In this April 14, 2010 photo, the dining room area
with staged decorations by Re-Arrange It Interiors,
are seen at the listed town-home of Brianne and
Michael Smith in Plainfield, IL.(AP
Photo/Corey R. Minkanic)
By DAVE CARPENTER
AP Personal Finance Writer
April 22, 2010
CHICAGO (AP) — You're finally ready to sell
your house. But so are your neighbor and the couple down the street.
This means you have to work harder at it than
just a few years ago when putting a "For Sale" sign on your lawn
might have been enough. A slow economy and a record level of
foreclosures have caused the supply of housing to exceed demand in
many markets. So competition among sellers is fierce.
Patience helps, too. While there are signs of
life in some markets, in others a single-family home that used to
take 30 to 60 days to sell can languish for many months — if it
sells at all.
Ultimately desperate measures may be
required, including accepting a big loss to get a deal done.
But even in a challenging market, anybody's
house can be sold, says Loren Keim, a real estate broker in
Allentown, Pa., and adjunct real estate professor at Lehigh
University.
Tell that to Brianne and Michael Smith of
Plainfield, Ill. They've been trying to do everything by the book to
sell their townhouse outside Chicago, short of holding a fire sale.
They spackled, painted and scoured the
two-bedroom unit from top to bottom before listing it for $159,900
in January. The price was almost what then-single Brianne paid for
the brand-new home in 2002.
And the couple promoted the sale through a
real estate agent. "LOCATION LOCATION LOCATION!" says the online
listing. "SPACIOUS DINING ROOM PERFECT FOR ENTERTAINING! KITCHEN HAS
PANTRY AND LOTS OF CABINETRY! FULL BASEMENT READY FOR YOUR IDEAS!
PRICED TO MOVE!"
But in a market glutted with townhomes,
they've gone three months without an offer. Meanwhile, they sit
across town in a new home, juggling two mortgages.
"People are only buying the ridiculous deals
right now," says Michael, 36, an operations supervisor for an oil
refinery. "We got the good from this market (as buyers), and now
we're getting the bad."
A week-long series by The Associated Press
examines home ownership as the housing market starts to recover from
the biggest collapse in decades. Some of these stories have focused
on whether it's time to buy and how to do it. This is the story of
the other side: How do you sell in a buyer's market?
"There's a zillion townhouses on the (local)
market right now; that's the problem," says Rosemary West of ReMax
International, the Smiths' agent. "We can't change that."
But there are things you can control. Here's
a look at the rules of home-selling in the post-bubble era.
DO I HIRE A BROKER?
It may be tempting to avoid the 5 to 7
percent sales commission that brokers charge. About 11 percent of
homes sold without a broker in 2009, according to the National
Association of Realtors.
But think hard about going this route unless
you have a buyer already lined up.
Homeowners selling on their own also can't
advertise on the popular online sites, such as Realtor.com, Trulia,
MSN Real Estate and Yahoo Real Estate. Such sellers may be limited
to listing on FSBO.com or in the local newspaper.
You'll also need to handle everything from
advertising to negotiating the deal. What's more, you must be
available for frequent showings, and you'll have to know what's
going on in the local marketplace.
"Our decision to hire a real estate agent was
really all about the work involved," says Brianne, a mechanical
engineer. "And also with the market being what it is, to lose out on
the advertising that you can get by hiring an agent seemed kind of a
silly move."
WHAT DO I REPAIR?
Fix or replace anything that's broken,
leaking or cracked. And don't let little items go unfixed, figuring
no one will notice.
"To get top dollar for the property in this
market, do as much as you can," says Keim, author of "How to Sell
Your Home in Any Market."
Make sure there are no problems with the
roof, foundation, windows, screens, heating and air conditioning
system, plumbing, appliances or yard. Oil squeaky doors, replace
worn faucet fixtures, patch cracks in the walls, replace bad
flooring, fix light switches, and paint the house trim.
Consider paying $250 to $600 for a preemptive
home inspection to learn of deficiencies that the buyer's inspection
would turn up.
If you're not a do-it-yourselfer, hire a
handyman. Don't be cheap. A buyer's offer that's lowered by your
home's shortcomings may cost you more than the repairs would have.
Such efforts as spending $30 on a gallon of
paint and repainting a room yourself can pay off many times over. A
buyer may otherwise dock an offer by $1,000 or $2,000 for the
headache of having to hire someone to do it.
In the Smiths' case, no repairs were
necessary to a townhouse still less than a decade old.
HOW DO I SET THE PRICE?
Set the price low if you want your house to
move.
You and your real estate agent should check
online to see what buyers have paid recently for homes similar to
yours. That's often a better gauge than the list prices of houses
still on the market, because many of those won't sell in a slow
environment.
West, the Smiths' broker, studies how long it
takes properties to sell, time on the market, as well as recent
sales volume, list prices of comparable homes, foreclosures and
short sales. "You have to adapt to the market," she says.
Keep your emotions out of it. Sure, maybe
your house has extra storage racks in the closets or other pluses.
But if the neighbors have granite countertops or other popular
features that add value and you don't, their house is going to sell
for more.
Leave room for negotiation. Buyers expect you
to come down in price and may cite the cost of extra work needed on
the house to insist on it.
And remember, homes that sell faster reap
higher sales prices in the end.
"Every week that the house is on the market,
it grows more and more vulnerable and the buyer pool grows more and
more emboldened to pay less," says Katie Severance, a broker for
ReMax in Upper Montclair, N.J., and co-author of "The Complete
Idiot's Guide To Selling Your Home."
It's a tough balancing act for couples like
the Smiths. They just lowered their price by $5,000 to lure buyers.
But if they have to wait much longer, they may pull the townhouse
off the market and rent it rather than drop the price again
significantly.
"We don't want it to sit on the market
forever and ever but we don't want to give it away either," says
Brianne.
HOW DO I DRESS UP MY HOUSE?
Presentation is critical in a buyer's market.
That means not only showcasing a spotless house but dressing it up
to stand out from the competition.
Consider the curb appeal — a home shopper's
first impression in pulling up out front. Do what you can to spruce
up the exterior.
On the interior, eliminate clutter, wash all
floors and bathroom tiles, shampoo the carpets, and clean out the
closets, basement, attic and garage. Apply a fresh coat of paint, in
neutral colors, to the most used areas and let in as much as light
as possible.
Depersonalize the house so buyers can
envision themselves living there. Remove framed family photographs
of weddings, graduations and your kid's soccer game; put away
vacation mementos and political or religious items; think
bed-and-breakfast decor.
Stage the rooms to appeal to prospective
buyers — rearrange or remove pieces of furniture to highlight the
best features and redirect eyes away from weak spots. Consider
hiring a professional. A consultation costs $150 or more, and
staging typically runs $1,500 or more for an occupied house and at
least $2,500 for a vacant house.
The Associated Press paired the Smiths with a
professional home stager. Margaret Gehr and four employees swept
through their townhouse last week, adding furniture, art works and
pizzazz.
"It's like a beauty contest," says Gehr, who
owns Re-Arrange It Interiors in Plainfield. "The best-looking homes
sell faster, and often for a higher price."
To bring the vacant property to life, the
white walls were painted a more striking but still neutral gray, and
the townhouse was made over in a contemporary style to target
younger buyers. Gehr added a sofa, patterned chairs, a glass coffee
table, framed art and a potted plant to the living room.
The dining room was staged with chairs and an
artfully set table, ceiling lamp and two large mirrors to magnify
the size. And flowers and a display of Pellegrino mineral water
added flair to the kitchen.
"We go for a model home sort of look," Gehr
says. "So, a lot of lifestyle elements to help buyers see what it's
like to live in the house."
The $2,500 worth of staging work she donated
gave the no-longer-empty property a warm, homey feel, and left the
couple optimistic that buyers would soon emerge.
HOW DO YOU AVOID TWO MORTGAGES?
Although it's advisable to do everything you
can to sell your home before you buy another, it may not always be
possible. For example, relocating for a job might force your hand.
If you're facing this situation there are
financing options, though they're harder to come by since the
housing crisis.
One of the least expensive options is to
borrow money through a home equity line of credit on your old home.
But be aware that this credit line must be in place before you put
your home on the market. Even so, lenders may balk at your taking on
the debt because of declining home values in many markets.
The old option of a bridge loan — to cover
the cost of a down payment before you close on a new home — has
largely vanished in this market because banks find them too risky.
Ultimately it may be safest to consider
renting a new home until the old home is sold and your financing is
readily available to make a purchase.
The Smiths have been gritting their teeth and
paying two mortgages since January — $2,400 for the new house and
$1,000 for the old one. They can manage it because both have
good-paying jobs, and they remain reluctant to let the townhouse go
for a rock-bottom price. But it handcuffs them a bit.
"It's not ideal," Brianne says. "I'd like to
have my $1,000 (a month) back!"
Don't worry about the real estate market being slow, this book has
all the answers. According to the author, ANY home can be sold in any
market if it's positioned correctly in the marketplace. Positioning
means making the home show better than the competition, strategically
pricing the property, using advanced marketing techniques, and
understanding showing and negotiating strategies.
If all else fails, the author has a section on desperation measures
which includes a full outline of how to work on a short sale with your
bank, a lease purchase, auction, rent with option and many other ideas.
Full of real world stories, examples and checklists. If you're trying
to sell a home in today's market, this is THE must read book.
The book includes checklists for each room and includes strategies for
setting the home apart from the competition.
"Life Lessons... from the back seat of my car" is a
collection of more than seventy stories and essays by
real estate broker and author, Loren Keim, including
humorous, sad, off-the-wall, wacky, bizarre, touching
and inspirational stories from Keim's unique experiences
in the field of real estate as well as his insights into
human nature, relationships, economics, society and
politics.
"For good or bad, I've had the opportunity - or the
misfortune - of quite often being in the right or wrong
place at the right or wrong time," says Keim, who, for
more than two decades, has represented business people,
politicians, actors, rock stars, celebrities, and
everyday people in the purchase and sale of property.
This collection of those incredible experiences is
certain to entertain and amuse you.
Loren Keim is a real estate broker and author with over
25 years in the industry. Keim is also an adjunct
Professor with Lehigh University's Goodman Center for
Real Estate Studies. He has represented celebrities,
politicians and everyone else in every area of real
estate sales. He has lectured and trained thousands of
real estate professionals, and is currently the
President of Century 21 Keim Realtors in Eastern
Pennsylvania.
