Why Smaller Homes Are Selling Faster—

And How You Can Use This Trend to Get Your Clients Top Dollar

by Scott Larrow 3/12/25

Buyers are thinking small in 2025—literally. Inspired by Warren Buffett’s recent insights on the housing market, this shift toward smaller homes is shaping real estate strategies in a big way. With soaring costs making big homes less desirable, first-time buyers are snatching up smaller, well-maintained homes faster than ever. Meanwhile, larger homes are sitting longer and will need strategic updates to stay competitive.

As a top-producing agent, knowing how to leverage this trend can mean the difference between a stale listing and a fast, profitable sale.

In this post, I’ll break down:

• Why small homes are in high demand and how to use this trend to maximize seller profits through strategic presale updates and preparation.

• What updates sellers should make to maximize ROI.

• How to position larger homes for a faster sale.

Let’s dive into the exact presale strategies you need to guide your clients and close more deals in 2025.

1. Smaller Homes Are Selling Faster & at Higher ROI

Why It’s Emerging:

With high mortgage rates and rising energy costs, first-time buyers and downsizers—yes, baby boomers (the largest generation of homeowners who once had an affinity for grandiose living)—are gravitating toward smaller, more manageable homes that require less upkeep and cost less to own.

Impact:

• Higher demand for updated small homes = More competitive bidding. More competitive bidding = Higher sales price.
• Larger homes sitting longer on the market due to affordability concerns.
• Sellers of small homes have an opportunity to maximize ROI through smart presale updates.

Data:

• Smaller homes already sell faster: The National Association of Realtors (NAR) reports that homes under 2,000 sqft sell nearly 20% faster than larger properties.
• Lower inventory fuels demand: With fewer starter homes available, move-in-ready small homes are commanding multiple offers.

Action Steps for Agents:

✅ Encourage sellers of small homes to invest in presale updates (modern finishes, fresh paint, lighting upgrades) to maximize ROI.

• Examples: Updated cabinet pulls, modern lighting, stylish tile, and sleek faucets.

✅ Stage for space optimization – Buyers want functionality, so clear clutter and showcase multi-use spaces.

• In smaller homes, the last thing you want is to give potential buyers the impression of a lack of space. Ensure that all storage feels plentiful by prepacking as much as possible.

2. Large Homes (4,000+ sqft) Are Getting Harder to Sell Without Strategic Updates

thats a lot of lawn to water, and house to cool, and heat, and clean

Why It’s Emerging:

Big homes mean big expenses. Higher property taxes, maintenance, and energy costs make these homes less attractive to today’s budget-conscious buyers.

Impact:

• Luxury homes may sit on the market longer without updates or strategic staging.
• Buyers are more selective and won’t pay top dollar for outdated finishes, especially if there are multiple similar properties on the market.
• Sellers need to differentiate their listing to make their property stand out.

Data:

• Larger homes stay on the market longer: On average, homes over 4,000 sqft take 30–50% longer to sell than smaller homes.
• Buyers prioritize efficiency: According to Zillow, 74% of buyers prefer a home with energy-efficient features over extra square footage.

Action Steps for Agents:

✅ Help sellers focus on high-ROI updates – Modern lighting, updated kitchens, neutral paint, and smart home features.

✅ Position the home for a lifestyle shift – Highlight multi-generational living potential or luxury home office spaces to appeal to today’s buyer needs.

3. Buyers Want Move-In-Ready Homes—Not Projects

fresh paint, floors and staging for the win, in this small living room

Why It’s Emerging:

Today’s buyers are willing to pay a premium for a home that’s move-in-ready rather than taking on costly renovations themselves.

Impact:

• Turnkey homes sell faster and for more money.
• Dated, unstaged homes are getting overlooked.
  • 👉 Checkout my YouTube Video About the Power of Home Staging!
• Agents must educate sellers on the importance of prepping their home before listing.

Data:

• Updated homes sell for 5-10% more: According to Redfin, buyers will pay up to 10% more for a home that’s fully updated and move-in ready.
• First impressions matter: Staged homes sell 73% faster than unstaged homes, per the Real Estate Staging Association.

Action Steps for Agents:

✅ Push for presale updates – Even small changes (modern hardware, lighting, fresh paint) can dramatically increase perceived value.

✅ Offer seller guidance on cost-effective improvements – High ROI updates like kitchen refreshes, flooring updates, and exterior curb appeal.

✅ Market listings as move-in-ready – Use language like “fully updated,” “turnkey,” and “ready for immediate move-in” in descriptions.

Final Takeaway: How to Win in the 2025 Housing Market

Step 1: Adapt Your Seller Strategy Based on Home Size

✅ For Small Homes:

• Encourage minor but high-impact updates. With the shifting trend, sellers have an opportunity to make a healthy return on their investment—quickly!
• Showcase how a small home supports a big life. Ensure areas are versatile to show buyers that even in a compact space, they can live fully.
• Stage for maximum space to improve listing photos. To make a home feel large and spacious, it needs to be heavily decluttered and depersonalized to create a mental space for buyers to “move in.”

✅ For Large Homes:

• Position them for multi-generational living or luxury buyers.
• Focus on must-have updates like modernized kitchens, updated baths, and smart home tech.

Step 2: Leverage Data-Driven Pricing & Market Insights

✅ Track market trends – Compare average days on market for different home sizes in your area and present these insights in listing presentations to set realistic expectations.

✅ Use pricing psychology – Create immediate high demand for smaller homes and emphasize value-driven pricing for larger homes.

Step 3: Offer Smart Presale Resources & Services

✅ Presale Consultations – Help sellers identify the most important updates before listing.

✅ Staging & Styling Services – Even virtual staging can make a huge difference in buyer perception.

✅ Exclusive Service Providers – Partner with painters, landscapers, and handymen for quick, cost-effective updates.

References & Further Reading

This analysis was inspired by Warren Buffett’s insights on housing market trends. To dive deeper into his predictions and how they may shape real estate in 2025, check out the original article here: Article Link.

Stay Ahead & Maximize Your Sellers’ Profits

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