Five steps for selling home in a buyer’s market

Just in case you haven’t been paying attention, most citiesare now in a “buyer’s market” for home sales. That means there aremore houses and condos listed for sale than there are qualified home buyersactively in the market. Nationally, home sales volume is down about 10 percentcompared to 2005.

The best way to tell if your area is in a buyer’s orseller’s market is to check the average number of days homes are on the marketbefore selling. When this number rises above 60 days, it’s definitely a buyer’smarket. That means it’s a great time to be a buyer, but not such a great timeto be a home seller.

Purchase Bob Bruss reports online.

Another method is to look at the number of months’ supply ofhomes for sale at the current sales pace. Just divide the number of local homessold during the last 30 days into the number of homes listed for sale. If theresult is more than a six-month supply of homes, the oversupply of listed homesshows it’s a buyer’s market.

Fall is usually the second-best season to sell a home(spring is the best because that is when the largest number of prospective homebuyers are in the market). But 2006 is proving to be unusual.

The number of homes listed for sale in most cities is at ornear an all-time record high. The result is prospective buyers know they cannegotiate hard over price and terms.

For example, a few days ago a Realtor told me about his $1million house listing where a buyer offered $800,000. Normally, the sellerwould be insulted. Instead, his seller counteroffered at $950,000, a $50,000price reduction. But, according to the Realtor, the buyer wants a bigger pricereduction.

THE FIRST STEP TO A SUCCESSFUL HOME SALE. If youseriously need to sell your house or condo, and are not just”testing” to see what price you might get, the first step is to getyour home into tip-top, near-model-home condition. Most buyers don’t want tobuy a fixer-upper; they prefer to turn the key in the door and move in.

Cleaning, repairing and painting are the most profitableactions to take. Install new light fixtures and new carpets or flooring ifneeded. But don’t waste money on major renovation, which you won’t get to enjoyand buyer prospects might not like.

If you have lots of unneeded “junk” you don’t wantto move, September and October are ideal times to hold weekend garage sales.Better yet, call it an “estate sale.”

THE SECOND STEP IS HIRING THE BEST LISTING AGENT. Today’shome-sale market is not a good time to be a do-it-yourself “for sale byowner” home seller. The reason is there is so much competition fromserious home sellers whose listings are professionally marketed through thelocal MLS (multiple listing service).

Most MLS agents also put their listings on the Internet at www.Realtor.com and other Web sites wheremore than 70 percent of today’s home buyers begin their searches, according tothe National Association of Realtors.

Before selecting the best listing agent, smart sellersinterview three or more successful agents who sell homes in their vicinity.Successful home sellers should understand they are hiring an individual listingagent, not the impersonal brokerage with the well-known name on the agent’sdoor or the fancy franchise name with expensive image advertising.

Smart home sellers ask the agents interviewed lots ofquestions. Ten examples include (1) what are the names, addresses and phonenumbers of your five most recent home sellers? (2) if I list my home with you,what price will you get for it in today’s market? (3) what is your minimumlisting term? (4) how long have you been selling homes in this area? (5) do yousell homes full time? (6) what professional courses and designations have youcompleted? (7) how many listings do you have now? (8) what is your writtenmarketing plan for my home? (9) what sales commission do you suggest? and (10)do you recommend “staging” my home?

As part of their listing presentations, each of the three ormore agents interviewed should anticipate these questions. The best agents willpresent you with a written CMA (comparative market analysis) form showingrecent nearby comparable home sales prices to justify their estimate of yourhome’s market value.

Sharp agents will suggest a 90-day listing. If the agentasks for a longer term, be sure it includes an unconditional cancellationclause after 90 days just in case you chose a bad agent.

As for the sales commission, although 5.1 percent is thenational average according to Real Trends, in today’s market it often pays toraise the commission to get buyer’s agents to show and sell your home first.Low commissions to buyer’s agents often result in no sales.

Although agents being interviewed will be reluctant tocriticize your house or condo, be sure to ask if the agent recommends”staging” the home to make it appear more attractive. Staging a homemeans bringing in a professional “stager” to make the home more marketable.

Stagers often suggest removing old-fashioned furnitureclutter during the sales period and renting more contemporary furnishings. Anexcellent new book on this topic is “Home Staging” by Barb Schwarz,available in stock or by special order at local bookstores, libraries and www.Amazon.com.

THE THIRD STEP IS TO HAVE YOUR HOME PROFESSIONALLY INSPECTED. Afterselecting the best listing agent, but before exposing your home to the market,be sure to obtain all the customary local inspections, such as for termites,energy efficiency and building-code compliance. Your listing agent will knowwhat’s required.

Although not required, a professional home inspection avoidssurprises later. I recommend hiring a member of the American Society of HomeInspectors (ASHI). The cost is around $300 and takes two to three hours.

Be sure to attend the inspection to discuss any defectsdiscovered. Then you can decide if you want to repair them or merely disclosethem to buyers and let the buyer make the repairs.

If the repair cost is minor, it’s usually best to haverepairs completed before listing the home, thus removing possible buyerobjections. Local ASHI members can be found at www.ashi.comor 1-800-743-2744.

THE FOURTH STEP IS TO SET A REALISTIC ASKING PRICE. Aftergetting your home ready to sell, hiring the best listing agent and having allprofessional inspections completed so you can disclose your home’s defects,it’s time to set a realistic asking price.

With the help of your listing agent, study those CMAsprepared by all the agents you interviewed. Consider whether the local marketfor homes in your price range is rising or falling. In most markets, priceshave leveled off from what was attainable a year or two ago. If you really wantyour home to get sold quickly, don’t get greedy.

Asking a few thousand dollars less than your closestcompetitor homes can mean your home sells while the others don’t. Holding yourhome an extra month or two often costs far more than setting a realistic askingprice.

Here’s another asking price secret: set your asking price$1,000 below threshold amounts. For example, if your home is worth around$300,000, set the asking price at $299,000 rather than $300,000 or higher. Thereason is buyers who tell their agents they will pay up to $300,000 will thensee your home on their MLS computer search. But if you set the asking price at$300,000 or above, those buyers might not learn about your home.

THE FIFTH STEP IS TO CONSIDER ALL PURCHASE OFFERS. Manyhome sellers are insulted if they receive a written purchase offersubstantially below their asking price. Some sellers and their listing agentswon’t even make counteroffers.

That is a major negotiation mistake. Always make a counterofferto keep communications open with that prospective buyer. Negotiations oftentake several weeks, back and forth, before determining either a sale willresult or the parties are too far apart in price or terms. But unless theseller counteroffers every purchase offer, even a “low ball” offer,you will never know if a sale can result.

After both buyer and seller sign a firm purchase contract,the sale isn’t over. This can be the most difficult time period. You and yourlisting agent must keep on top of deadlines, especially to be certain the buyerfollows though on obtaining the mortgage appraisal and other essentials.

Sellers should be aware the buyer might be encountering thedread “buyer’s remorse” disease. For this reason, it is essential forsellers and their listing agents to keep in touch with buyers and their buyer’sagent to be certain the sale closes on schedule successfully.

More details are in my special report, “How to SellYour House or Condo for Top Dollar With or Without a Real Estate Agent,”available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or bycredit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2006 Inman News

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