While there are glimmers of hope that the real estate market is nearing a bottom, homeowners longing to get the For Sale sign off their front lawn still need to brace themselves for a rough road ahead.
Houses continue to flood the market and prices are still declining (although at a slower pace). Sales of existing homes, fell 3% during March (year over year, the decline was 7.1%), according to the most recent data from the National Association of Realtors. Meanwhile, the latest S&P/Case-Shiller Home Price Index indicated that home prices in 20 major cities dropped 18.6% year over year in February.
Tack on near-record-low mortgage rates and more generous tax incentives, and home buyers clearly have the upper hand. While that may mean sellers will need to make some concessions — like covering a percentage of buyers’ closing costs or their first few mortgage payments — they aren’t completely hamstrung. Sellers just need to know what it takes to stand out in a crowded market and how to appeal to buyers without sacrificing too much financially, says Tara-Nicholle Nelson, a real estate broker in Oakland, Calif.
To get the best deal when selling your home, try to avoid these all-too common mistakes.
1. Failing to vet your real estate agent.
Without an experienced real estate agent who is familiar with the ins and outs of the sale process, your home may languish on the market. When shopping for agents, ask for references, as well as their track record with homes in your price range and geographical area. Equally important is their list-price to sell-price ratio (that’s the original asking price compared with the actual sale price). You want to see that the agent is selling homes at or near the asking price. If an agent’s listings were in the $400,000 range, but sold in the $325,000 range, consider looking for someone else.
2. Setting the price too high.
Sure, you may have bought your house at the market peak, but be aware of the correction that’s since taken place. To price your property appropriately, find out what comparable homes in the area sold for and how long they stayed on the market, says David Hanna, president of the Chicago Association of Realtors. Real estate search engine sites like Zillow.com and Trulia.com give buyers an automated – and estimated – valuation of your property. If your listed price is significantly out of sync with the results, you’ll probably have a hard time drawing buyers, he says.
3. Waiting for a market rebound.
Moody’s Economy.com forecasts that the housing market will hit a bottom at the end of this year, and start a slow recovery in the first half of 2010, says Celia Chen, senior director of housing economics at the financial research firm. But that doesn’t mean you should wait until then to sell your home. In fact, waiting could cost you thousands of dollars in home value, says Pam O’Connor, president of Leading Real Estate Companies of the World, a national network of real estate agencies. If your home is worth $300,000 now, but area prices are expected to sink another 10% by the end of the year, that’s $30,000 you missed out on by postponing the sale.
4. Skimping on listing photos.
The Internet is the first stop for many home shoppers. How you present your home online is just as important as how it looks during the open house. Sellers should include as many pictures as allowed on real estate listing sites and on the local Multiple Listing Service, an online clearinghouse of property listings, says Nelson. Highlight the rooms and features home shoppers care about the most: the kitchen, bathrooms and outdoor space.
5. False advertising.
Don’t misrepresent your house – either through your description or by retouching photos to the extent that it’s misleading – and don’t let your agent either. Altering a photo to add shrubbery to the front yard or making the neighbor’s house look farther away than it really is won’t fool anyone, says Nelson.
6. Failing to incentivize buyers.
Lowering your asking price isn’t the only way to grab a prospective buyer’s attention. Offer extra perks like paying for a year’s worth of dues at the local golf club or a $1,000 decorator allowance, says O’Connor.
7. Waiting to fix up the place.
If you know a part of the kitchen’s hardwood floor needs to be replaced, do it before the open house. Deducting the cost of such necessary repairs from the asking price will cost you a lot more than just getting the project done yourself.
8. Taking offense at lowball offers.
Home buying is one of last great bastions of haggling in the U.S. And now more than ever, buyers are testing the waters to see how low they can go, says Hanna. Rather than turning your nose at what you think is a low bid, present a realistic counter offer. That way, you can spark a real negotiation.
9. Failing to make sure the buyer can afford the house.
Any offer you receive should specify that the buyer has been pre-approved for a mortgage big enough to purchase your home. The fall-through rate on transactions is around twice what it was just two years ago, says Hanna, and it’s usually because of a financing problem.
10. Being inaccessible.
Make it easy for buyers to arrange to see your home. “If I need to call you numerous times just to get a buyer in your house,” it won’t get shown or sold, says Nelson. Leave a lockbox with a key at your door so the buyer’s agent can get in when you’re not home. (Only members of the local Multiple Listing Service can get an electronic key, which opens the box that holds the house key.)