Home prices have begun to flatten or rise in some parts of the country.
But it is hardly a seller’s market and median prices remain 20% to 25% below 2006 peak levels. You need to stage, advertise and price your property much more carefully than during a boom. Steps to take…
Choose a shrewd broker. During the boom, about one-fifth of all home sellers saved themselves the 6% average sales commission by listing their properties For Sale By Owner (FSBO). That’s riskier in a down market. For example, you could lose more money by mispricing your home than you would have to pay an agent. (“This is where I come in as I am trained in Advance Comparable Market Analysis which should provide you with a much more accurate value for your home when you go out to market it for sale,” Mark Slade” Brokers are practiced at showing houses and playing up the qualities that buyers care about most. And many will “prequalify” anyone who makes an offer, doing a preliminary credit check.
To get the right broker, first find out which real estate firm dominates the business in your area by looking at For Sale signs and talking to neighbors. (Keller Williams now has the largest group market share in Maplewood, pulling from the GSMLS on 4/17/2011) Then call the sales manager and ask for the broker in the top 10% of the office’s sales rankings. These agents generate 90% of revenues. They’re the most likely to sell your home at the best price.
Before you commit yourself to a relationship with a broker, ask him/her extensive questions to be sure that…
Get your marketing right. Most home buyers start their searches online. Make sure your property is listed on the five biggest Web sites for real estate sales – Realtor.com, Trulia.com, Zillow.com, your local MLS and Homes.com. Depending on where you are located, a town or county specific website might be in order as well as Craigslist.org. If your broker doesn’t provide this service, you can post a listing on Craigslist, Yahoo and Zillow. (If you have given the broker an exclusive listing, the broker collects the commission even if it is your Web listing that attracts the buyer.) Only real estate professionals can list on Homes.com and Trulia.com. Advertising costs range from nothing for a Craigslist.org or basic Yahoo listing to $300 and up for enhanced features such as first-page positioning, slide shows and videos on some sites. By being with Keller Williams, agents are privy to these “enhanced” listing packages on most of these sites. Besides raising your home’s visibility, Trulia, Zillow, Your Local MLS and Homes.com let you or your broker keep track of the traffic your listings generate and see what comparable properties have fetched recently.
Use professional photos. Market research shows that photos influence house hunters more than any other marketing tool. A wide-angle lens will magnify your space, and good lighting compensates for any shadows. Some brokers send a professional photographer to take the photos for a new listing — if yours does not, hire one yourself. This can cost as little as $100 or over $500 depending on where you live and how big your property is.
Stage creatively. Back during the boom, home sellers spent tens of thousands of dollars on trendy appliances to lure buyers — and it worked. In fact, a Sub-Zero refrigerator was said to add twice its price to the value of a house. Today you can’t count on recovering hefty remodeling costs, because buyers want a bargain more than they want state-of-the-art décor or, in some cases, they want BOTH! I recommend finding inexpensive ways to update the appearance of tired/old or original kitchens and bathrooms; and there is nothing better than a fresh coat of white paint to clean and brighten up a room.
So make the most of what you already have by taking these steps…
Clean out the closets. Neatness implies that you take care of things. Buyers may think a messy closet means faulty plumbing and wiring; buyers may also come the false impression you don’t have enough closet and storage space!
Throw out the clutter. Every piece of junk reduces your home’s value because people can’t see past it. Rent storage space for a few months if necessary.
Let the light in. Buyers prize brightness above everything else except location. Take down heavy drapes, wash the windows, move furniture away from windows, and trim any outdoor foliage that blocks the sun. Paint walls a creamy white and ceilings a bright ceiling white.
Borrow from the pros. Attend an open house at a new development to check out the latest decorating trends. Pretentious, “Trumplike” luxury isn’t popular today. Ten years ago, buyers wanted kitchens with cherrywood cabinets, black granite countertops and black appliances. Now the preferred look is French country kitchen — white cabinets, blond countertops and stainless steel appliances. Instead of installing new kitchen cabinets, put new doors and knobs on the ones you have. I personally love the idea of cleaning and adding a fresh quality paint job to take dated cabinets and give them a fresh face.
And because buyers like a “spa” feeling in the bath nowadays, consider buying a “rainfall” showerhead for $200; more importantly, for what amounts to $250-$300, you can buy a new toilet and a new vanity at Home Depot and have them installed to give a dated bathroom a fresh updated look and feel.
Price with care. Underpricing is often the smartest strategy. The market will correct a low asking price — you entice multiple buyers with a great value, then let them bid against one another. The worst thing you can do is start too high and ratchet down your asking price by degrees. Otteau Valuation Group informs us that for every $10,000 of intial overpricing, it will cost you, the Seller, an additional $3,500. This means if you should have priced your home at $500K and you priced it at $525K, statistically, you will end up selling for $9,000 less then you could have sold the home for if it was priced smartly out of the gate. Buyers will smell desperation, making low-ball offers, or they will wait to bid until your asking price reaches rock bottom.
Offer an up-front financial incentive. In today’s market, buyers are looking for value. So a cash incentive can give you a huge advantage over other sellers. Even a relatively small gesture works — anything free will make an impression.
Example: Offer to pick up all or part of the closing costs, which can run from 2% to 8% of the sale price. Don’t wait for potential buyers to ask for this perk, which has become more common lately. Advertise it in advance, and more people will want to view your property.
Or you can sweeten the deal by offering to prepay property taxes for the first year. In a buyer’s mental arithmetic, a year without property taxes sounds like a year of living gratis. It carries so much value that you may more than recoup the expense with a higher sale price. Including fixtures or furnishings that a buyer likes also can help nurture a deal.
Consider seller financing. Offering to finance the purchase of your home can be a win-win for you and your buyer. There’s no need to be skittish about this technique — about one-fifth of all home sales in the US involve whole or partial seller financing. Buyers may not be able to qualify for an institutional mortgage because, say, they are self-employed or they can’t come up with a 20% down payment in time.
If you don’t have a mortgage to pay off… aren’t buying another house… and don’t have another pressing need for the cash, you can charge 4.5% to 5% on the loan, and your collateral is a property you know and trust. The buyer gets to skip the hassle of applying for a mortgage and saves on closing costs. The down payment becomes negotiable — an advantage to the buyer that may translate into a higher sale price for you. And you may be able to spread any capital gains taxes you owe on your home over several years because you’re making an installment sale.
Important: Have your lawyer or accountant perform a credit check on the buyer, which usually costs $50 to $60, and draw up a formal promissory note. The contract should stipulate that you may take over the property if the buyer falls behind on payments by more than one or two months, depending on how tough you want to be.