5 tips to get the highest price in a falling market
It's easy to sell when the market's good, but when house prices are falling it can be tough to get a great deal for your buyers. But don't fear, there are still plenty of opportunities for agents - so here are our top five tips for you to get the highest price in a falling market.
It’s easy to make hay when the sun shines. But what about when it’s pouring with rain and the grass is too wet to scythe? It’s a different story altogether. Even the best properties stop selling themselves and buyers, sensing an opportunity, suddenly expect a hefty discount. The cheeky so-and-sos.
Sadly, the market seems to be entering one of these fallow periods right now. House prices fell for a fifth month in a row in January and are now 3.2% lower than their peak in August last year. Meanwhile, some journalists are even claiming that it’s the worst time to buy a home since 1876 - that’s a whopping 150 years ago.
Even though these stories are exaggerating somewhat for effect - not to mention clicks - it’s clear that asking prices are beginning to take a hit. First-time buyers are struggling with the cost of borrowing, buy-to-let landlords are fleeing the sector, and developers are beginning to accept lower offers to shift stock.
But do not fear. Whilst conditions aren’t exactly fertile at the mo, there’s still plenty of opportunity for agents to earn their corn. People are still looking to move home - research shows that new instructions are more than 125,000 higher than they were this time last year - so discounts are far from inevitable. Just make sure you follow these top 5 tips for securing the highest price in a falling market…
1. Do your homework
The national headlines might be full of gloom but several localities are bucking the trend. And yours could be one of them, so be bullish. Prices in many London boroughs, for example, haven’t fallen at all. Meanwhile, activity is actually up in several towns: Yeadon in West Yorkshire saw a 247% rise in sales last month, Bridlington 180%, and Filey 150%. Business is also booming in Roker, Perranporth, and Selkirk.
What’s more, don’t forget that some buyers (especially in certain areas) haven’t been impacted by the current market conditions too adversely; therefore they shouldn’t necessarily expect a discount. Some towns and villages, like the ones mentioned above, are being propped up by downsizing older buyers who can easily weather the mortgage crisis because they’re cash rich and can afford larger deposits.
Although it’s obviously a different story with first-time buyers, who are genuinely struggling to get a foothold on the lusted-after property ladder, other buyers remain in a strong position - especially those who deliberately sold at the peak of the market last year, went into rented, and are now ready to pounce as cash buyers.
The bottom line is to understand the idiosyncrasies of your local area and know your buyers. Cash is king, of course, but don’t forget that those currently shelling out on record rents will probably be desperate to find a place of their own. Therefore, agents do have some leverage, too.
2. Presentation is more important than ever
Presenting a home for sale is obviously all-important when you’re trying to secure the highest price in a falling market. Buyers are pickier than ever; so make sure your vendors carry out essential repairs, redecorate tired-looking rooms, cut the lawn, replace tatty carpets, and generally spruce the place up. Don’t forget to stress the importance of de-cluttering, as well. Doing this depersonalises a home, helps buyers to visualise living there, and also makes rooms look bigger.
Basically, the message here is a simple one: don’t give buyers any excuse to lowball your vendor. What’s more, research shows that buyers tend to view potential homes multiple times when the market is cool; therefore they’re more likely to notice wear and tear or more serious issues that could impact the offer they make.
3. Make the most of marketing
New instructions almost seem to sell themselves when the market is buoyant. You just email your waiting buyers, list the home on the main portals, and wait for the phones to start ringing.
However, the harder the times, the harder your marketing needs work. So if you’re not already using a blog, virtual viewings, TikTok, or even drones to enhance your marketing then it could be time to let go of your inner Luddite, take on new technologies, and push the proverbial envelope.
It’s helpful to think outside the box occasionally, too. What about supplementing your particulars with an ‘additional information’ sheet that lists local amenities and points of interest? Knowing there’s a local school, doctor, gym, or pooch-grooming salon around the corner might be enough to wheedle more wonga from a wavering vendee.
4. Be realistic on price
Remember those halcyon days when you could value a property, add 5%, and still receive a tidal wave of interest? Well, that probably ain’t happening in the current climate. Buyers are understandably more cautious so being overly optimistic on price - cheeky, even - is likely to backfire. You don’t want a new instruction to linger, sloth-like, for weeks until your vendor finally admits defeat and slashes the price.
Reduced properties, of course, often seem tarnished in the eyes of picky buyers. And this can sometimes lead to a downward spiral of incremental reductions, which is the worst-case scenario for any seller. Consequently, it’s far better to price a property competitively in a falling market and secure a sale in a reasonable timeframe. A good rule of thumb? Set a figure that attracts the most interest possible.
It’s also worth remembering, by the way, that vendors won’t automatically be attracted to the highest offer. A buyer’s position is even more important when the market is slow. The security of a cash buyer (or a smaller chain) can be worth its weight in gold in a market riven with down valuations and collapsing deals.
5. Negotiate hard
Finally, negotiation is all-important in a falling market, so use every bit of leverage you’ve got. The problem, of course, is that buyers will always justify low offers by arguing that a home will be worth less in six months’ time. The best response to this? Hit them with some good economic news stories and a dose of positivity.
For starters, many experts now believe that the market won’t fall as much as previously predicted and that any recession will be shorter and shallower. What’s more, you can back this up with hard data from buyers’ own favourite website, Rightmove…
The leading portal has just revealed that the number of people contacting estate agents was 11% higher in February than it was in 2019 before the pandemic. And the number of sales is also rebounding: they were down 30% immediately after last year’s calamitous mini-budget, but this has rallied to just 11%.
Also point out that both interest rates and inflation are forecast to fall later this year. Consequently, it’s better to buy now, when there are fewer buyers and less competition, than wait until the summer or autumn - especially as it can take several months to go from offer to exchange.
At the end of the day, the market is driven by sentiment. Therefore, a bit of reassurance goes a long way. We wouldn’t necessarily bet the farm on achieving a home’s asking price every time in the current market, but sowing seeds of optimism definitely helps.