In the 30 years I’ve been investing in real estate, I’ve never seen anything like this housing market. Granted, all real estate is local, and I live in Florida, which shares the title of worst market with California, Nevada and Arizona. Home prices here have declined up to 50%, and many have been on the market for years.
But as the saying goes, what doesn’t kill us makes us stronger. If you can successfully sell your home in a horrible market, you’ll find selling in better times a walk in the park.
Let’s recap the five tips from the video above, this time with a bit more detail added:
1. Marketing: I’ve never been a fan of real estate agents and a horrible market hasn’t altered my opinion. It’s not that I don’t appreciate what they do: it’s just that I think 6-7% is an exceedingly hefty price to do it. So if you’re up to the task, selling it yourself is something to consider, even in a bad market.
I don’t have the room here to talk about selling without benefit of professional help, but if that’s a row you’d like to hoe, I’d encourage it: there are plenty of web articles and books that can steer you in the right direction. What I will urge here, however, is that if you’re going to be stuck paying 6% of your home’s selling price to agents, do what you can to make sure they earn it.
Start an agent search by asking for referrals of friends or neighbors. Copy names and numbers from signs in your neighborhood. Visit nearby open houses and meet agents (and while you’re at it, start getting a feel for neighborhood values.) As you compile a list of prospects, compile a uniform list of questions you can ask them: How many homes in my neighborhood have you sold? How long did it take you to sell them? How long have you been in the business? Exactly how do you typically market homes in my price range? Can you furnish me with referrals?
Asking the same questions in the same order of multiple agents will quickly help you narrow the field. When you’ve gotten it down to three, invite them over for a face-to-face.
Let them walk around your house and provide more details on what they feel your home is worth and why. If your home is expensive, they might bring samples of marketing campaigns they’ve successfully used in the past. But either way, make sure you nail them down as to exactly what they plan on doing to sell your home fast. Stuff like where and how many ads they’ll place, how many open houses they’ll hold, etc.
Don’t make a decision until you’ve interviewed all three, and don’t sign anything until you’re entirely clear on exactly how they intend to market your home. If possible, put it in writing. And don’t be afraid to ask for a commission discount. It may not work, but it costs nothing to ask.
2. Price: In bad markets, price isn’t the main thing, it’s the only thing. There’s always an active market for houses that are selling for less than comparable houses in the same neighborhood. In my neighborhood here in Fort Lauderdale, the time to sell most houses is measured in years. Yet foreclosures sell in days, often hours, after they come on the market. Why? Because they’re cheap relative to other houses in the neighborhood. (Here’s a story I did on buying foreclosures: How to Buy a Foreclosure.)
So if you want to sell your house fast, you need to price it right. Your agent will help, but don’t just blindly follow their advice: visit the competition, foreclosures and all, to see what homes in your neighborhood are actually listing and selling for.
Don’t like the price your agent suggests and your market justifies? Fine. Don’t sell. But don’t waste your time with a listing price based on what you paid, what you owe, what your home used to be worth or what you really wish it was worth. The only number that matters is what it’s actually worth to a buyer right now.
In the story you just watched, Mary Beth and Bob were unhappy with the dirt-cheap price at which they were forced to sell their old home. But they were tickled pink at the dirt-cheap price they paid for the newer, nicer house they bought. You can’t have it both ways.
3. Outside Presentation: The more fierce the competition, the better your house needs to look. And the first thing people see is the outside: it’s called curb appeal.
So stand on your curb and look at your house, then decide what to do. The key is bang for the buck. Clearing clutter, cleaning up, trimming bushes, stashing junk and generally doing what you can with what’s there? Free. Paint? Cheap, especially if you do it yourself. Plants and landscaping? Maybe, if they make enough difference to justify the cost. Look at the prettiest yards in your neighborhood: how are they different than yours?
Pay special attention to the front walk and front porch: your mom wasn’t kidding when she talked about first impressions.
4. Inside Presentation: There’s a delicate line you walk when you sell a house. You want it to look like home, but not your home. Remove absolutely everything that’s not necessary: think about what a model home looks like, or even a nice hotel room. Classy? Yes. Cluttered? Absolutely not. Remove family pictures from the wall and everywhere else: the goal is for potential buyers to visualize their family there, not yours.
Rent a storage room and put everything you possibly can in it, leaving only enough nice furnishings to make your house look both functional and inviting.
Paint is a good idea, but don’t get creative: off-white is best. Replace flooring if it has either style or wear issues, and make sure everything in the house works and looks as it should. No leaky faucets, no cracks in the ceiling – as with the outside, the trick is to balance cost and benefit. Whoever buys your home will have it inspected, and whatever isn’t working is going to be discovered and you’ll be expected to fix it. Save yourself the headache and fix it now.
You can save money by doing repairs yourself, but don’t get in over your head: Here’s a story I did on that: The True Cost of Home Improvement.
Is all this a terrific pain? Oh yes. But this is about selling fast, not painlessly. If you follow this advice, your house will definitely sell faster and for more money.
5. Financial Incentives: If you’ve followed all the advice above, you shouldn’t need to prime the pump by offering extra incentives to sell your house. But if it’s not moving and you want more action, the answer is simple: pay for it.
Raising the commission, for example, will almost certainly result in more interest from agents. Offering to pay the buyer’s closing costs, fix-up expenses or even a trip to the Bahamas will interest more buyers. That’s what a lot home builders are now doing, and they’re your competition too. So it’s something to consider. But incentives are icing; the cake is having the nicest looking, lowest priced house in your neighborhood.
Bottom line? A lousy market isn’t a dead end. It’s a challenge. The marketing lessons you learn now will serve you well in years to come.