Selling A Home In A Declining Market
In the Leon County area, there are presently in excess of 2,500 homes on the market for sale. A significant number of these homes have been for sale for over 6 months, and some sellers are pointing fingers at their REALTOR® and placing the blame on them. In some cases, it is justified.
We are in a market at the present time that has seen declining prices for several years. In my opinion, we have not hit the bottom yet and probably will not hit it during 2010. There are still issues such as 3 year and 5 year Adjustable Rate Mortgage(ARM’s) re-pricings now starting to hit families.
Many of these homes have little to no equity due to the declining real estate market over the past 3+ years, and most have artificially low rates. Some of these people have limited options on fixing their rates, and many will be priced out of their homes due to a higher rate and rigid lenders, and will have to sell their homes.
Banks Will See Portfolios Devalued
Another issue is that many banks have properties in their portfolios that are worth less than the money owed on them due to the Real Estate downturn. These banks have not yet fully realized the position they are in, and that the longer they keep these homes in their portfolios at artificially high prices, the harder they will be hit.
I believe when they start realizing this and start putting these homes on the market at realistic market prices, it will flood the market with homes, and there will be even lower prices. BUT, the positive side of this is, when this occurs, the bottom will be reached, and a strong recovery in real estate should commence as homes will finally be at realistic and affordable prices. Until that time, it is vitally important that sellers educate themselves on how best to market their homes to sell quickly.
Important Points For Home Sellers To Consider
- Does your house have a good curb appeal? Is the exterior neat and clean and in good repair? Is the yard attractive? Think as if you were a buyer. Would you drive by and think that this house is attractive and want to see the inside? This is one of the most important items to consider. It is the first impression you make and can have a large impact on the number of showings.
- Does the inside of your home show well? Is the interior clean and in good repair? Is the carpet clean? Is the kitchen and its appliances clean. Have you removed excess furniture and clutter to give it an open feel? Do all your electrical and other mechanical systems work? Keep the rooms bright and cheery by keeping blinds and drapes open. If you have animals, make sure you take whatever steps possible to eliminate odors.
- Is the property priced right? This is probably the most important item on this list. If you meet with a Realtor to list your home, it is very important they provide you with current sales and listing prices in the area, as well as recently expired listings. These are all part of a process to determine where you should price your property. If a Realtor meets with you and asks you what price you want and is willing to list it at that price without documenting to you that this price is reasonable and in line with the market, I would suggest you interview other REALTORS®. Listing your home at any price without knowing the market in your area is the worst thing you can do. If your home is priced too high, then it will probably not be shown much, and will stagnate on the market. When you do decide to drop the price, you will be chasing a declining market and will probably still be priced too high. The net result will be the same. I encourage sellers to look at the marketplace and prices and make the decision to list competitively. If you owe more than you think the home can sell for, you need to contact your lender and discuss this situation with them. They many times will agree to a “short sale” where they will approve a sale for less than owed them and will satisfy the mortgage. They may require the seller to execute a note for the difference owed as a condition to allowing the sale, or they may just forgive the difference.
- Other ways to help the home sell are: a) Consider lease purchasers with at least a 3% non-refundable deposit plus first and last month’s lease payment. This assures they are serious and are not going to walk away. b) Consider holding a second mortgage for the buyer.
These are all steps that will help you sell your property in a timely manner. All are important to maximize the appeal. Remember you are still in a declining market, and your chances of selling are low without doing all you can to make your house as appealing as possible.JAY NOVAK Broker Associate Joe Manausa Real Estate (850) 386-2001