Question: I have been trying unsuccessfully to sell my home for the past 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 in this situation, 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: You won’t like what I’m going to tell you but the best way to make a home sell quickly is to price it aggressively. By “aggressively,” I mean lower than your competition. Try to separate your emotions from the situation.
I understand that your home is special to you, but to prospective buyers it’s just another house. You want it to stand out from the crowd, and the best way to do that is to put a price on your home that gets attention.
One of the most common mistakes home sellers make is to overprice their homes. There are many reasons for this:
The sellers may think their house is “worth” more than the price suggested by their listing agent; they may want to “test the waters” in hopes that some buyer will be dumb enough to pay an inflated price for the home; or they may be pricing their home based on the amount of money they want or need to net rather than the amount they can realistically expect to receive.
In your case, you have to sell your home, so you are in a very weak bargaining position. The housing market is currently slow throughout most of the Puget Sound region, but homes that are “priced right” still sell fairly quickly.
This is still a “buyer’s market,” and buyers aren’t stupid. They will shop around and compare your home to others on the market. If your price is out of line, they probably won’t even bother to make an offer.
To sell in this market, you must first assess your competition. Find out what similar homes in your neighborhood have sold for in the past couple of months. Notice that I said the “sold” price, not the listing price. Most homes now sell for less that the asking price.
Market your home below the average sales price in your neighborhood. Figure out the lowest price you are willing to accept and start there, do not add “negotiating room.” A lower asking price will get the attention of real estate agents and buyers in your area, and it will sell much faster than competing homes.
You said that you don’t want to “take a bath” on the price of your home, but you have to remember that a home is only worth as much as a buyer is willing to pay for it. If your home has been on the market for several weeks with no offers, you are probably asking more than the home is truly worth.
At that point, you have only a few options: 1. Face the facts and reduce your asking price until the home sells. 2. Rent the house out until the resale market improves and/or the home’s value increases. 3. Walk away and let your home go into foreclosure.
Option No. 1 may result in a “short sale” where you sell your home 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 a low purchase offer. That can take a long time and you may be forced to sign a personal loan to repay the bank for the money it loses.
Option No. 2 is not very attractive because I believe it will be several years before we see home prices in this region begin to appreciate again. If you decide to keep your home as a rental, you will have 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 property management company about 10 percent of your gross rent. That will make it even harder to cover your mortgage on the house, and being a long-distance landlord is not a lot of fun.
Option No. 3 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 a real estate agent. If you already have an agent, make sure that he or she holds “brokers’ opens” to promote your home to other agents.
Ask the agents who tour your home for price opinions. If the consensus is that your price is too high, reduce it to the average price suggested by the agents. Remember, the agents are working with home buyers every day, so they know what the market will bear. Ignore their advice at your own financial risk.
Steve Tytler is a licensed real estate broker and owner of Best Mortgage. You can email him at features@heraldnet.com.
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