Whether you're selling your own home as a "for sale by owner" or a Realtor helping your clients sell, chances are you'll need to work smarter and harder in 2017 than you did last year to find the right buyers for your homes for sale.
Here are a few reasons why and what you may be able to do about it.
Escalating Mortgage Interest Rates
As Freddie Mac just noted, 2016 ended the year with rates at a two-year high. In fact, rates are up 85 basis points since early November. It's a trend that is highly likely to continue through 2017, with many experts predicting the rise may reach historic highs over 5%.
Don't think that means a lot for most homebuyers? Just to compare, a monthly payment on a $225K mortgage at 2016 levels of 3.57% is $1,019. At 5% where 2017 rates are headed? It's a whopping $1208 per month.
Simply put, this means many homebuyers won't have the budget to afford buying a first home or move up to a larger one. And that means fewer total buyers for the homes you have for sale - no matter what area you're in.
Digging a little deeper, this trend is likely to affect home buyers (and sellers!) more in the lower end of the price range. It also means that, in very tight markets, it can take longer to get a mortgage and be much more difficult to qualify interested buyers for your homes.
That all means more competition for fewer buyers. Finding the right buyers first and fastest will be the key to successful sales.
Home Price Trends Spell Bad News for Buyers
Whether you think we're headed for another real estate bubble or not, one thing is for sure: home prices have steadily been rising.
As The Wall Street Journal author Steven Russolillo points out in a recent article:
"The market is flashing warning signs. The homeownership rate still hovers near a five-decade low and it is tough for less-affluent buyers to obtain mortgages. Meanwhile, mortgage rates have risen substantially since Donald Trump’s election victory, which will affect affordability.
Even without that, historical trends suggest that housing prices aren’t likely to keep rising at their current pace. For instance, since prices bottomed in 2012, they have risen in real terms at more than 5% a year, according to data courtesy of Yale economist Robert Shiller. That is great news for current homeowners but bad for anyone looking to buy, particularly first-time buyers."
Again, home prices coupled with rising mortgage rates means a shrinking pool of buyers - and more competition for you and your sale.
The Top Way You Can Overcome These Challenges
Despite rising rates and home prices, there is something you can do to improve your chances of a sale:
Consistently target the buyers most likely to be seriously looking to buy in your area.
Today, almost all home searches start online. By using the right digital marketing and advertising techniques designed to focus only on those web and mobile viewers interested in homes in your area, you can ensure you find the right buyers and find them faster than other competitors.
For FSBO sellers, exposure and affordable marketing is - simply put - critical. Most FSBO sellers convert to Realtor listings within 6 months because of low exposure (which leads to few showings and little interest). If buyers can't find you, your home won't sell. And, no, Craigslist does not equal good digital marketing, folks.
For Realtors, unfortunately, most digital advertising promises and "guranteed #1 search rankings" are just ways to separate your from your ad budget every month. Indiscriminate digital ads shown to whoever wants to click them and reports of millions of ad impressions only help these advertisers ask you for more money next month. Think about it...If they did their job as described, would be pay more each month to reach "even more" buyers?
Plus, the big guys add an extra layer of challenge to already-tough market conditions by selling marketing or leads to dozens (or more!) Realtors in one area. It all adds up to even more competition than interest rates and home prices can cause.
So, how do you target the most serious homebuyers in your area?
Introducing HomePocket for Realtors and FSBOs - It's FREE
For Sale by Owner sellers, you can post your home for sale and advertise it digitally for more exposure in just 5 minutes. Download our app and post today!
Realtors, using Listhub? Send us all your listings free and attract more buyers. Contact us to add your MLS.