Tips on How Sellers Can Compete Against Distressed Properties
With distressed sales accounting for half of all home sales, many home sellers are finding that traditional sales are competing with cut-rate foreclosures — as close as next door. Here are some tips for navigating this difficult market.
Skip the Agent: Housing has lost more than $6 trillion in value since 2006. Your own equity can be completely siphoned off by the full-price 6% commission charged by most agents. Selling “by owner” giveas you a cushion to lower the price to reflect the eroding market without trimming your equity at the same time. The National Association of Realtors also recently found that “by owner” sellers actually sell quicker and for closer to asking price than agent-represented sellers.
Price the Home Correctly: Your asking price must reflect today’s market. Not what you paid, not what you’ve put into the house through iimprovements; not the state of your investment portfolio. None of thsoe factors are relevant when pricing your house. To capture a sale in this tough market, you need to anticipate the buyers’ expectation of sliding values and start out asking less then you normally would. Again, that’s easier to tolerate when you’ve saved much of the commission. Pencil it out: you might be able to retain more of your equity than you thought. Using a combination of an online value estimator and a licensed home appraiser will help you pinpoint the best price for the market of the moment.
Market the Home More Effectively: Reach as many people as possible. That means getting your house on the ‘must-see’ sites, especially Realtor.com and the multiple listing service, which is where most buyers start househunting. You also want the house listing to be where it will ‘get found’ by casual househunters: AOL and Yahoo, Trulia, Zillow, Facebook Marketplace and other sites where your buyer might run across it. Your goal is to reach qualified buyers with a strong message of value and quality: two factors that don’t always combine in foreclosures and short sales.
Keep the Home in Top Condition: Separate your house from those with cloudy financial histories through a clean, strong presentation. Many buyers think they will pick up a foreclosure for a song only to find themselves singing the blues when the repair and renovation bills start piling up. You can hold firm on your reasonable market price when your house is in excellent conditions — in sharp contrast to nearby houses under foreclosure. A home seller should stage their home to give it the appearance of being in “move in” condition. The house, as well as all closets, should be kept clean and free of clutter to create the appearance of a more spacious home. Sellers can make their home stand out by doing things like landscaping the front yard to improve curb appeal, replacing worn-out carpets and old appliances, applying new paint in key interior rooms, and tackling other minor home improvement projects.
Offer a Quick Closing: An advantage of being a conventional home seller is being able to offer a quick closing, often an advantage for buyers who wish to move quickly. Distressed properties can take many months to reach a closing date. Sellers should be prepared to offer a 30-day closing date to attract buyer who wants to move quickly.
Qualify Interested Buyers: Nothing is more discouraging than spending weeks with a prospective buyer, only to learn that he or she is unable to obtain a mortgage. To avoid such situations, make sure that your buyer is pre-approved for the loan amount necessary to finance the purchase of your home.
Get Help with the Paperwork: For a couple of hundred dollars, a local real estate attorney or a title company will craft and review all contracts between you and the seller, and ensure that you are adhering to all state and local disclosure requirements. Remind buyers that while a real estate agent isn’t needed to buy real estate, that they should get an attorney and/or title company to handle their paperwork.