Price home right if you want to sell

Published 7:07 pm Friday, September 10, 2010

Question: I have been trying unsuccessfully to sell my home for the last few weeks after being told by my company that I would have to relocate.

I am single, so I have no family concerns, but I am worried about having these payments hanging over my head after my move. My company offers me no help, and I have heard horror stories from co-workers and friends who had to move and ended up making extra house payments for months or even years.

What can I do to make sure my house sells quickly, without taking a bath on the price?

Answer: The best way to make a home sell quickly is to price it aggressively, meaning lower than your competition.

I understand that your home is special to you, but to prospective buyers it’s just another house. You want it to stand out, and the best way to do that is a price that gets attention.

One of the most common mistakes that sellers make is to over-price their home. The sellers may think their house is worth more than the price suggested by their listing agent; they may want to test the waters or they may be pricing their home based on what they need to net.

In your case, you have to sell, so you are in a weak bargaining position. The market is slow here, but homes that are priced right still sell fairly quickly. You’ve probably noticed that some homes in your neighborhood have been on the market for months. Why? Because they are over-priced. It’s really that simple.

This is a buyer’s market, and buyers aren’t stupid. They will shop around. If your price is out of line, they probably won’t even bother to make an offer.

To sell, you must first assess your competition. Find out what similar homes in your neighborhood have sold for in the last couple of months. Notice that I said the sold price, not the listing price. Most homes now sell for less than the asking price unless the listing price was slashed to attract attention.

Market your home below the average price in your neighborhood. Figure out the lowest price you will accept and start there, don’t bother adding negotiating room. A lower asking price will get the attention of agents and buyers and your home will sell much faster.

You said that you don’t want to take a bath, but you have to remember that a home is only worth what a buyer will pay. If your home has been on the market for several weeks with no offers, you are probably asking more than the home is worth.

At that point, you have only a few options: Face the facts and reduce your asking price until the home sells; rent it out until the market improves; or let your home go into foreclosure.

Cutting the price may result in a short sale for less than you owe on your mortgage. If you find yourself in that situation, you will have to get the bank’s permission to accept the offer. That can take time and you may have to agree to a personal loan to pay the bank for the difference between the sale price and what’s owed.

Renting is not very attractive because I believe it will be several years before prices begin to appreciate. You also will want to line up a property management company or a friend to keep an eye on the place while you’re out-of-state. Expect to pay a company about 10 percent of your gross monthly rent. That will make it even harder to cover your mortgage, and being a long-distance landlord is not a lot of fun.

Foreclosure will provide short-term financial relief, but your credit rating would be severely damaged and you would not be able to buy another home for about five years.

None of the options above are very attractive. But you have to be realistic. If you are trying to sell your home yourself, get an agent. If you already have one, make sure that he or she holds a brokers’ open house to promote your home to other agents nearby. Ask those on the tour for price opinions. If the consensus is that your price is too high, reduce it to the average of the suggested prices. Remember, agents work with buyers every day, so they know what the market will bear

Mail your real estate questions to Steve Tytler, The Herald, P.O. Box, Everett, WA 98206, or e-mail him at economy@heraldnet.com.