Considering how hot the current housing market is, it’s no surprise that plenty of sellers are gearing up to sell. For various reasons, though – school schedules, approaching holidays, etc – many families are waiting until 2022 to do so.
We’ve spoken to several experienced Realtors, and one thing is clear: If you’re thinking about selling your home next spring, you need to stay ahead of the curve. Here’s how you should be preparing for the 2022 housing market.
Expect a Softer Market and Plan Accordingly
Make no mistake, 2022 is still going to be a seller’s market, and a strong one at that. Would-be sellers have heard the stories of multi-offer situations where homes go for 20% over asking price with no contingencies. However, buyers have hit a wall in terms of what they’re willing to put up with – they’ve heard plenty of horror stories from this year’s buyers, and they’re wary.
“I think there’s some buyer burnout in the market, and buyers are fighting back a bit,” explains New Jersey-based listing agent Ruben Concepcion. “I think they’re going to be saying: ‘We’re not going to be giving sellers everything they want anymore. We want to get a good home, we’re willing to pay a little more, but there’s a limit to what we’re going to give up,’” he says.
After hearing about 2021’s crazy conditions, home sellers have gotten comfortable with the idea that they can do the absolute minimum and still have their home sold immediately. According to August data from Redfin, though, 58.8% of home offers written by Redfin agents had competition from other buyers – a record low for 2021, and lower than the same point in time last year.
While prices will likely continue to appreciate, sellers should anticipate that reduced competition will alter the playing field a bit.
“Sellers are going to need to be a little more realistic. Don't listen to what happened to your neighbor down the street and assume it’ll go the same way for you,” says Concepcion. “I think the days of bidding wars being a given are going to be over.”
Aim to Maximize Your Profit Potential
2022 should be your year for retaining equity - not leaving it at the closing table.
“At the end of the day, the most important thing to 99.9% of people is, ‘How much equity can I walk away with?’ So many Realtors now are not only charging sellers 6% in agent commissions – there are all these added fees. Make sure that you understand exactly what you’re going to pay,” recommends Orlando-based listing agent Kelly Isenhour.
The biggest expense for sellers is the real estate agent they partner with. Over the last decade, technology has made real estate much more efficient and scalable, but traditional brokerages have continued to charge sellers a 6% cut. Which means that as home prices have soared, so has the cost of a traditional agent. (Selling a $600,000 home, for instance, would amount to $36,000 in agent commissions.)
Fortunately, home sellers have better options now. Through companies like Houwzer, sellers can still get the full service experience without needlessly throwing away profit.
Houwzer offers full service for a flat $5,000 listing fee (plus 2.5% for the buyer’s agent) – saving home sellers an average of $15,000 in commissions.
Sellers still get everything they need to sell the home – full representation from a local listing agent, a for sale sign, lockbox, HD pictures, virtual tour, agent-run open houses, social media advertising, and distribution on all major online listing sites including the MLS and Zillow. These are fixed costs. Instead of pocketing the difference, Houwzer passes the savings on to clients.
Houwzer’s business model also creates a more fair system for their agents, who are hired as full-time employees, paid salaries with benefits, and given extensive training and support. Sellers benefit from their agents’ local home selling expertise, which results in more offers, better negotiating, and greater profits. 2020 sales data from Bright MLS shows that our homes consistently have a higher sale-to-list ratio when compared to the average brokerage – in other words, our listings are more likely to sell at or above asking price.
Selling with Houwzer doesn’t just have a positive effect on your wallet, it also offers a tangible way to impact your community. A certified B Corporation, Houwzer is a socially responsible company that balances profit with purpose. For every buyer and seller Houwzer assists, we donate $100 to the RiseUp Fund – Houwzer’s new nonprofit that provides down payment and closing cost assistance, full representation, and mentorship to low-to-moderate income families trying to reach the dream of homeownership.
Fix Up Your Home to Further Maximize ROI
Although re-doing your kitchen might seem like a good project to keep you busy until 2022, data consistently shows that remodeling doesn’t have great ROI.
However, low-budget cosmetic changes that make your home really pop can ensure it has that “wow” factor that brings buyers in – which will become more important if the market softens. A fresh coat of white paint can help a home appear larger and newer.
Concepcion recommends entirely replacing old carpet – even if it means just putting down the cheapest option available. “Eye candy goes a long way. It’s actually impressive how much it matters,” he explains. “I’ll say to someone with an old, dingy carpet: just put in the cheapest, neutral colored carpet you can find. Even if you offer them a credit, most people don't want to pick up a project while buying a home. So if you can just do it for them and make it look ready, they're more likely to buy. They’ll change it eventually, but this way it’s not an immediate project they have to deal with when moving in.”
If you’re going to be selling a home that’s a bit older or smaller than other homes on the market, repairs can also keep you a competitive player in the market if available inventory increases. Taking care of little issues now will help you maximize your profits come spring.
“I think a lot of sellers have become a little complacent when it comes to doing home repairs prior to listing,” notes Isenhour. “Things like that will become more important again in 2022, when there’s more inventory and you’re competing with other properties to get buyers’ attention. It’s going to be important to go back to those roots of preparing your home, and doing so will get you more for your home in the long run.”
The Bottom Line
Sellers in 2022 may face additional challenges as the market begins to stabilize a bit. By taking care of minor home repairs now, working with a flat-fee brokerage like Houwzer, and opting for an experienced agent, you can maximize your profits while minimizing future stress.
