How to Sell a Home in This Brutal Market
Jim Remley
Realty Times
Published: February 15, 2008
Real estate values have been falling quickly across much of the US. The pace of existing home sales is down sharply as well, with many homes languishing on the market for months and months.
There are strategies that can help you sell your home -- for a fair price -- even in hard-hit areas.
BEST MOVES FOR SELLERS
You might have to be very aggressive in the current environment, especially if your local real estate market has a glut of homes for sale. Here’s how...
Don’t start with a high price. Asking price is the single most important reason that a property does not sell. In this buyer’s market, it is a mistake to set a high price and assume that you can lower it later, if necessary, in negotiations. Area real estate agents pay the most attention to listings when they first appear on the market. These days, they may not even bother to show your home to buyers if it is overpriced.
If you start out too high, by the time you do lower your price, real estate agents will have newer listings to show buyers. The buyers who do see your home will view your price cut as a sign of desperation and bid low.
The correct price to ask for your home in this market is toward the low end of the range of prices being asked on comparable homes currently for sale in the neighborhood.
Pricing your home as a slight bargain ensures that as many potential buyers as possible will walk through your door. This is crucial at times like these when home sellers outnumber buyers.
Recheck the asking price of comparable listings every two to four weeks if your home has not sold. If local real estate prices are falling fast, you might have to lower your price to remain competitive. When you do a price reduction, make it large enough so that the new price is very competitive with comparable homes or is even a “best buy.”
Important: The amounts your neighbors sold their homes for a year or two ago should not even enter your thinking when you set your asking price. It was a very different market then, and those prices are irrelevant today.
Helpful: If your home is not attracting many showings, the price is probably the problem. If it is attracting showings but not offers, the home itself is most likely to blame.
Fix it up first. “Fixer-uppers” tend to be ignored in slow real estate markets because buyers can find good deals without breaking out their tools. If your home is in need of substantial repairs, it is best to get the work done before placing it on today’s market.
Pay attention to curb appeal. Home buyers have so many options that if a property doesn’t look attractive from the street, they will drive past it without even stopping.
What to do: Spend a weekend beautifying the front of your home. Replace damaged window screens... tidy up the lawn and landscaping... pressure-wash the sidewalk... add mulch around trees and in flower beds. If necessary, have the home’s exterior repainted, particularly the front door and trim... and upgrade outdoor lighting fixtures, doorknobs and your doorbell switch or knocker. These small details can evoke an emotional reaction in a home shopper that can lead to a sale.
Freshen up inside. A fresh coat of paint and new carpet or refinished wood floors can make a big difference. It also pays to hire a professional cleaning service to remove years of grime from your kitchen and bathrooms.
Smell matters, too. It is extremely difficult to sell homes that reek of cigarette smoke or pet and cooking odors. Perfuming the house with scented candles or potpourri doesn’t fool anyone.
What to do: Hire a building restoration company to remove odors if scrubbing does not do it. Services range from a few hundred to a few thousand dollars. (Look in the phone directory under “Building Maintenance” or “Building Restoration.”) You will recoup this expense if your home is worth $300,000 or more.
Include special features and construction details in your Multiple Listing Service (MLS) listing. French doors, mosaic tile or a gated entry sets your home apart from others in the area.
Be descriptive. Rather than writing “in-ground pool,” you or the agent should write “in-ground pool with waterfall and hot tub.”
Offer incentives to buyers and brokers. Many home sellers are “bribing” buyers with cash, cars and flat-screen TVs. Most effective incentives...
Help with closing costs. Cash-poor buyers might have trouble paying up-front mortgage expenses. Offer to pay a portion of these costs, and buyers have a reason to choose your home.
Pay for buy downs. Many lenders will lower interest rates by one-eighth to one-quarter percentage point in exchange for an up-front payment. The payment usually is 1% or 2% of the loan amount.
Include details of your incentives in your MLS listing, newspaper ad, flyers, on your Web site and anywhere else you advertise the property.
You also can offer real estate agents a bonus, which often is an extra 1% to 3% of the purchase price, on top of their usual commission, at closing if they find you a buyer. Mention the bonus only in the MLS listing.
Important: If you offer a sales incentive, disclose this in your sales contract with the buyer. If the incentive is not mentioned in the contract and the buyer later defaults on the loan, the lender could claim that you and the buyer engaged in fraud by manipulating the sale price of the home to include an asset that the lender could not foreclose upon.
Don’t over negotiate. If a potential buyer’s first offer is reasonable, consider accepting it, rather than making a higher counteroffer. Buyers have so many homes to choose from today that they sometimes move on to other properties, rather than make second offers when sellers don’t accept their initial bids. If you do not need to sell quickly or your home is garnering lots of showings, counter -- but if you need to sell fast and the initial offer is reasonable, do not risk losing the sale over a relatively small amount of money.
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