If you’re trying to sell your home or are considering putting it up for sale in 2023, you probably already know that it’s much harder now than it was a few months ago. In this post, we’ll discuss some things you should know when selling in this more ‘normal’ market to be best prepared for a successful experience!
It was March 2022 when housing prices in Ottawa hit a record high. The average sales price for a residential property exceeded $850,000 and sellers were excited – for good reason. Record low interest rates, few properties for sale and hot buyer demand resulted in high price points where conditions in offers were basically non existent.
If you were selling your home at this time, you didn’t have much to worry about. Many buyers were prepared to pay well over the asking price and then some just for the chance to buy a home, knowing they would be competing against several other hungry buyers.
Since this time, things have changed significantly. The Bank of Canada has been aggressively raising interest rates since the beginning of the summer in an effort to lower demand and reduce inflation.
Average sales prices were on a downward spiral through the spring and into the summer but over the past three months, things have begun to stabilize and level off with the average selling price now sitting below $700,000. Most economists believe that prices and interest rates will be relatively stable into 2023.
Patience is needed
It’s no secret that the market has shifted. Buyers are not feeling the pressure to buy as urgently as they once did because they’re taking their time to browse new inventory and are only submitting an offer on a property they truly love. While buyers now have much more time to think wisely before making decisions, sellers are having to test their patience. This change is evident by the rise in average CDOM (cumulative days on market) which is now up above 40 days. A seller can now expect their home to take much longer to sell. While a property would sit on the market for no more than a couple weeks during the peak, it’s taking much longer now. We’ve seen plenty of homes that would have sold in about a week during the peak, now taking several months. For sellers, it’s important to recognize this shift and to plan accordingly. You will need to lean on your agent to help you determine an appropriate listing strategy. At SERNO Realty, we work 1 on 1 with our clients to create a listing strategy that they can be confident in.
Pricing has changed
As interest rates increased and pricing began to drop, many sellers had a difficult time coming to accept just how significantly things had changed. In February and March, sellers were receiving astronomical prices for their homes. This storyline was all over the media and neighbours were talking about it. Selling prices that were $50K to $100K over asking were not uncommon, and in some cases, even higher than that. For the most part, these scenarios are gone but it took a while for this new reality to set in. The sale to list price ratio dropped to around 97% in October meaning that on average, homes are selling 3% below the list price. In consultation with your agent, it’s important to get the listing price right from the onset. A home that is overpriced when initially listed may be overlooked. It’s important to keep in mind that with higher interest rates, the pool of potential buyers is being reduced at every price point due to the mortgage stress. Determining the initial list price correctly is important.
Negotiations are back
Conditions in offers have returned and sellers should be prepared to work with these scenarios. While home inspections, mortgage approvals and status certificate reviews were absent for nearly a year in the majority of transactions, these have returned on a very regular basis. It’s perfectly reasonable to expect these to be included in offers once again. In a more traditional housing market like the one that we’re experiencing now, conditions are a routine aspect of the sales process to allow the buyer time to complete their due diligence before closing the transaction. With longer selling times, most sellers will have no problem accepting a conditional offer with reasonable time lines. In this market, it is unreasonable to expect that receiving a firm offer will be a guarantee.
The need to stand out
It’s more important than ever to stand out from the crowd when listing your home. With a rise in inventory expected through 2023, it’s very crucial to differentiate from the competition. In one specific neighbourhood where a seller is listing, there will likely be several other comparable properties that buyers will be considering. A seller needs to be mindful of things from the buyer’s perspective. The home will need to show well, so professional staging and cleanliness is important. The photo and video tour will also need to look good in order to attract interested buyers online who now have many options to choose from. Attracting the most buyers to want to have a showing is the first step in receiving one or more offers. At SERNO Realty, our premiere digital marketing and staging experience will ensure that your home will be ready to attract the right buyer.
Make it accessible!
As discussed, buyers are taking longer to make decisions when weighing their options. Many people are going on a prolonged shopping spree, viewing more homes over a longer period of time with their agent. It’s important to ensure that showing availability is flexible. If a buyer is not able to get in to see a property, they may just move on to other options. Sellers should be prepared and able to leave the home regularly in order to accommodate showing requests, especially on weekends and on evenings throughout the week. By limiting the days or a large block of times in which prospective buyers may view a property, a seller could be missing out on potential opportunity to sell their home. Remember: it only takes one serious buyer to make a sale.
Be prepared to adapt!
Sellers should understand that the market has been shifting and change may need to come on the fly. This could include adjusting the price or being flexible on the closing date. Be prepared to work with your agent on incremental price drops if you’re having trouble selling your home or if market conditions change during the course of the listing. It’s important to have a solid strategy when selling in an evolving market as it will set you up for a higher likelihood of success.
Conclusion
There’s no way to sugar coat it: selling a home in this market is not as easy as it was when interest rates were at historic lows throughout the course of the pandemic. With a solid marketing plan, an effective pricing strategy and the right guidance from a licensed real estate professional, you can still successfully sell your home for a great price and be extremely happy with the outcome. Ottawa is now seeing all the signs of a more traditional real estate market with a longer time on market and conditions in offers.
If you’re looking to buy or sell, contact me today for more information and to learn how I can help you achieve your real estate goals.