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Home Selling in a Buyers' Market
The supply of homes and condominiums continues to
grow throughout the United States. Hopes that the
2007 spring and summer selling season will see a
rebound are fading. Many experts have already
declared this season "a bust," and say the hope of
seeing any possible rebound is delayed until next
year. Home prices are flat-to-declining in many
areas, and a sudden tightening of lending standards
is limiting the supply of potential buyers by
preventing them from getting the loans they need.
It's been a long time since home sellers have faced
these conditions. In fact, many are in uncharted
waters.
Face the New Reality — It's a Buyers' Market
Homeowners looking to sell have a choice: sell now
in the current market, or wait to sell later, when
market conditions improve. Of course, the latter
assumes they can wait. But if you are
determined to sell, you need to forget about the
real estate market of just two years ago and face
the new reality in many regions: It's a buyers'
market, and you will be competing with a growing
supply of motivated sellers to get someone to buy
your home.
When trying to sell in a buyers' market, two most
important factors are price and condition, according
to real estate pros. I would add — flexibility.
Buyers know real estate prices ran up far too much
during the last two years of the real estate boom,
and just because you may have paid too much for your
home, many buyers don't think they should have to
pay to bail you out.
With all this in mind, here are some of the most
common mistakes sellers make in a down market, along
with ways to avoid them:
Pricing it too high: Real estate pros say that the key to selling a
house is to "price it right." Setting the wrong
asking price can cost you real money. In a buyers'
market, it doesn't matter what you or your realtor
think your house is worth; the only thing that
matters is what a buyer thinks and is willing to
offer. Sellers fear pricing too low and leaving
money on the table, but there is little danger of
doing this. If a home is priced too low, far below
the competition, then you should receive multiple
offers that will drive up the price to the fair
market value.
You don't want to over-price your house, because
buyers will then ignore it and your listing will
loose its freshness and appeal, not to mention the
uncompensated effort of keeping the home spotless
during the showings.
Also, the "original listing price" and "current
asking price" are on your home's Multiple Listing
Service listing, and some buyers will see it as a
sign that you have unreasonable expectations of what
you can fetch for your home.
Look at the listing for every comparable home that
is or was listed in your neighborhood in the past
six months. Compare similar properties, make
adjustments for locations, age, upgrades and lot
sizes, and come up with a range of values. Most
buyers search the Internet and buy a home within 12
miles of their existing home — so use the Internet
tools available in your area to see what the supply
of homes for sale looks like near you. Also, if you
are working with a realtor, don't choose to list
with the one who suggests the highest listing price;
rather, select a listing agent who can back up his
or her proposal with the most facts, market research
and experience.
When setting the listing price for your house, use
round numbers, in increments of $5,000. Most buyers
use the Internet to search for a home. When
searching by price, they typically search in
increments of $5,000. So, listing at a price of
$250,000 will turn up in more searches that listing
at $249,900.
Making a poor first impression: Real estate pros
often talk about "curb appeal." Homes with it sell
more quickly and those without it can languish on
the market longer, further eroding the price buyers
are willing to pay. Realtors often comment on the
number of homes that are put on the market with
little or nothing done to improve their curb appeal.
One put it this way, "Most buyers know the house is
'the one' when they see it the very first time. If
they make a connection on the first showing, it's
sold."
For this reason, doing what it takes to get your
house in selling shape is the second most important
factor, after setting the correct price, if you want
to get close to your asking price or sell as quickly
as possible. Inexpensive things you can do to
increase your home's curb appeal and help it show
better include:
Sprucing up the yard, sweep the walk, mow the
lawn, prune the shrubs, and clean up debris.
Clean the windows, floors, carpets, the kitchen,
appliances, the bathroom, and even wash the windows.
Paint the front door, walls leading to
entranceways, ceiling stains, cracked or chipping
areas.
Fix or repair broken doorbell, leaky faucets,
broken floor or counter tiles, door that don't close
properly, and broken deck railings.
Organize all rooms, closets and the basement.
Set the stage by removing pets and litter box,
lighting scented candles, playing background music,
rearranging and removing excess furniture, even
baking something to get the pleasant aroma from the
oven!
The industry term for doing this is "staging a
house" and, as you can imagine, it goes far beyond
decorating and cleaning. But doing this can result
in selling your home more quickly and getting a
higher price, according to pros who offer those
services.
If you don't have the time or would prefer to have
someone trained and objective do this for you, ask
your realtor to refer you to a professional home
stager. Some realtors have earned the Accredited
Staging Professional (ASP) designation and can do
this for you. You can also learn more and locate a
professional home stager at www.stagedhomes.com.
Not getting a pre-sale inspection: Sellers are
strongly advised to consider getting a pre-sale home
inspection, especially if their home is older or in
need of repairs. This way, they can either use a
clean home inspection report as a selling advantage,
or take care of the repairs listed on the inspection
report. Of course, make the repairs before listing
the home, if possible, especially if they involve
things that can be messy and unsightly, such as
replacing the roof or removing an old fuel oil tank.
But if you can't make the repairs, you can use the
report to make estimates available to show potential
buyers about the cost of repairs.
Not being flexible: In this market, buyers will
expect to pay less than the asking price. They will
be armed with the original list prices and final
sales prices of comparable homes, and will know the
price reductions other sellers are accepting. Many
buyers may make a low-ball offer to see what your
reaction is. Remember to keep emotions out of it —
your objective is to sell the house and, if they are
truly interested, there is a higher price they may
be willing to pay. Don't simply reject their offer;
instead, make a reasonable counter-offer and send
the message that you want to work with them to close
the gap between their offer and the price you need
to get for the house.
Also, ask the buyers or their realtor what
information they used to determine the price they
offered and why they want to buy your house. For
example, say the buyers respond that they based
their offer on comparable price per square footage
for two other listings. If your house includes
upgrades and a finished basement that the other
listings don't have, include an explanation of the
cost of your upgrades and the additional value per
square foot with your counter-offer.
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