Wednesday, April 28, 2010
9 Steps to Sell Your Home in a Slow Market
No one can predict what the rest of 2010 and beyond will bring, but many markets have slowed, if not declined, although many experts believe the “bottom” has already occurred in many markets. For the majority of established home owners in the prevailing market, prior property appreciation will ensure at least some degree of profit, though today's sales might not be as prosperous as they would have been a few years ago. But all homeowners want to get the highest possible profits. How do you go about this? There are 10 negotiating steps that a seller can follow to assure that a person's home gets the best price and is sold quickly.
Step 1: Use a broker from the local area. When the market is down, so is the number of buyers. That means that you need to expose your property to as many potential buyers as possible. Who do prospective buyers get in touch with when they are house hunting? Real estate brokers. National Association of Realtors statistics show that 85% of purchasers count on real estate brokers for their home selections, while the Internet accounts for 80%. Who creates all of those online real estate postings? Real estate brokers from the local area.
Step 2: Familiarize yourself with the entire sale agreement. Nearly all jurisdictions have standardized real estate contract that has become lengthy and complex over many years. If you use one of those, read it carefully and be aware that you are agreeing to every unmodified term and condition. Make sure there is nothing in the agreement that needs to be taken out, rewritten or added. The brokers should offer a copy of the sale agreement that they might use at listing presentations and the sale deed should be read to avoid misunderstandings. As these are agreements on forms, whatever is not stated as a requirement by the law can be changed by a cross-out or addenda. Consult your attorney or broker for further detailed information.
Step 3: Be completely familiar with the current real estate market. For the sake of negotiations, knowing what the recorded sale prices were isn't sufficient because often they don't give the complete picture. As an example, two houses might have both sold for $300,000. A person might have sold for $350,000 while the other for $300,000 but the owner gave the buyer a 6 percent seller credit for a new roof and appliances, which is $18,000. Local brokers who are familiar with the details of recent sales are able to provide the best negotiation advice.
Step 4: Understand all of the terms you are willing to offer. You are confident that your home is going to sell at some satisfactory price, but instead of starting out with an inflexible amount, consider the property sale as a combination of price and terms. For example, it might make more sense in a slow market to help reduce the buyer's closing costs by offering a "seller contribution "instead of lowering the price of the property. Often the seller contribution could be significantly less than a reduction in price, and buyers who require cash to close the sale could find it more attractive as well.
Step 5: Request a smaller deposit. In order to bind a legal contract, the buyer needs to make a deposit. In a standard transaction in California, a seller will receive a deposit equal to 3% of the purchase price, but in a down or "off" market, a much smaller deposit request may attract more buyers. The buyers prefer to make the lowest possible deposit because a huge deposit indicates a big financial and psychological commitment. You can ask for a lower deposit if the buyer has mortgage pre-approval or if the buyer shows a strong interest in the property and you have no other offers.
Step 6: Sweeten the pot. Are you really planning to take large items like a swing set or washing machine? In certain cases it may be better to leave such items if a buyer makes an offer.
Step 7: Fully understand the marketing plan. The broker's marketing plan should be reviewed quite often to see that it is being followed and is changed whenever it is needed.
Step 8: Check out other open houses. Going to open houses, also known as your competition is a great idea. It isn't always easy to be objective. However, do other owners have selling ideas that might work in regards to your home? Is there something you can use to bargain with? You could consider offering to do some painting or other cosmetic repairs.
Step 9: Keep everything in context. Don't worry about nickels and dimes when your main goal is to get the house sold.
As an example, just before closing the deal, let's say the buyer requests an extra $750.00 to resolve last minute concerns. It might be better for you as the seller to lose $750.00, than to try find another buyer later when the market may be harsher and the final sale price might end up being lower by several thousands of dollars. Would the seller have preferred to have saved that $750.00? Certainly. However, seven hundred and fifty dollars was a small price to pay considering that the delays could have meant a big reduction in price.