10 keys to selling your home in '07
For starters, be realistic. Make sure your initial asking price isn't too high, or else you'll waste your time and risk turning off that first rush of potential buyers.
Matthew Haines understands real estate. As the founder of PropertyShark, an online real estate listing and information service in New York, he knows the ins and outs of buying and selling in one of the quirkiest housing markets in the country.
But when he put his Harlem townhouse up for sale, he still made a crucial mistake. Relying on his broker's advice, Haines priced the house at $1.68 million -- too much in a softening market. "People don't have to fool with sellers who are asking unreasonable prices," Haines says.
If you're trying to sell your home in 2007, brokers have one piece of advice: Make sure the price is right. Perhaps your neighbor made a bundle by putting his home on the market just when prices peaked. Maybe your sister sold her condo last month, reaping a 40% return.
But when it comes to your own abode, that means nothing. Sellers need to get real, and sometimes that means dropping the price. Unfortunately, many sellers are suffering from housing-bust denial. "All sellers are human," says Sharon E. Baum, a senior vice president with Corcoran Real Estate in New York City. "Hope springs eternal, right?"
First 6 to 8 weeks important
But starting with too high a price can hurt your prospects of making a great sale. When you first put up that "for sale" sign, you'll be visited by a bevy of potential buyers who have been waiting to find the perfect home. Brokers call this "pent-up demand." "Your first six to eight weeks on the market is your hottest time," says Pat Vredevoogd Combs, the president of the National Association of Realtors and a broker in Grand Rapids, Mich.
If you've set a reasonable price, potential buyers might start bidding, and hopefully the competition will push the final price higher. If they think the price is too high, however, they're not going to bother. When you finally drop the price, that pent-up demand may be gone, and then you've wasted six months of time and energy on an unsold home.
That's exactly what happened to Haines, who had to get rid of his townhouse because he was moving to launch PropertyShark's Romanian operations. He couldn't be on call to solve his tenant's problems when he was living halfway around the world. But the building sat for six months with no buyers. Then his broker called and suggested shaving $100,000 off the price. Haines went even further: He cut the price by $185,000, down to $1.49 million. Within days, two people expressed interest.
Haines could have upped his asking price a bit because he had multiple offers. Instead, he wanted his buyers to compete on who would sign the best contract. For him, a hassle-free sale was the priority. Often, he says, a contract will allow the buyer to back out if he is turned down by three mortgage brokers. But Haines calls that a "get-out-of-contract-free clause" because any buyer can find three brokers who will reject his application. "I want a contact that says it's going to close," he says.
Once you've settled on a price, focus on getting your home ready for sale. Have the roof inspected, clean the windows, fix foundation cracks and clean up the front lawn. Colleen Badagliacco, the president of the California Association of Realtors, says she once told a client to replace a deep red carpet with black flecks. These cosmetic changes have become more important as buyers have gained power in the housing market.
Some brokers will even hire a "stager" who can tidy up the home, move furniture around and even re-hang pictures to create a more inviting living space. If a prospective buyer opens a closet door and boxes fall out, she's going to think the house is too small. The house should feel as open and bright as possible.
"The buyer should walk into the house and go, 'Wow,' " Combs says. "We want it to feel like home."
Tips for a successful sale
- Price it right: With the right price, you should get multiple offers early in the process. Hopefully, your would-be buyers will bid the price up.
- Don't quibble over pennies: Don't worry about squeezing an extra $5,000 out of your potential buyer. Sometimes it's better to focus on getting the deal done without any extra hassles. Tell buyers you'll cut them a deal if they agree to buy the house "as is" and will sign a contract that isn't full of contingencies.
- The early bird catches the worm: If you price your home well enough for an early bid, you're more likely to get competing offers and maximize the final selling price.
- Before you sell, get a new loan approved: Figure out how to pay for your next home before putting this one on the market. Use worst-case-scenario projections when factoring in the proceeds from your current house.
- Employ a little elbow grease: Baking cookies is a well-known trick for making potential buyers feel at home. But don't stop there. Make sure your home is spotless and consider using a stager.
- If you go it alone, prepare to work hard: Brokers exist because selling a house is a full-time job. They take care of the marketing campaign; they help you prepare for open houses; they have connections with other brokers who represent buyers. Do some research, and make sure "for sale by owner" is the right move for you.
- Have a 21st-century marketing campaign: Find a broker who is good with a digital camera. If you don't have a great set of pictures, buyers will think that means you don't have a great house. But don't neglect the traditional advertising channels. Though the Internet might be great for young professionals, there are a few people who still read the newspaper.
- Time your sale to bonus season: In New York, traders and investment bankers get massive bonuses around Christmas. They start looking for properties in November and December, but January is when activity really picks up, especially for high-end properties. If you live outside New York, check with your broker to see if any similar periods exist. Extra foot traffic at the open house is always a good thing.
- Understand your market: It doesn't matter what your neighbor got a year ago when he sold his condo. And it doesn't matter what your friend across town received last week. Prices and market conditions vary depending on the time, location and condition of your home.
- Do your research: Talk to several brokers before putting out a "for sale" sign. They will educate you about the market and give you a potential asking price. They may also suggest you put in a few thousand dollars worth of improvements. If you put your house on the market before you're ready, you'll only alienate prospective buyers.
