An economic downturn could stress you out if you’re selling your home. A contracting and uncertain economy doesn’t usually yield top dollar for home sales.

At RankMyAgent, we aim to make the home selling process more manageable. So this article explains what a recession entails and tips to sell your home for the best price during a recessionary environment.

What is a Recession?

The traditional definition of a recession refers to two consecutive quarters (three-month periods — so two consecutive quarters equal six consecutive months) of declining Gross Domestic Product (GDP). But this definition comes with numerous asterisks.

Even if Canada faces two declining quarters, we may not be in a recession. We continue to face record-low unemployment rates, and in a recession, unemployment peaks.

A recession depends on numerous factors like employment, consumer spending, and GDP. An “official” recession usually occurs once a group of leading economists looks at these factors and determines we’re in a recession.

What Can We Expect During a Recession?

A recession’s outcomes and contributing factors are a “Catch-22” — i.e., the presence of the factors indicates a recession, but the same circumstances also result from an economic downturn.

We usually see the following during a decline:

• Layoffs: Businesses fear the unknown and want to reduce spending when the economy begins to tumble. You can expect layoffs in business departments that aren’t critical or where companies previously overhired.
• Less consumer spending: People are also fearful when we hit a recession. We’re scared of losing our jobs or taking a loss in the stock market. As a result, we might spend less and save more of our income for a rainy day.
• Depressed stock market: Investors may sell their stocks and choose safer investments. So, you can expect stock prices to decline. Some corporations also don’t fare well during a recession, and their stock price reflects that.
• Higher interest rates: This isn’t true for all recessions. But in our case, a recession may be caused due to the Bank of Canada increasing borrowing rates to tamp down inflation. This would make buying a home and making mortgage payments more expensive.

These factors can turn the residential home market in favour of the buyer. We’re more cautious about making significant financial decisions in a recession. We’re also unsure whether we can hold our job or afford increasing interest rates.

As a result, there are fewer buyers on the market. We might wait until economic conditions are more positive and confident before applying for a mortgage and making the largest purchase of our life.

But the number of sellers remains the same or even increases during this time. Some Canadians may need to sell their second home to cover costs or downsize to afford their mortgage in a poor economic environment.

Tips for Selling Your Home During a Recession in Canada

1. Rethink if You Need to Sell

Housing prices tend to peak before an economic decline and slide once a recession becomes a reality.

Selling in the middle of the downturn might not bring you the best price. Downturns tend to be buyer markets, where homebuyers have more leverage. You won’t likely have the same bidding wars or unconditional offers we saw a year ago.

Sometimes, you might not need to sell an investment property or move into a larger home right now. It’s best to consider whether entering the real estate market is required.

2. Sell Sooner Rather than Later

Past recessions show a history of dipping home prices. If you plan to sell in the near future, it’s better to do it as soon as possible. You’re only going to face tougher selling conditions.

Otherwise, you should wait until the economy is more positive before you sell. Home prices tend to fare better when there’s financial prosperity among Canadians.

3. Don’t Overprice Your Home

You might be used to seeing bidding wars and homes selling for hundreds of thousands of dollars over asking. But the market right now might not have the same prospects. You should temper your expectations to something reasonable.

Working with a real estate agent can help you set a reasonable selling price. Additionally, a realtor can guide you towards getting the best dollar for your property. They might suggest minor renovations or staging to bedazzle the prospects.

4. Give Your Home Some Minor Renovation

Minor renovations, deep cleanings, and restoring curb appeal can help move your home on the market. These changes make your home shine in photos and showings.

You don’t need to overhaul your entire kitchen. It may not be worth it in the current environment since labour is in short supply — contractors aren’t as open to negotiations or discounts. At the same time, home prices are going down.

Contributing your own labour by refreshing walls with a coat of paint or deep cleaning your carpets may be what you need to increase your chances of selling. A clean and refreshed home can help potential homebuyers envision themselves living there.

5. Consider Renting your Property Out Instead

Cities like Toronto and Vancouver are seeing record-high rent prices because surging interest rates have left prospective buyers unable to purchase a home — therefore, many Canadians continue to rent.

Some sellers who aren’t getting the offers they hoped for have turned to the rental market because the sky-high rent prices make being a landlord much more appealing.

If you aren’t in a rush to sell, renting out your property until better economic conditions might be an option to get the best return on investment from your property.

Recessions don’t have to be scary. Yes, there’s a fear of layoffs and depressed stock prices, but things rebound eventually. If you’re planning to sell your home during a recession, it’s vital to temper expectations. You can’t expect your home to sell for the same amount that homes sold for during a growing economy.

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But with COVID-19 and a migration to the digital world, staging your home isn’t only for showings and open houses. Staging your home is also crucial for the photos and videos used to sell your home. These marketing assets will make the first impression on potential buyers.

In this article, we discuss how to stage your home for the virtual world and how COVID-19 may change how you should stage your home in 2021.

The home staging basics

Decluttering and cleaning are still important

Decluttering and deep cleaning your home is an effective way to stage your home. This remains true for staging in the virtual world. Decluttering can make your home seem more elegant and help potential buyers imagine themselves moving in.

Although people won’t be visiting your home in person (just yet), it’s still essential to deep clean your rooms. Often, the dirt, dust, and grim around your home can add up and provide a sense that your house isn’t for the person looking at the photos of your rooms. Unclean windows, a fine layer of dust on your furniture, or a stain on the rug can quickly put someone off.

Small renovations can help you shine

Painting your rooms can be one of the easiest ways to freshen things up. It can turn an old room into a new one. A fresh coat of paint removes any stains, marks, or scratches—no matter how small—from being noticed. This can also reduce the cost of virtually staging your home as the photo editor will have fewer details to clean up (more about virtual staging later in this article).

Enlist small decorations

Commonly, what sets apart a fancy home from a regular one are the details and minor decorations that add up to a certain suave in a room. For example, hardcover books, throw pillows and blankets, potted plants, and artwork can add a lot to a room and jazz it up. The best part is that these items are usually easily accessible from places such as Amazon, so you don’t even need to leave the comfort of your own home.

Consider how COVID-19 trends have changed home staging

Home offices and gyms are now in-demand spaces

COVID-19 has changed what buyers look for in a home. People are moving to the suburbs and to larger homes as they envision a home gym or office to compensate for their inability to have a gym or office like before.

Instead of staging an area as a second dining or living room or as a storage closet, these places could be better set as a home office. You could further stage an empty basement with a set of dumbbells or even a squat rack to expand a potential buyer’s imagination. Other possibilities could include a home classroom, media room (to replace movie theatres), or spa area.

Create an outdoor retreat

The pandemic has also driven demand for private outdoor space. People, more than ever, want fresh air without being in public. Staging your outdoor patio with excellent patio furniture or even a fire pit can create a sense of an “outdoor retreat” that buyers are willing to line up for. It creates an opportunity to entertain guests when the weather is warmer while reducing the fear of COVID-19 transmission.

DIY or professional stager?

This generally centres around declutter and trying your best to make everything appear fresh and pretty for the pictures that’ll sell your property.

However, stagers have also adapted to COVID-19. Some stagers are now offering their services virtually. You can take them around your home via FaceTime or Zoom as they provide suggestions on how you can spruce the place up. Another alternative is to find a real estate agent who also provides home staging services.

A stager can be expensive. Especially with furniture rentals, it can amount to thousands of dollars. However, it’s commonly worth the cost. A well-staged home can help your property stand apart from others in the market and ultimately increase the final selling price.

If you do look for a professional home stager, you want to look out for the following:

• Portfolio: What was their past work like? What do their prior clients say about them?
• Professionalism: Do they act professional when they communicate with you? Do they get deliverables to you when they say they will?
• Real estate knowledge: A stager who understands the real estate market understands what’s in demand and can orient your home to fulfill such market demands.

What about virtual staging?

Virtual staging beings with a photographer taking photos of your rooms. The photos are then sent to a virtual stager who uses software to achieve a particular look akin to a staged home. This effectively removes the need to rent furniture when staging your home (an enormous cost and hassle).

Virtual stagers can remove or add in pieces of furniture, change a room’s colour schemes, or even change whole areas of your home. This type of service is more important than ever as demand for staging has increased due to an increased dependency on real estate photography to drive sales. At the same time, traditional home staging has become more complex with COVID-19.

This method of staging is also more cost-efficient. Virtual staging services can cost anywhere between $16-$100 per photo. Although it’s common to have 20 pictures for a single home listing, rooms such as washrooms and closets likely won’t require this treatment. As a result, you’re probably not looking at thousands of dollars to virtually stage your home.

Staging your home is a great way to make it stand out from other properties in your area. It can ultimately help you sell your home for a better price at a faster rate. There are many options to stage your home, such as DIY, a professional stager, or doing it virtually. Whichever option you choose, you can be sure that it’ll likely add value to your selling process.

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The residential real estate industry is not different from the rest of the corporate world. Homebuyers and sellers must communicate with agents through new means as opposed to face-to-face interactions. Further, home tours have turned virtual. These may become permanent fixtures even once the Coronavirus is no longer everyone’s first thought.

But it’s not only technology leaving a lasting impact on the real estate sector. Everyone has realized the importance of having living space — especially true as many of us must work and self-isolate at home. Homebuyers and sellers now have a more substantial interest in moving to the suburbs, where a larger home is still within their budget.

COVID-19 will have lasting impacts on the real estate market and the buying and sell process. This post discusses COVID-19’s potentially lasting effects on the operations of the real estate industry. This includes:

1. Buyers and sellers using social media to communicate with agents;
2. The increasing use of virtual home tours and remote home buying; and,
3. A greater demand for larger homes in the suburbs.

Meeting and Communicating with Agents via Social Media

How we find an agent to buy or sell our home has changed with technology. Speaking with friends and getting a referral to an agent is still common. But instead of a call, many opt to message an agent on social media.

A 2018 survey on realtors in the digital age found social media was the best source of generating high-quality leads among agents, even more so than Multiple Listing Service (MLS) websites. Now that it’s harder to meet with an agent face-to-face or through cocktail parties and other social gatherings, social media is even more critical for realtors.

The pandemic is likely pushing more real estate agents onto social media to replace the social gatherings where realtors once met new business leads. As more agents adopt this lead generation tactic, it’s likely to stay in their arsenal for the long term. And social media will become more prominent in how buyers/sellers communicate and meet realtors.

Virtual Home Tours and Remote Buying

We’ve used the internet to browse online home listings for the past two decades. There’s nothing new about it. But the ability to do so during COVID-19 has made it more important, and so, agents are putting more effort into their online listings.

Photography

We already understand that pre-COVID, homes that had high-quality photography sold faster. We can only imagine how much faster photos sell a home now that open houses and showings aren’t as frequent. Before we call an agent to book an in-person showing, we’re likely looking through the photos first to narrow down what properties we want to learn more about.

Videography

A real estate video can help a potential buyer feel like they’re walking through the home. Before COVID, 73% of homeowners said they’re more likely to list with an agent who uses video. Again, this number is likely even greater with COVID-19. As agents adopt more real estate videos into their marketing strategy, it may become a new norm for realtors after the pandemic.

Further, drone footage can provide potential buyers and sellers with an idea of how the surrounding community looks. People don’t only buy a home for the interior but also the neighbourhood.

3D Home Renderings

3D home renderings with technologies like Matterport are becoming more important. 3D digital home tours provide potential buyers with a better online experience that may stay in demand even when they can view an open house again.

Remote home buying

COVID-19 has shut borders, which means foreign home buyers likely can’t fly to Canada to view a property before purchase. Even purchasing a property in another province as a Canadian can be difficult.

As a result, remote home purchases have become more popular. 42% of Ontarians said they were “open” or “somewhat open” to purchasing a home they could only view digitally. Some brokerages combine digital 3D home tours with real-time calls with agents to provide an experience that replicates an in-person showing. Ultimately, COVID has made homebuyers more comfortable with remote home purchases, and this effect likely will last post-COVID-19.

A Push Towards Larger Homes in the Suburbs

Condo apartments [AZ1] in downtown city cores have become scary places for those avoiding COVID-19. Thousands of people living in the same building is not a good way to avoid the pandemic. When you combine this with the small spaces that condo owners must self-isolate in, many look to the suburbs as their next big move[AZ2] .

This desire to move to the suburbs isn’t temporary. Remote work has created a longing for home offices that aren’t possible in a condo. In a survey of Ontarian homebuyers, 28% mentioned that pandemic isolation had increased their desire for a bigger home, more space, and more amenities. 25% wanted more outdoor space, which is usually only possible in the suburbs (unless you can afford a high-end property in the city).

COVID-19 has changed society a lot. One of those changes is how we buy and sell a home, and some of these changes are here to stay. Even after the pandemic ends, we’ll likely see social media and online alternatives to home tours take an even larger role in selling homes and driving leads to agents. The demand for larger, suburban homes will also likely continue as we further embrace remote work.

The post How the COVID-19 Pandemic has Permanently Changed How We Buy and Sell Real Estate first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

Although it’s a tough time, it’s important to remain hopeful. The federal and provincial governments have worked with the private sector and with other organizations to help those in financial distress due to COVID-19. Some of these measures may have an impact on your home purchase or sale.

In this article, we look at what measures and policies have been put in place to help fight or recover from COVID-19. Particularly the ones that affect the home purchase and sale process. This includes the restrictions and bans on open houses, the ability for homeowners to defer mortgage payments, and interest rate cuts by the Bank of Canada.

The Ban on Open Houses

Open houses are an easy way for COVID-19 to spread. A dozen people wandering inside a 3,000 square foot or smaller home is the ideal environment for transmission. That’s why real estate boards in Canada have called for the end of open houses ever since measures were put in place to prevent the spread of COVID-19. As a substitute, agents have gotten creative with technology and held open houses through online live streams or pre-made video tours.

Most realtors now will not conduct an open house for the sake of safety and the law. This is not only due to the strong urges from realtor boards, but provinces like Ontario have prevented gatherings of more than 5 people, which can make the idea of an open house more or less impossible. Instead of urging its realtors to not conduct open houses, some boards like the Alberta Real Estate Association (AREA) have outright banned open houses.

If you’re currently looking to purchase a property, you’ll likely have to make do with virtual home showings. If you’re very serious about a property, it may just be a reason for a realtor to provide an in-person showing.

As a seller, you need to understand that realtors are now more limited than before. Without the opportunity to hold open houses, your agent has lost a tool in their belt, but that doesn’t mean that they won’t continue to do the best that they can.

The Ability to Defer Your Mortgage Payments up to Six Months

When a bank provides a mortgage, the debt doesn’t stay with the bank for long. They commonly pool together these mortgages and sell it to someone else, taking a cut on the way. What they sell is called a mortgage pool. If banks want to keep providing mortgages, there needs to be demand for these mortgage pools. To help provide this liquidity, the Government of Canada committed to the Insured Mortgage Purchase Program (IMPP). In this, they’re prepared to purchase $150 billion of insured mortgage pools. This is to ensure lending continues in this dire time.

As a result of the IMPP, the government has also ensured agreement with the leading six Canadian banks that they would allow for up to six months of mortgage payment deferrals. This will ultimately vary on a case-by-case basis. Banks are also set to provide relief on other credit products such as credit cards.

The ability to defer mortgage payments will provide Canadians with some much-needed financial flexibility. If you’ve lost your jobs or lost other sources of income, it can help to defer payments till later on so that you can use your money on necessities like food.

However, this deferral will not be interest-free in most cases. So, if you do decide to defer your payments, you’ll end up having to pay more money back to the bank.

This deferral also helps those who are renting. Landlords who can defer their mortgage payments may be more lenient in deferring or reducing rent.

Estimates believe that these deferrals will leave homeowners with roughly $663 million in their pockets per month. This is based on monthly Canadian mortgage payments averaging to $1,326.  However, everyone is now rushing to their bank to defer their next mortgage payment—whether they need to or not—and therefore, it may take some time to get through.

This opportunity to defer your mortgage can be useful if you’re selling your property due to a loss of income, since this may mean you need extra capital. Delaying your next mortgage payments can hopefully put some money back in your pocket until the economy returns to normal.

Interest Rate Cuts by the Bank of Canada

The Bank of Canada announced three cuts to interest rates in March. This effectively brought the rate to 0.25% and has brought prime interest rates to 2.45%. In a statement, the Bank said that these rate cuts would cushion the economic impacts of COVID-19 by easing the cost of borrowing.

At first, this brought down the cost of borrowing money, meaning lower mortgage rates. That’s why in the first weeks of the rate cuts, there was an unprecedented rise in mortgage refinances. And although day-to-day Canadians will have an opportunity to borrow at lower rates, the rate cut by the Bank of Canada does not equally reduce the cost of borrowing at your local bank. Instead of passing on the complete interest reduction to the consumer, many banks are increasing their margins. This is because lenders are seeing more risk in the borrower’s market. As more individuals lose their jobs, the risk of them defaulting on their loan goes up. These higher margins are to take this into account.

Overall, it may still be cheaper to obtain a mortgage now than before. But with such a high demand for mortgages at current interest rates, banks may further fatten their margins. Although the era of COVID-19 may decrease the number of transactions going on in Canadian markets, we can hope that lower interest rates can improve that situation.

The coronavirus has resulted in new policies and changes such as a ban of open houses, the ability to defer your mortgage payments, and lower interest rates. These changes will likely help or hinder your home buying process. However, it’s important to remain hopeful that we’ll get through this storm.

The post The COVID-19-Related Policies and Measures That a Home Buyer or Seller Needs to Know first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.