Dianne Stow
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Real-estate

4/20/2007

Rules for home sellers in a buyer’s market

Well, the housing market finally slowed down in 2006, and some sellers began to experience the pangs normally associated with a buyer’s market: longer listing times, higher commissions and low-ball offers.

Did the much-discussed housing bubble pop? I don’t think it was so much of a pop. That hissing sound you hear is a little bit of air coming out of that balloon. Only the buyers are having any fun.

This year saw the average price of a home drop by 3.5 percent nationwide (although the blogosphere is full of writers who claim that in most individual markets, housing prices held up and even rose).

Some new construction builders saw their sales volume drop by nearly half. Sellers and developers offered bonuses to buyers and their agents, gave away cars and trips, and even started to lower the price of properties they were trying to sell.

So what does the rest of 2007 look like? Expect a continued slowdown for new construction through the first half of the year at least. Existing home sales will probably rise slightly, especially if the Federal Reserve actually begins to lower the Federal Funds rate (and mortgages drop to the low 6 percent range, or lower).

If you’re going to sell next year, the key to a successful closing will be planning. To get you going, here’s my annual list of home seller rules you might want to keep.

• Overcome any possible objections a buyer would have.

Sellers often don’t understand that their primary job is to not only eliminate any potential objections that would stand in the way of a buyer making an offer, but to exceed their expectations, as well. If your home is competitively priced, and the home’s condition exceeds a buyer’s expectations, you’ll get the offer you want.

• Get my home into shape before I let anyone see it.

Getting a home into selling shape is quite different from even having a clean, beautiful home. You need to stage your home, which means you must make it look exactly the way a buyer thinks it should.

For best results, do this before you invite any real estate agents or brokers in to assess how much the house is worth. The agents you interview will be your wow test. If they walk into your home and say, “wow, what a great place you have here,” you know you’ve done it right.

How do you stage a home? Start by throwing away, giving away or packing away anything you haven’t used in the last three to five years. Give your home a thorough cleaning and address any small fixer-upper projects you’ve been putting off.

Once the house is clean, you can assess what kind of other work needs to be done. Should you give the interior and exterior a fresh coat of white paint? Do you need to power wash your vinyl siding? Should the windows be washed? The wood floor polished? New wallpaper put up in the guest bathroom? Does the landscaping require a visit or two by a professional landscaper? Whatever you decide to do, make sure it’s completely finished before you invite anyone over to see your home.

Finally, move out excess furniture, buy matching towel sets for the bathroom, and make sure you have new bed covers with matching pillows for your bedrooms. Your home should look put together, as if you were auditioning for the cover of a home decorating magazine.

• Invite at least three agents to create a comparative marketing analysis.

Often, sellers simply call the agent who sold them their home to list it. While you may end up with that person, you’ll be doing yourself a favor if you invite a couple of other agents in from other firms.

Why? Because each agent will have a different marketing plan and idea about how much your home is worth. If you invite three agents to prepare a comparative marketing analysis (a CMA is a sales tool that analyzes homes similar to yours that have sold recently in the area, presents a marketing plan and suggested list price), one will bring in a high price, one a low price and one somewhere in between.

Each may have a slightly different idea about how to market the home, or give you ideas you can share with the agent you finally choose.

If you don’t like any of the three agents you’ve invited to your home, get some referrals and invite additional agents to prepare CMAs. One good way to get referrals is to ask the agents you invited who they think is the best agent in town (other than themselves, of course).

• Know what my selling timetable is before I list my home.

Do you want to sell or do you need to sell? If you need to be out in three months or less, you’ll need an aggressive agent and a competitive list price. If you’ve got six months or a year in which to sell, you may choose to price your home a little higher, or pick a different type of agent.

Knowing when you have to move — and sharing that crucial bit of information with your agent — allows you to choose a correct pricing and marketing strategy.

• Be realistic about the market.

After a half-dozen years of a super-hot seller’s market, the tables have turned in many markets. Expensive homes are selling more slowly than homes priced for first-time buyers (although homes priced at $10 million and above seem to be selling at the same pace as always).

Accept the reality of your local market and make sure you price your home realistically. Don’t blame your broker if you don’t get three offers over your list price within 24 hours of putting your home on the market. Sellers who set sky-high prices could wait months for an offer and may wind up with the same amount they would have received if they’d priced their home correctly the first time — or a lot less.

Ilyce R. Glink’s latest book is “100 Questions Every First-Time Home Buyer Should Ask, 3rd Ed.” (Three Rivers Press, $18). If you have questions, you can call her radio show at (800) 972-8255 any Sunday, from 11 a.m. to 12 p.m. EST. You can also write to Real Estate Matters Syndicate, P.O. Box 366, Glencoe, IL 60022, or visit www.thinkglink.com.