Tips for Selling Your Home in Down Market

Median Home Price Drops in Sacramento-Area Sales

NEW YORK (CNNMoney) -- Getting a mortgage can be tough these days -- even people with near-perfect credit have been rejected for loans. But for some lucky borrowers, things aren't as bad as the doom-and-gloom crowd says.

At a recent press conference, Federal Reserve Chairman Ben Bernanke said lending standards for mortgages have tightened so considerably that "the bottom third of people who might have qualified for a prime mortgage in terms of, say, FICO scores a few years ago -- cannot qualify today."

Indeed, roughly one-in-four mortgage applicants was denied in 2010, up from about 18% in 2003, according to data from the Federal Financial Institutions Examination Council. And those are just the ones that apply -- many discouraged potential borrowers don't even bother to apply anymore.

Yet, there is money to lend. Bob Ryan, the acting commissioner for the U.S. Department of Housing and Urban Development, or HUD, recently said that mortgage money "is flowing, it's stable, it's tightened from the boom years, but it's there."

And many of those potential home buyers sitting on the sidelines may just have a shot at it -- as long as they take a few crucial steps.

"The belief is that you can't get a mortgage at all -- but you can," Keith Gumbinger, of the mortgage information provider HSH Associates.

Read the full story here...

The Wall street Journal reports that Riskier Loans are making a comeback.

"Critics say the loans are similar enough to the subprime mortgages of old that would-be borrowers should beware. They often have a so-called balloon structure, which requires the borrower to pay the remaining balance after five or seven years, or to refinance. And they are expensive, with interest rates of as much as 13%, the loans can cost more than double the average for bank mortgages. "You'd have to be fairly desperate to take that in the current market," says Guy Cecala, publisher of Inside Mortgage Finance.

Given the recent economy, that includes a lot of people.With housing prices still so relatively low, many people may want to buy, which analysts say could fuel a boom in this sector.

Also, starting in October, the government is expected to lower the limit on the loans it guarantees to as low as $271,050 in some places, in some cases a drop of almost $100,000. That, too, could open the door for these private financing companies."

Read the full story here

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.

• STORY: Spring buying boosts home 

prices in 13 cities

• STORY: On Helens Pouroff Ave., 

escaping falling home prices

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

The Standard & Poor’s Case-Shiller Home Price Index for 20 major metropolitan areas is one of the most closely watched gauges of the housing market. The figures for March were released May 31. Figures shown here are not seasonally adjusted or adjusted for inflation.

Read more

Economists Weigh in on Home Price Double-Dip

By: Carrie Bay 

05/31/2011

The S&P/Case-Shiller home price index confirmed a double-dip in home prices across much of the nation as Standard & Poor’s national reading fell another 4.2 percent during the first quarter to hit a new recession low.

 The analysts at S&P say there appears to be no relief in sight as home prices continue their downward spiral.

 If you take out the artificial rebound in 2009 and early 2010 resulting from the federal government’s homebuyer tax credit incentive, “there has been no recovery or even stabilization in home prices during or after the recent recession,” according to the ratings agency.

 Paul Dales, senior U.S. economist for the research firm Capital Economics says the further fall in house prices during the first quarter means that “on the Case-Shiller index prices have now fallen by more than they did during the Great Depression.”

 And should patterns continue to hold true, Dales notes that following the Depression, “the peak in prices was not regained until 19 years after they first fell.”

Based on the Case-Shiller numbers, Dales concludes that home prices are now 33 percent below the 2006 peak, compared to the 31 percent decline endured through the Great Depression.

According to Dales, the similarities between the current downturn and that seen during the Depression are “striking.” On both occasions prices initially fell by

31 percent and, after a temporary rebound, then dropped back by 7 percent.

“The remarkable thing about this downturn is that even though prices have fallen by more than in the Great Depression, the bottom has yet to be reached,” Dales said. “We think that prices will fall by at least a further 3 percent this year, and perhaps even further next year.”

Commenting on the latest Case-Shiller findings, Patrick Newport, U.S. economist for IHS Global Insight, stresses that falling house prices damage the economy in several ways.

“They reduce wealth, which reduces consumer spending….They force lenders to tighten lending standards, since the collateral is depreciating in value off the bat, reducing existing home sales. They reduce state and local property tax collections, resulting in spending cutbacks,” Newport explained.

“They raise the level of uncertainty, which has made an increasing number of Americans think twice about participating in the housing market,” he continued. “Finally, they lead to more foreclosures, which in turn lead to further declines in house prices, which lead to more foreclosures, and so on.”

Home prices are dropping at a steady clip nearly everywhere, Newport says. He notes that with over a quarter of all mortgages underwater and 6.3 million homeowners either delinquent or in foreclosure “further declines in prices are etched in stone.”

“Going forward, our view is that weak demand, foreclosures, and a glut of homes for sale should translate into at least another 5 drop in the Case-Shiller composite indices,” Newport said.

S&P issued a report on the implications of a double-dip in home prices on banks’ balance sheets last week, ahead of the Case-Shiller release Tuesday.

Devi Aurora, a senior director within S&P’s financial institutions ratings division, points out that housing makes up about a third of the portfolios of the banking sector as a whole.

The ratings agency laid out a worst-case scenario of home prices falling by another 15 percent by the end of 2012, as opposed to S&P’s baseline projection of a 5 percent decline.

If that worst-case were to play out, Aurora says banks would take a hit of an additional $70 billion to $80 billion as a result of higher credit costs from rising foreclosures and delinquencies, a buildup of representation and warranty expense related to buybacks from investors, and lost income from fewer sales and originations as demand waned even further.

DSNews.com’s full coverage of the Case-Shiller report can be accessed here.

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