Have the tables finally turned on home sellers?
After an 8-to-10-year seller’s market, things seem to be cooling down somewhat.
Lenders across the country report brisk, business – but they’re hardly doing any mortgage originations. Nearly all of their business is refinancing home loans. One San Francisco-based lender reports his current stash of loan applications includes just one purchase and 56 refinances.
“For Sale” signs have gone up and stayed up. Buyers seem to be on hold, perhaps waiting until interest rates drop further or news about the economy turns more positive.
The residential real estate market appears to be balancing out, as lessening demand creates longer listing times and, eventually, forces down prices.
If you’re a seller who has to get moving, you may want to take stock of your property and how it compares to the rest of the market. Here are a few tips to get you going:
Re-evaluate condition and price.
If your home isn’t selling, there may be a problem with either the condition of the property or the price in your local real estate market.
If your home has been on the market for 60 days without an offer, walk through your home with your agent and try to identify what problem buyers are reacting to.
If the condition of the property is in impeccable shape, you could just be priced slightly over the market. Have your agent pull up the most recent sales prices of property similar to yours in the neighborhood to see how you stack up.
Sometimes strategic pricing wins the game. Susanne, a Chicago broker, recently priced a 3,000 square foot 1920s condo at the same price as a smaller unit across the street. She knew agents would pull up both and wanted her property to compare favorably to all neighborhood competition. It worked. The property sold in a few days.
Give the buyer a break.
If you and your agent are comfortable with both the condition of the home and its price, then consider using other ways to tempt buyers to make an offer.
You could pay some or all of your buyer’s closing costs, buy down the interest rate on their mortgage for the first couple of years, pay a year’s worth of real estate taxes or, offer to solve a specific problem. For example, one Boston couple wanted to buy a specific co-op, but the building only had one parking space. The buyers had two cars. So, the seller offered to pay for a parking space for a year for the buyers’ second car.
You might attract attention with other kinds of “freebies” including free cars, vacations, and gift certificates. While these freebies won’t sell your home, they will attract more attention and get more buyers through the door.
Offer a bonus to the broker who brings the buyer.
Typically, real estate commissions are split equally between the buyer’s agent and the seller’s agent. In fact, most multiple listing services (MLS) used to require it. These days, the requirement that commissions be split equally between the buyer’s agent and seller’s agent has been removed and seller’s agents are left to split the commission any way they want. Regretfully, there is no requirement that your agent tell you what he or she is doing in terms of the split.
Make sure you and your seller’s agent have a conversation before you sign the listing agreement as to how the commission will be split between the brokers. Have the agent put the commission split in writing in your listing agreement. That way, you’ll know that the buyer’s agent will get at least half of the commission.
You don’t want the buyer’s agent getting the short end of the stick, or you’ll find fewer buyers showing up at your door.
In fact, you may want to give the buyer’s agent more. If your house isn’t selling, you may want to offer the buyer’s agent a bonus if he or she brings the buyer who ultimately closes on the property. How much of a bonus? It could be $500 or $2,500, depending on the sales price of the home. While no self-respecting agent will force his or her buyer to purchase your property just because of the bonus, most agents will make sure any client they have who might be right for your property gets in to see it.
Listen to the buyers – and their agents
If you have a good number of buyers coming through your property without making an offer, ask your agent to start calling back those buyers’ agents to find out what’s holding everyone back. Your agent has to tread carefully here, because some buyers’ agents may not want to disclose why their clients didn’t like the property.
Buyers can be an excellent source of information. They’re out there looking at the competition, and they know what’s missing from a home. Sometimes, buyers catch something that your agent may have missed.
Oct. 7, 2002.