Monday, November 01, 2004

Selling Your Home in a Slow Market

Bubble or not, demand is softening. That means you'll have to work extra smart to get the price you want
Adrienne Carter
November 2004 Vol. 33 No. 11
Money Magazine

The halcyon days of home selling are over. No longer can you simply

stick a FOR SALE sign on your front lawn and wait to collect your check.
Signs of a softening market began to appear in July, when existing-home
sales fell 2.9%, followed by a 2.7% drop in August. Says Barbara Kohut,
a realtor in the Chicago suburbs: "Houses that would have sold in less
than two days last year now stay on the market for 60 days." With demand
dropping, forecasters predict that home prices should grow just 3% over
the next 12 months—a far cry from the 9.4% average gain of the past year.

To get top dollar in this market, you need to make your house stand out
from the crowd. So stop thinking like a proud homeowner and start acting
like a marketing manager trying to move the merchandise off a crowded
supermarket shelf. The steps you have to take, after all, aren't that
much different.

Price it right
The single biggest mistake sellers make in a sluggish market is to
overprice their home, says Cleveland agent Tim Prida. Asking for the
moon may work in a period where bidding wars and multiple offers are the
norm, but good values are what nab deals when demand slows.

To get a realistic sense of what your home is worth now, check out sales
in your neighborhood over the past six months. You can typically find
this information online at your local county assessor's site, but you'll
need a good real estate agent to put the numbers in context. Your broker
should not only be familiar with conditions in your neighborhood but
also with prices for properties that are most comparable to yours. What
matters here is the number of bedrooms, bathrooms, and the square
footage, as well as other features that may be in particular demand in
your area, such as great views or proximity to transportation.

You might even consider underpricing your home by 5% to 10% to create
buzz, suggests New York realtor Barbara Corcoran. Often this strategy
can lead to multiple bids. And once buyers start competing, their
emotions can push the sale price higher than the home's fair value. She
notes, "Nothing turns a buyer on like the idea of a bargain."

Once you've set an irresistible price, make sure the word gets out. At a
minimum, your broker should place your home on the local Multiple
Listing Service, a database of properties for sale, and advertise in the
local newspaper or via direct mail. Since not all properties on the MLS
show up online, it's also imperative to list your home on the realtor's
website—some 70% of home buyers now search the Net for prospects. You'll
get the most traffic if your broker's site is easy to navigate (just one
or two clicks to get to your listing) and has multiple still shots of
the interior and exterior of the house.

Give your house a makeover
"Preparing your house for sale is like preparing for a blind date," says
Linda Mighdoll, author of Get Ready, Get Set, Sell! "You have to make a
good first impression."

To show your home to its best advantage, concentrate on sprucing up the
rooms that buyers care about most: the kitchen and bathrooms. This is a
cost of selling, not an investment, so limit yourself to relatively
inexpensive cosmetic jobs like slapping on a fresh coat of paint,
replacing broken tiles and updating appliances. A modernized kitchen,
realtors note, can sell a whole house.

Neutral, light colors sell too. So paint that purple bedroom a warm
ivory, and get rid of the gold shag carpeting from the 1970s. Up the
wattage on your lightbulbs to brighten rooms. Boost your curb appeal by
trimming overgrown shrubs. To make the best impression without spending
a lot of money or time, paint the front door.

Before your first showing, clean the house like you've never cleaned
before. Organize your furniture to draw attention to the nicest features
of your home, such as hardwood floors or a fireplace, and pull back the
curtains if you have a great view. You might even seek a professional
stager's help in showing off your abode (see "Don't Sweat It," page
113). While these steps help sell homes in any market, they move from
optional to essential when prices soften.

Offer incentives
To make a sale in a slow market, you may also have to sweeten the deal.
Small gestures can often tip the scales. If you're planning on
redecorating when you move into your next digs, for example, consider
throwing in your curtains or dining room set. More sellers are also
offering a home warranty. Sold through agents or directly through
providers like American Home Shield for $400 or so, these contracts
cover the cost to replace or repair major appliances that break within a
year of a sale.

If you need to move quickly, up the ante. One increasingly common
strategy is for sellers to cover their buyers' closing costs, typically
3% to 6% of the sale price. Seller financing is also gaining popularity.
In a typical arrangement, the buyer makes a big down payment, generally
20%. But instead of taking out a bank mortgage, the purchaser borrows
the remainder directly from the seller, who gets paid monthly, at a rate
around 1% higher than banks charge on 30-year fixed mortgages.

Of course, you should consider this option only if you don't need a big
lump sum from the sale, might benefit from a monthly payment and have
thoroughly checked out the buyer's credit history, so you're confident
that he or she can make good on the deal. If so, seller financing may
not only get you out of your current home but also provide an income for
you in your next one.


MARKET PULSE

• THEN In the fourth quarter of 2003, home prices nationwide jumped 3.7%
over the previous quarter.

• NOW With interest rates up, appreciation has dropped 41%, to 2.2%, in
the past three months.


SET THE RIGHT PRICE

THE STRATEGY: Your asking price must be competitive with those of
similar homes in your neighborhood.

THE REASON: In a soft market, over-priced houses often sit on the market
longer, prompting buyers to wonder what's wrong with them.

Where to get help: You can find recent sales on your county assessor's
or local realtors' websites.

SPRUCE UP YOUR HOME

THE STRATEGY: Think cosmetic changes instead of a facelift. A can of
paint and some fresh flowers work wonders. For some reason, yellow
houses sell fastest.

THE REASON: First impressions often sell homes, so make a good one.

Where to get help: You can hire a professional stager for $300 to $2,000
to make your house pretty, or do the beautification yourself.

USE ENTICEMENTS

THE STRATEGY: Sweeten the deal by throwing in free carpeting or buying a
home warranty to cover the costs if a major appliance breaks down.

THE REASON: In a weak market, tentative buyers may need extra financial
motivation.

Where to get help: Your real estate agent can guide you through
different incentive and financing options.

1 Comments:

At 3:30 AM, Blogger Lesly said...

I find your blog very interesting. The thing is that I have been looking for a company that provides home warranty protection services. And here I found American Home Shield. The company seemed to be the right choice. But recently I also happened to bump at www.pissedconsumer.com, where I checked out the customers’ reviews concerning the company. In fact, not all of them are positive.

 

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