What to Do If Your House Won’t Sell

An 'Open House' flag outside a single family home in Los Angeles, Calif., on Sept. 22, 2022. Allison Dinner/Getty Images

Commentary

Due to the Federal Reserve increasing interest rates at a record pace, the housing market has come to a standstill.

While we aren’t seeing dramatic discounts yet, significant price decreases are on the horizon as sellers will be forced to lower their prices to sell their homes. This is great news if you’re a buyer—but if you are a seller, this standstill in the real estate market is really affecting you. Speaking from experience, down cycles can be long and painful for sellers, and now is the time to be proactive and not reactive.

Currently, many sellers are reacting by slowly lowering the price of their homes. I like to call this “death by a thousand cuts.” Most buyers pay attention to their monthly mortgage payment when deciding what they can afford, so if you drop the price of your home by, say,  $20,000, and then rates go up the next month, the monthly payment just stayed the same or went up for your buyer.

If you want to sell, then cut once and cut deep. Make your home stand out due to its price, because what will happen as the market continues to drop is that all of these small cuts will equal that deep cut. However, by that time, rates may increase and more inventory may be on the market, making that large discount still not enough to sell. Don’t wait—the market isn’t getting better anytime soon.

However, what if you don’t need to sell right now? Markets are cyclical, and even though it may take a few years, the market will, likely, eventually, go back up. If you can cover your mortgage during this time, then you can wait to sell your home.

One of the more practical ways to cover your mortgage is with a tenant. Renting out your home can be an option as long as the renter is paying more than it is costing you to maintain your home. Long-term renters are the least amount of work, and I recommend this option for those of you that have homes that just won’t sell as long as the numbers work.

Last, if you don’t want to offer a deep discount, and renting out your home isn’t a feasible option, then you might want to look at the option of seller financing. Seller financing is when a seller pays your mortgage, and once it is paid off, they obtain ownership. This is a great way to get a buyer to pay more for your home, because they can assume your presumably low mortgage rate. You get the price you want, and they get the monthly payment they want. There are some risks to this, so check with a good syndication attorney when writing up the paperwork, but it can be a really good option for a seller in today’s housing market.

The main takeaway I want you to understand from this brief article is that I don’t think the real estate market is going to get better anytime soon. If you are a seller who needs to sell, you either need to greatly discount your home or get creative if you don’t want to end up in a bind.

The housing market is certainly at a standstill, and deeper price cuts are what will happen next. Don’t be a seller who is in denial about the future of the housing market—instead be a seller who is proactive because you see what is coming on the horizon.