Tips for selling your home in down market
By Dave Carpenter, Associated Press
CHICAGO — The home next door is in
Foreclosure. The neighbors down the street
just put their house up for sale at a
ridiculous discount. And "For Sale" signs
litter lawns all over town.
For sale signs line a residential street in Adelanto,
Calif., in June 2009.
Welcome to the toughest selling conditions
in years.
The bright side of selling a home in a down
market is you get to seek your own bargain if
you're going to buy after you're done.
Closing a sale, however, can be teeth-
grindingly slow if you don't do everything
right — and maybe even if you do.
"It's probably the worst time you could find
to sell a house since the late '70s or early
'80s," says Loren Keim, professor of real
estate at Lehigh University.
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Sales of previously occupied homes
continue to sag after hitting a 13-year low
last year. Even real estate professionals can
be flummoxed by this market.
"Realtors sometimes shake our heads at the
perceived randomness of it all," says Katie
Severance, a broker for ReMax in Upper
Montclair, N.J.
A house that's in a good location, fully
updated and seems perfectly priced might
sit on the market without a nibble.
Meredith Gray is leaving nothing to chance
in selling her four-bedroom colonial in
Norwalk, Conn. A freelance fashion stylist
and writer, Gray, 53, has taken every action
she could think of to get an offer for the
house she and her ex-husband bought 17
years ago.
She researched and interviewed four brokers
before hiring one, made a YouTube video
showcasing the house, and created a
hardcover book of comments and photos of
the house in all four seasons to display for
open house visitors.
Gray used Facebook and word of mouth to
advertise, and marketed on close to a dozen
websites. And she priced her house
competitively with the broker's guidance
after studying the comps herself. The initial
listing of $683,000 in late April was far less
than the $850,000 she had sought in a failed
attempt to sell near the height of the market
in 2004.
She even brought in a shaman to cleanse the
house of any negative vibes, figuring it
couldn't hurt.
"If you really want to move your house in this
kind of a market, you have to do everything,"
she says. "It's a lot of effort, but people
shouldn't leave it all in the hands of their
broker."
Unfortunately, all that work still doesn't
guarantee a sale, particularly when many
buyers feel little urgency to act and assume
they will get a better deal by waiting.
Lowering the price can be a home seller's
most painful move. It was for Gray, who
reluctantly dropped her asking price 5% to
$649,230 after eight weeks.
"Selling is really emotional for me because
I've put a lot into this house. It's now exactly
as I like it," she says. "I don't want to give it
away at a huge discount. It's kind of my nest
egg."
The best tips for selling underscore how the
market has changed:
1. PRICE AGGRESSIVELY.
Even if you're fully aware that prices have
plummeted, it can come as a shock when a
real estate agent advises you to slap a low-
low price on your home.
The reality is that only 4% to 10% of homes
on the market nationwide sell in a given
month right now, according to Keim. A
typical selling time for a home the last two
years has been eight to 10 weeks. But that
timeframe makes selling sound easier than it
is, because it doesn't factor in all the homes
that never sold, or were pulled off the market
and later relisted. With that in mind, Keim
says you need to ask for at least 1% less than
competing homes.
Holding out for a higher price generally
doesn't work well in this market, either.
Among homes that took at least four months
to sell, nearly half the owners accepted less
than 90% of their asking price, according to
the National Association of Realtors— many
far less.
Days on the market can be a helpful statistic.
Available through most multiple listing
services, it shows the average time it takes to
sell a home. The specific sales data can
provide valuable insight. When reviewing
comparable homes it will become clear which
list prices led to fast sales and which were
set too high and prolonged the sale.
But don't focus on the overall average for a
specific location. This can be misleading
because it accounts only for homes that
sold. Also, homes that were pulled off the
market and relisted start the clock back at
zero.
Sellers often like to look at the ratio of list
price to sales price. Your local ratio gives an
idea of the latest price trend and indicates
how much a typical seller came down from
the list price.
Be wary of using that to justify refusing to
lower your price, however. For example,
homes sold across the country in April went
for an average of 96% of their list price,
according to data compiled by Zillow, the
real estate listing and information service.
But it, too, does not reflect all the homes that
failed to sell that month — by far the
majority.
2. STAGE LIKE A PRO.
You may not be able to compete with the
price of homes in Foreclosure, or with short
sales — those in which a lender is allowing
the seller to list for less than is owed on the
mortgage. But you can outshine them when
it comes to the condition and appearance of
your house.
"Staging is no longer optional," Severance
says. "It's like a boot camp that the seller and
listing agent go through together."
It can be an intense period of planting
flowers, painting and depersonalizing the
house so buyers can envision themselves
living there. Getting rid of clutter and
rearranging rooms to highlight the best
features also are essential.
What's new this year is that many sellers are
willing to go beyond the basics of staging to
make physical upgrades.
"They'll do whatever it takes to look better
than the house down the street now,"
Severance says.
One of her clients this year hired a
contractor to turn a three-bedroom, one-
bathroom home into a four-bedroom, two-
bath. The month-long, $15,000 renovation
paid big dividends: The house sold for at
least $50,000 more than it was expected to
otherwise.
After learning a valuable lesson about
today's persnickety buyer, Michael Ayalon
went the extra mile in renovating the kitchen
of his house in East Meadow, N.Y.
Recognizing that their '70s-era kitchen
looked dated, he and his wife, Jennifer, first
spent $2,000 on stainless steel appliances
before putting the three-bedroom home on
the market in April for $399,000.
After 15 showings, he says, they realized
that "nobody could get past the fact that a
project was waiting for them in the kitchen."
So it was do-it-yourself time for Michael, 35,
a website designer. They pulled the house
off the market for two weeks while he
installed a new floor, ceiling, cabinets and
granite countertops. Then they put it back
on the market in late June at the same price.
They hope to justify the additional $10,000
investment with a quick sale.
3. GO ALL-OUT ONLINE.
Sellers used to post photos of their homes
online only sparingly to entice buyers to
visit. No longer. With about 90% of buyers
starting their search online, according to the
National Association of Realtors, you can't
just tease and hope.
"That whole strategy is thrown out the
window, because all listings are online and
there are so many that you have to compete
for people's attention," says Amy
Bohutinsky, chief marketing officer of Zillow.
Agents recommend putting lots of high-
resolution photos and as much information
as possible online, including citing upgrades
and what you love about living in the home.
If you don't show a photo of a key area —
kitchen, bathrooms, backyard — prospective
buyers may assume there's something
wrong and move on.
It's important to remember that buyers are
going mobile, too. The use of smartphones
and apps to review listings has exploded.
Nearly 1.8 million homes are viewed daily on
Zillow's apps alone, and the service says 30%
of its weekend traffic and 20% overall come
from mobile devices.
So, make sure your listing agent markets
your home in as many places as possible —
from AOL Real Estate to Zillow — with a
special emphasis on sites that work well for
mobile access.
4. BE FLEXIBLE WITH BUYERS.
The single biggest change in the real estate
market since the Great Recession is tighter
financing, according to John Vogel Jr., real
estate professor at Dartmouth's Tuck School
of Business. Banks once freely dispensed
loans for 95% of a home's value, but a
requirement of 20% down is becoming the
new normal in many cases. And any
perceived imperfection in a credit record can
spell denial.
"As a seller, you have to be very conscious
of how hard it is now to qualify for loans,"
Vogel says.
If you're about to accept an offer, make sure
you inquire about the down payment and are
informed about the buyer's financing status.
Consider accepting an all-cash offer, even if
it's not your highest. If your buyer is hitting
a roadblock, consider talking with the lender
to help structure a deal.
Don't be afraid to speak directly to the prospective
buyers. If they say they're leery
about committing to a home in this
environment, you can help make the case. Be
ready to show them any recent local
statistics indicating that owning is better
financially than renting, as is the case in
many areas. And if you don't accept an initial
offer, share information to encourage a
counteroffer and be ready to bridge the gap
to close the sale.
5. DON'T RUSH TO RENT.
The fallback for many homeowners who
can't sell is to rent the property. That's the
case with Gray, who wants to be out by
winter.
But it's a strategy that carries risk. With so
many foreclosed and underwater houses on
the market, Vogel says there's at least a 50-
50 chance that any given house will be worth
less in a year than it is now.
Not only that, you may be planning to move
out of town, so renting would entail being a
long-distance landlord.
Vogel says homeowners may need to take a
deep breath and treat their house as a sunk
cost — money that has been spent and
cannot be recovered. "The house today is
worth what it's worth," he says.
Accepting that advice may bring perspective
and help you sell in the worst market in
years.
http://www.usatoday.com/money/economy/housing/2011-07-02-home-sellers-down-market_n.htm