Most sellers today are nervous and unsure. They wonder: is taking a loss on our house inevitable?
The answer is no! A strategic sales plan, coupled with a smart buy in your new location will ensure that you
recoup the maximum value for your home.
Your Strategic Sales Plan
Consult with an expert, local real estate agent to ensure your house is priced competitively and well-staged.
Why? Because while there are always three factors to getting a home sold—location, price, and condition—only two are under your
control: price and condition. Of the two, which is more significant? Price. Remember that price will correct bad condition, but
condition will never overcome a bad price.
It's tough being the seller in a buyer's market. But you can improve your odds with the right research.
In many cases, making a smart deal and getting the best price come down to studying your market and being an educated seller.
"You've got to know more than you would have if you'd sold a year ago," says William Poorvu, professor emeritus at Harvard Business School
and author of the book "Creating and Growing Real Estate Wealth."
"If you want to protect yourself, you have to become knowledgeable."
Steps will help you to price your house
1. Recognize that housing markets are local.
Home prices are like the weather — very different in different areas. In many markets, home prices have actually gone up from last year,
says Dick Gaylord, president of the National Association of Realtors. In addition, demand will change depending on the price range and even
the neighborhood. What you need to know: What's the demand for a house like yours in your area?
2. Analyze who is buying and selling in your market.
"You have to look at what's being sold and at what price," says Poorvu. "That's important."
Look at comparables for similar houses. Study prices and sales for one year ago, six months ago, three months ago and current numbers,
What are the trends? Are prices going up or down — and by how much? How many days are homes staying on the market? If they are on the
market longer, how much of that could be seasonal? In many areas, spring and summer are the busy seasons.
Pay special attention to "the delta between the list price and the sales price," says Ron Phipps, broker with Phipps Realty in Warwick,
R.I. That is, look for a meaningful relationship between list price and sales price. Perhaps most homes are selling for 5% less than the
"An agent who works the market will be in the best position" to find "the tipping point between nice, attractive and interesting — and
being sold," Phipps says. You want to find the point between, "Hey, that's interesting," and "It's too good to pass up."
If you're not using a real-estate agent, it's especially important to use the Internet, visit open houses in your area and study home
sales in your Sunday paper, says Greg Healy, vice president of operations for ForSaleByOwner.com.
But you also need to realize that the paperwork alone tells only part of the story. While sales and prices are public, many times seller
concessions are not.
What's your competition? Who are the buyers, and why are they shopping?
3. Ask the professionals.
Do you live in an area like Phoenix, which Poorvu calls "a growing market with people coming in"? Or are you living in an area that doesn't
attract a lot of new residents, where many shoppers don't have to buy but are looking to pick up a bargain?
Are you competing against a flood of new houses from builders eager to sell, or are you selling a newer home in an area where most of
the housing stock is older?
Don't ignore the elephant in the living room. When you interview real-estate agents, ask about the market conditions for your area and
4. Know what your house is worth.
Specifically, ask about the "absorption rate," says Phipps. What that means: In the current conditions with the current inventory, how
long would it take the market to absorb, or sell, all the houses on the market?
If the supply is much larger than the demand, ask potential agents how they would "price to offset that inventory," he says.
Talk to a handful of agents. Get an appraisal from a certified professional appraiser. Look at your comparables. Taken together, that
information will give you a pretty good idea of what your home is currently worth.
5. Consider strategic pricing.
Here's how it works: If prices in your area are dropping 1% each month, and you want to sell within the next three months, you take 3% off
your price right off the bat, says Phipps. So if you were going to put your home on the market for $400,000, you set the price at
6. Rebate your "commission."
The upside: You'll have the competitive edge over the guy who's dropping his price every month, without the air of desperation. Plus, in a
market where prices are falling, you'll make more money if you sell quickly.
The downside: Predicting the market is a tough call, even for the pros. And it's really difficult to raise the price if your market starts
to rebound, Phipps says.
If you're selling it yourself and need to move quickly, consider subtracting half of what would have been the commission from the sale
price, says Healy. The standard commission is about 6%, so if you subtract 3%, your $300,000 house would go on the market for $291,000, he
7. Evaluate whether you really have to sell now.
Listing a home for "$9,000 to $10,000 under that value should create higher interest," especially if it's new to the market, says Healy.
The downside: If the house doesn't sell and you end up hiring an agent, you'll need to cover the commission, which may mean raising your
sale price or taking a smaller profit.
If you want to get the best possible price for your home and the local market is tanking, "see if you can delay the sale," says Poorvu.
Otherwise, in a lot of markets, sellers have "to be willing to accept a pretty good haircut over what they thought their home was worth
last year," he says.
8. Assess the market where you plan to buy.
The downside of waiting: The market could decline or your circumstances could change to the point that you might need to sell quickly.
But for situations where the move is optional (or you might be able to rent the property until your local market improves), waiting is
a solid option.
Just because you've already planted that "For Sale" sign doesn't mean you can't change your mind if you're not seeing the interest you
"If you know there are no sales or sales are decreasing, and you have the opportunity," taking it off the market is a decent solution,
says Healy. "I think we're seeing a lot of that."
If you're selling one house and buying another, look at the market where you plan to move. Says Poorvu, "It might be that, with the
housing there, it's a great time to buy."