Mortgage rates topped 7% last autumn and have continued higher for longer than many experts expected. This was a tough break for home buyers, who still have to deal with slim chances of buying a home and high home prices.

While home sellers typically don't worry about interest rates as much as home buyers do, that doesn't mean that home sellers can ignore the conditions that home buyers are currently facing in the market.

For starters, if sellers are also buying a home, they may be facing the same high interest rates on their loan. But even if they don't plan to buy a property right away, they should keep these high rates in mind when pricing their home.

Danielle Hale, chief economist at Realtor.com®, notes that the median monthly mortgage payment for a home in May 2023 was almost double what it was two years ago - $2,216 versus $1,262 - before interest rates began to spike.

In other words, from mid-2016 to the end of 2019, monthly mortgage payments as a percentage of income averaged about 21.3 per cent. But when interest rates rose, those monthly payments skyrocketed to more than 36% of a homebuyer's income (given the list price on Realtor.com).

While some homebuyers have been able to adapt, Hale says, "Rising mortgage rates are one of the major reasons for the current downturn in home sales. Higher mortgage rates not only increase costs for potential homebuyers, but also change the calculus for existing homeowners looking to trade in their mortgages for a home. As a result, higher mortgage rates are dampening supply and demand in today's housing market."

So what does this all mean for home sellers?

Hale says, "It's good for sellers to consider the role their asking price plays in their monthly payments." I don't know if sellers need to empathise, but they may want some background."

Pamela Grunstein, an agent with the Francie Malina Team in Westchester County, New York, adds that there are many factors that determine the right price for a home, from the school district to the size of the home to the number of rooms, or whether the property is located on a busy street or in a flood zone.

She acknowledges that in a hot market, the cost of financing a home buyer may seem like the last thing homeowners should be thinking about. But they should consider it.

"A discussion about mortgages is essential in conversations with sellers," she says. Sometimes they listen, but sometimes they focus only on the price they want.

However, today's overpriced homes may get few, if any, offers. Once sellers miss that window of opportunity, they're hurting their chances of selling.

Grunstein explains, "Buyers are used to seeing properties get offers within three days." If that doesn't happen, they suspect something is wrong with the house.

In the same way that buyers are advised to "rate test" their purchasing power whenever mortgage rates change, home sellers should check how fluctuating interest rates affect the monthly payments on their home at the ideal asking price. (You can calculate these figures using an online mortgage calculator).

For example, you may learn that at a certain interest rate and at a certain asking price, your home's monthly payment reaches a certain key tipping point - it may rise from $2,090 to $3,050, for example - and that may be enough to convince some homebuyers to pass on the purchase.

Grunstein cautions that we always try to make sure sellers know what the monthly costs will be.

Julie Chang, a realtor with Pacific Sotheby's International Realty in San Diego, suggests that sellers consider keeping an eye on, if not empathising with, homebuyers' high mortgage rates. It will help them sell their home in the long run.

There's plenty of data to show that if you're priced at or even below market levels, you'll drive demand because you seem reasonable.

It's all about optics. Then let the market decide where the house goes. If you overprice and turn people off, then you'll have people not coming to see your house because they think you're greedy.

In a high interest rate environment, Chang also encourages sellers to consider offering concessions, such as interest rate reductions, which may be the same amount of money for the homeowner but more favourable to the buyer than a price reduction.

Another option may be help with closing costs. You may even want to consider seller financing to help your buyer avoid the current high mortgage rates altogether while providing you with some nice income for the foreseeable future.

Another key area of seller flexibility in times of high interest rates is repairs.

Chang says, "Considering how tight buyers are, it's likely they won't have any cash for repairs after closing." If you're not willing to work with a qualified buyer who points out that there's something wrong with the roof, for example, you could lose one of the few qualified buyers if you choose to be unreasonable and not offer a discount. You have to show a win-win position. Or you can take your chances and try your hardest to make the highest bid and risk being turned away".

If you're willing to offer buyers options to ease the burden of high interest rates, make that clear in the listing information.

"Market it," Chang says." Stand out among other properties."