. Contributing factors include increased supply of housing, particularly apartments, stricter lending standards and decreased foreign investment, especially from China.
How can a slow market impact me selling my house?
A slow market can bring about two major differences if you’re selling your home. In a slow market, property values decrease which means if you’re selling your home you may not be able to sell your property for the same price you might have obtained two or three years ago. The second difference has to do with the time it takes to sell your property.
As we’ve already mentioned, one of the contributing factors to the slowing Australian property market has been an increased supply of housing, and this, combined with stricter lending standards, equals fewer potential buyers and demand. With less potential buyers walking through the door, sellers may find their property takes more time to sell. Data from CoreLogic in October 2018 showed the average number of days for a property to sell across the capital cities increased from 42 days in 2017 to 53 days, while in Sydney, auction clearance rates have fallen from 80% to around 50%.
What is the best strategy to sell your house?
The best strategy for selling your home in a slow market will involve patience, a realistic price and presentation.
Given your property may take more time to sell, it’s a good idea to sell your property before you buy another property. This will eliminate the need for a quick sale. Patience will be your best ally when it comes to selling in a slow market. Sellers who are prepared to wait for the right buyer are likely to be rewarded.
A fair and reasonable price is a sure way to sell your property quickly. Forget about what your property was valued at in the past, focus on the current market and adjust your expectations accordingly. Research what is happening in the property market around you, take note of the competition and speak with experienced real estate agents who can advise on a realistic price. In a market where buyers have the upper hand, you can’t afford to set an unrealistic price.
Just as presentation is important when selling your home in a booming property market, it is equally important, if not more so, in a slow market. At a time when potential buyers can afford to be picky, near enough is not good enough. Focus on presenting a clean and tidy property, from the bathrooms to the garden. Clear any clutter and minimise furniture so potential buyers can imagine themselves in the property. Create ambiance with smells and music that appeals to either a broad range of potential buyers or your target market.
What preparations are involved in selling a house?
Presentation will be paramount in obtaining the best possible selling price. Undertaking some preparations before you list your property for sale may have a dramatic impact on your final selling price.
It may be necessary to tackle some repairs around the property before selling your home. When a buyer sees broken or decrepit fixtures they see dollar signs. Ensure potential buyers offer you their best price by conducting small repairs yourself or searching for the best quote if workmanship from a professional is required.
Depending on your property, it may be beneficial to undertake some renovations. Ensure the renovations are cost-effective and won’t put you at risk of over-capitalising. Small renovation jobs like re-carpeting or a fresh coat of paint can completely transform the appearance of your property and in turn, what someone is willing to pay for it. Kitchen and bathroom renovations are often more expensive and may not be cost-effective. You can read more about home renovations by downloading this guide.
Consider how professional property styling could help to increase your selling price. Properties that are professionally styled can often attract more interest and a higher selling price. These professionals will have selling tips and access to appealing, on-trend furniture. They are experienced in accentuating attractive property features and hiding negative features. Weigh up the cost of these services and the likely return they will give.
Any renovations and preparations should be carried out with the intention of appealing to a broad range of property buyers. This means you should keep colours neutral and try to appeal to families, young professionals and older couples alike. For example, to increase family appeal you should ensure your property is child friendly, while presentation of entertaining spaces may be important when appealing to couples.
Real estate agents will be able to advise you on how to achieve broad appeal or they may advise you to focus on one part of the market, for example, families. Buyers will usually find your property through listings, so you want your property to stand out. A good real estate agent will ensure your property is noticed among the many property listings. Remember real estate agents work for you so ensure you make use of their skills and listen to their selling tips. Don’t underestimate the value of finding a good real estate agent – this should be your first step!
What is the fastest way to sell your house in a slow market?
There are several ways to sell your property and choosing an appropriate selling process is important. The selling process can include an auction, private treaty or by tender (also termed expressions of interest). Those looking to sell fast in a slow market will benefit from an auction or sale by tender. This is because both methods create urgency by setting a time limit on the sale.
An auction is held at a set time and place after a period of marketing, while a sale by tender invites potential buyers to submit an offer by a specified time and place. If a property is being sold by private treaty there is no urgency for property buyers to act or make a decision. As a result, a property may remain unsold for a longer period of time.
When a house is sold at auction there is usually no cooling off period which means settlement can occur sooner and there is less chance the sale will fall through.
Regardless of the selling process, if you’re looking to sell your property fast, whether it is in a slow or a booming market, the same age-old principles will still apply. To help you achieve a fast sale, even in a slow market, you should ensure the property is:
- priced appropriately
- meets expectations of the target market
- appeals to a broad range of potential buyers
Can I sell my house if I have a mortgage on it?
The majority of Australian home-owners have a mortgage so it would be crazy if they were locked into the same property for the life of their typical 20 – 30-year loan term. You can sell your property if you have a mortgage on it but depending on the amount you still owe and the value of your property, selling with a mortgage can be costly if you need to close your loan early.
There are a number of options available to those who wish to sell while they still have a mortgage.
Loan portability is a home loan feature that allows you to take your current home loan with you when you move house. This option is easy and can help to avoid unnecessary costs as there are no exit fees or set up fees that you otherwise would incur if you have to enter into a new loan agreement. To make use of the loan portability feature most lenders will require you to settle on your old property and your new property on the same day.
So, what happens if you find a new property before you list your current property for sale? A bridging loan is a temporary loan that can be arranged quickly to help you finance the purchase of your new home before you have sold your current property. These loans can be expensive but will automatically close and revert to a standard home loan when you sell your existing property.
Moving house may be the perfect time to refinance. Review how a new property will change your situation and determine if your current home loan is still the best option. Refinancing to the most suitable loan could save you thousands of dollars, but you will need to account for exit fees and set up fees, particularly if you are changing lenders.
Selling your house in a slow market
The property market is always changing, and it is hard to time the sale and purchase of property perfectly. Take these selling tips on board and buy and sell when it suits your personal circumstances, not an unpredictable property market. This is a good way to ensure you are in the best financial situation.