And they said the good times would never end.
Unfortunately for home sellers nationwide, the red hot seller’s market of the last few years has cooled — dramatically in some places. The National Association of Realtors (NAR) estimates that existing home sales will drop 6 percent in 2006, from last year’s record highs.
If you’ve been waiting to sell, this isn’t the news you want to hear. But it’s still possible to make lemonade even if the market feels a little sour in your neighborhood.
The best thing you can do is be realistic about your local market. Here are some things to keep in mind:
Your home may not sell at the price you want. Although homeowners have been conditioned to believe that their home will appreciate by double-digit leaps each year, it may be tough to get top dollar right now. While you can price your home wherever you want, buyers are sophisticated enough to know what’s a fair price. You’re better off pricing your home right when you list it than pricing it at some sky-high price and turning off prospective buyers.
Consider underpricing your competition. With more homes on the market, some savvy sellers are underpricing the competition in order to draw more attention to their home. If you do it right, you may end up in a bidding war and may wind up with a bid that’s above your original list price. The idea is that buyers will recognize a deal and flock to it in droves.
It’s tough to sell by-owner in a slower market. Many home sellers dream of selling on their own and pocketing the commission. But it’s hard to sell on your own in a slowing market because you’re up against homes listed by agents who are putting their advertising muscle into getting their properties sold. If you want to try listing by-owner, give it a whirl: price it right, use one of the companies that allows you to list it in the local MLS, and make sure it looks as good as possible. But if it hasn’t sold in 6 weeks, hire a full-service agent.
Commissions are dropping. But just because you hire a full-service agent doesn’;t mean you have to pay a full 6 percent commission. According to the NAR, the average commission dropped to 5.1 percent. In Chicago, some agents are charging as little as 1.5 percent to sell some small rental properties (split in half, that’s .75 percent per brokerage firm). The bottom-line: Commissions are negotiable, but if you don’t ask an agent to reduce his or her commission, chances are they won’t offer.
Discount brokerages are still forming. The concept behind a discount brokerage firm is that the company did some of the work for a much smaller than average commission. The new twist is the “give back.” Some firms will give you back up to half or three-quarters of their share of the commission. While discount brokerage sounds great, you have to do a lot of the work yourself.
No one wants to fix anything. Vintage is in — if you’re in the clothing business. Movie stars wear vintage (that is, old) clothing by famous designers to walk on the red carpet. But when it comes to buying a home, new or like-new is hot. So, get your home into selling shape by clearing out clutter, repainting rooms, packing away or giving away excess furnishings and clothing, and cleaning or replacing your carpets. Today’s buyer wants to move in and not worry about anything other than replacing window treatments (if that).
Curb appeal has never been more important. The Internet brings the world of home sales to our desktops, in millions of living colors. If the photos of your home don’t reflect a gorgeous exterior with a fabulous garden, it’s possible that prospective buyers perusing the web will simply move on to the next listing. Make sure your exterior is in such magnificent shape that buyers have to stop for a closer look. That may mean hiring a professional landscaper to give your garden a makeover, or painting your exterior to make it shine.
While plenty of homes are selling, listing times are lengthening. While it would be nice to sell within a couple of days of listing your home, the reality is that your home may sit for months before fielding an offer. The best thing you can do is keep visiting other homes on the market to see what’s selling, and how long it takes.