Despite significant government interventions, economies around the world are in recession driven by Covid-19. Consumer confidence is low, share markets are wallowing and unemployment is rising.
The housing market is not immune to this turmoil. While commentators point to the market’s time-proven resilience, they’re also quick to admit the robust seller’s market of recent times is likely to be absent for some years to come. We’re already into a very new economic environment, and it will continue to evolve. Just as the leading real estate agents have quickly adapted their processes, so will sellers need to change their strategies to secure the best possible outcome.
Experienced realtors will tell you that it’s certainly possible to sell your home in a recession. They’ll have first-hand experience of this from the 2007 global financial crisis. Even agents relatively new to the profession will be armed with the knowledge and experience of their more senior managers and business owners.
Here are some high-level tips from specialists[1] to help you start thinking about:
- Whether you should sell during the recession or wait until it’s over
- If you decide to sell, how to get the best price without over spending
- How to go about promoting your home and negotiating with buyers when it’s no longer a seller’s market
Should you sell a house during a recession?
Obviously, there’s no one answer to this burning question. If you’re reading this, you may have already listed your home and are now wondering whether to keep it on the market. Or you might have been planning to list it about this time, before things changed. There’s also the possibility that your Covid-19 financial circumstances require you to sell up. With any of these scenarios, here are some questions to ask yourself that might provide clarity.
Are you selling to buy another house?
If you’re selling your current home to buy another in the same market, not getting the selling price you once expected may not be a problem. Chances are you’ll be on the positive end of a similar discount when you buy your next property. Different types of homes and locations will be affected to a lesser or greater degree, so you might even on the winning side of the equation.
Are the costs affordable?
While a lower selling price may not be a problem for you, there are costs involved in marketing, achieving a sale and moving house. It’s a good idea to list these out and check that you’ll be able to pay for them, while still achieving the outcome you’re hoping for.
Here are some costs that will most likely apply:[2]
- Real estate agent’s commission – by far the highest cost
- Advertising – online, print media, flyers, street sign, open home hand-outs
- Auctioneer’s cost, if not included in agent’s fee
- Title search and building consent documents
- Bank charges to discharge the mortgage
- Lawyer/conveyancer fees
- Taxes and rates owing after settlement
- Stamp duty on your new property
- Moving costs
Here are some discretionary upfront costs to think about:
- Commercial interior cleaning
- House, roof and window wash
- Garden and landscaping maintenance
- Repairing things that aren’t working
- Painting, interior and/or exterior
- Interior upgrades, such as renovating a tired-looking bathroom or kitchen
- Temporary off-site storage for space-killing clutter, toys and clothing
- Home staging to make your home look super-stylish
Will the benefits of selling outweigh the downsides?
If you’re moving to take up a more attractive job offer, the prospect of selling during a real estate down-turn may be of no real concern. You may not get the price you once thought you would, but a higher salary, more satisfying work or more favourable location might make you feel ‘richer’ in different ways.
If your family is growing and your cosy love nest is turning into a claustrophobic cabin, you may be doing everyone a favour by getting on with your plans for a bigger home.
Maybe you recently became empty nesters and were looking forward to downsizing to clear debt or reduce costs. Or perhaps you’ve been hanging out for a lifestyle change, like a move to the country, the coast or inner city.
The point is, life goes on and sometimes seizing the day has more benefits overall than the front-of-mind downsides dominating the news and other media. Only you will know the answer, but it’s a question worth asking yourself.
What’s next if you decide to sell?
Having made the decision to put your house on the market, it’s time to get it looking its best. You might even be able to start on some of this while you’re still weighing up the pros and cons.
In a time of recession, maximising your home’s appeal might feel unaffordable. But you don’t have to do everything; just make a list of must-dos and could-dos, price them up and prioritise.
Think like a buyer
The trick is to approach your house like a buyer. Start on the street and do a complete walk through. Make a note of anything that catches your eye in a negative way – these are OFIs (opportunities for improvement). A deep clean and tidy can make a big difference for very little cost. Remember you don’t have to do it all, so eliminate the tasks you definitely can’t afford or projects that won’t increase the sale price more than they cost.
Make sure the first impressions are positive
Street appeal is vital. Does your place look attractive, desirable and cared for from the road? Will potential buyers even want to get out of their car? Does the house number need replacing? Is the front garden tidy and weed-free, the walkways and paving clean, the trees and shrubs well-tended? Is the front door clean and the porch free of cob-webs? Would a coat of paint and a new door knob create a better impression? You get the idea.
Set your advertised price and focus on marketing
Work with a real estate agent you trust to set a price or price range that will be seen as realistic to buyers. Once you’ve committed to selling, it may be best to avoid further delay. Prices are often highest at the beginning of a recession. Because of the Covid-19 restrictions, there will be a backlog of people who know they need to buy. Some will have already sold before the restrictions; others will want to release capital as soon as possible by trading down.
Real estate agents have been making the most of new technology to allow buyers to draw up a short list, without actual visiting any properties. Great photos, aerial drone shots, video walk-throughs and even 3D tours all help to give you a stand-out listing. You can even provide a quote for home cover, so they’ll know what the home will cost to insure. People are going to be less keen on congregating closely with others for a while, so the easier you can make it for them to assess your house from a distance, the better for all concerned. A private viewing can follow.
Be ready to negotiate
Hopefully, you’ll find a buyer who’s willing to start negotiations. An experienced real estate agent can really come in handy here. You need to be open to offers and prepared for potential buyers to ask for concessions, like a contribution to the cost of new carpets. That way you can focus on dragging them over the ‘sold’ line.
[1] https://www.homelight.com/blog/selling-a-house-during-a-recession/
