How to Sell a House in a Down Market
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FacebookThe latest issue of Money Magazine includes a “Real Estate Survival” guide with tips for selling your house in the current down market.
Rule 1: Get real about price. Interview multiple agents, and have them each come up with a price based on recent, comparable sales and current market conditions. Don’t obsess over what you could’ve gotten had you sold a few months ago. Also consider inventory in your price range. If there are a lot of properties like yours, you might want to undercut the competition.
Rule 2: Vet your agent — especially if it’s you. Selling amidst a major market slowdown is tough work. If you’re not prepared to market the heck out of your property, consider enlisting the help of a pro. If you go this route, make sure they have a track record. Ideally, you want someone who has weathered previous market downturns.
Rule 3: Pimp your house — hire a home stager. Staging a home is all the rage these days. If you don’t know how to properly stage your home, it might be worth bringing in a pro who will help rearrange furniture, move extraneous items to storage, etc. Also browse through my tips for preparing your home for sale. You want that curb appeal as high as possible.
Rule 4: Cash will make your home look even better. Instead of offering some sort of gimmick such as a car or cruise to the lucky buyer of your home, consider throwing in some cash. Offer to pay part of the buyer’s closing costs. You might also consider throwing in an additional bounty to the realtor that brings in the buyer. Either a higher commission and a flat amount of cash. You may even be able to carve this out of the commission to the seller’s agent, but be careful… You don’t want to decrease your agent’s incentive to sell your house.
Rule 5: Underwater? Learn to swim. If you bought recently, your mortgage may be larger than what you can get for your home. According to data from Zillow.com, about 1/3 of 2006 homebuyers currently have negative equity (ouch!). If you have no choice but to move (say for a new job) you still have some options. For one, you might be able to get your employer to cover the difference. Alternatively, if the rental market is holding up, you could rent out your house while you wait out the slump. Finally, you can always sell for as much as you can and then make up the difference out of your savings.
So there you have it. Five tips for selling when nobody is buying.
Any other suggestions?
Published on June 9th, 2008 - 6 Comments
Filed under: Mortgages, Real Estate
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About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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number 1 – get real about price – is the one i see most often around our area. People list their homes at unreasonable prices and expect them to sell. 6 months later and they’re hurting – and they end up putting it up for less than they could have in the first place.
Check out some comps in your area people – we know you love your home, but other people aren’t going to pay the price if other homes in your area aren’t going for that much!
Comment by Pete — Jun 9th 2008 @ 10:14 amWhen we sold our last house we sold private and saved thousands on realty fees. We also undepriced the market by about 1%.
We sold the house in 4 days.
Comment by Personal Money Tips — Jun 9th 2008 @ 8:34 pmGreat post, but Rule #1 needs a modification. I am a broker so I can comment on them and feel OK about it. Many times, agents/brokers don’t have your best interest in mind (at least not entirely). It is the job of an agent to get a deal done. You might want the highest price or the fastest transaction, but if it does not maximize the agent’s commission, then it oftentimes is not the option that the agent chooses to pursue.
I hate this comment, but I have to tell clients this all the time. “An agent or broker will tell clients and customers whatever they need to hear to get you to the table and get a deal done.” This is how they get paid and you should always remember this when choosing an agent based on what they say they can do for you. And one more thing, you, the seller or buyer, are always in charge. If the agent does not understand this, then find a new one.
Great post…
Comment by Kevin — Jun 10th 2008 @ 2:07 amI think I have to pimp my house!
Comment by Harrington Brooks — Jun 10th 2008 @ 7:40 amKevin: You’re exactly right. When we sold our house, we ran into agents that wanted to price it too low (to sell fast with minimum effort on their part) or too high (to get our business – they could always drop it later.
Think of it this way… If your house is properly priced at $225k, the listing it for $210k will make it sell really easily at minimum cost to the agent. You’ll lose out on $15k, but they’ll only lose $450 and still take home $6,100 (based on their 3% share of the full commission). It’s not the last $15k that pays their bills. It’s the first $210k.
Hmmm… This would be a good topic for an article in itself.
Yes, it’s still possible to sell your house these days.
There are still lots of first time buyers out there but they now have the bigger them of the bat for these reasons:
- People who couldn’t afford to buy a first home at the top of the bubble now can since home prices have fallen.
- Higher priced homes can now be Federally insured making them more affordable.
- New house’s size are smaller they during the bubble years. Contractors are building smaller homes people can more easily afford.
Overall, homeowners should find it harder to sell but as this post says it’s not impossible with some work and down to earth expectations.
Comment by SmartHippo — Jun 20th 2008 @ 9:01 am