Tips for Sellers in a Buyer's Market
Please find some words of wisdom in the following paragraphs. All of us on The Crown Team are here to serve you. We are on the frontline selling real estate every day and we share information that affects our clients as we sense and see changes in the Apple Valley, Hesperia and Victorville markets.
Sellers beware…the Buyer is king in today’s market.
Over the last 4 to 5 years in the High Desert, sellers have been king. Today's buyer is moving more cautiously and being choosier. Most homes are taking substantially longer to sell, and prices are continuing to slip.
We have gone thru a strong sellers market that ended early in 2006 and has transitioned to a strong buyers market. Sellers have been reluctant to drop their asking prices, but a lot of them have to in order to induce buyers to act.
Here are a few pointers that can help if you are going to be selling:
Bottom line... If you don't have to sell at this time, stay out of the market. An over abundance of homes for sale is making it a nightmare for sellers. Only the most motivated sellers are selling. If you have to sell then continue reading…
Prepare yourself…
Accept the market as a commodity, it will set the price and terms. Don't take it personally if you don't get the price your looking for.
The first thing you have to understand is what the market is doing, and make the most of it. It doesn't have anything to do with you personally or your Realtor, it has to do with the current market condition.
Do not expect a continuation of the price increases that we have seen over the last few years. You're simply going to get frustrated if you think, everyone's house increased 25 percent more than the year before, so why isn't my house worth 25 percent more this year?
You need to be flexible. Price is one of the main items although fortunately, you can be flexible on things besides price. The move-in date for the buyer is a good example. If it helps you sell a little faster by accommodating the buyer with an early move out, that can be a good thing. You never know what people might want to do to make it convenient for them. If the buyer wants something that isn't hard for you to give, that's something in your favor. Maybe the buyer wants to store furniture in your garage before moving in or wants to make the purchase contingent on selling his or her own house. If you have flexibility, you have an edge.
Prepare for picky buyers…
Every Realtor will tell you to improve your
home's curb appeal. It's even more important
now that buyers have so many homes to pick from. Many buyers are making the first cut of homes to look at based on the outside appearance. This is your chance to stand out from the crowd. In a transition from a seller's to a buyer's market, buyers become much more sensitive to deferred maintenance, items that don’t work. Things like dated decor and fixtures… When you walk in and the house has mustard appliances or avocado carpet they'll say, 'This house looks old,' and walk out. It's easy and inexpensive to replace things like dated light fixtures and more expensive to replace appliances and carpet although if the carpet is stained or frayed it will probably benefit you to make the change. Scuffed walls, scratched or damaged hardwood floors, dripping sinks, torn or missing window screens, most of us live with flaws in our homes that we eventually will get around to fixing. When you put your home on the market, that day has arrived.You really need to concentrate on making repairs that are profitable in terms of selling the house. If your spa isn't quite functioning properly and the bathroom has old tattered cabinets, fix up the bathroom first. Buyer’s want to see updated things. If the choice is between replacing the refrigerator and re-facing ugly kitchen cabinets, spruce up the cabinets.
Prepare to educate yourself about the real estate market…
Talk to neighbors and real estate agents about sales in your neighborhood. Do homes tend to sell for the listing price, or 5 percent under? Was a house recently sold for a surprisingly low price? Maybe the owners sold it to a family member or a young family just starting without much money. Maybe it was a short sale or foreclosure. This is important knowledge to have when a buyer tries to use that sale against you in negotiations.
Interview two or three potential listing agents, and ask them to prepare a CMA (competitive market analysis). The agents will look at comparable homes that have sold recently and at homes that are for sale today, and recommend a price and marketing plan. Have them go through the data they came up with for the estimate. You don't necessarily want to pick the agent who recommends the highest listing price. You're making a hiring decision, which is an art and not a science.Prepare to hire a property inspector…
Buyers often make the purchase offer contingent on the home passing a property inspection to their satisfaction. Sellers are now hiring inspectors before they put their houses on the market to control expenses and avoid contractual repairs that they had no idea would occur after they settled on a price. This is a good example of spending a little to save a lot.
A property inspector is impartial. He'll be able to tell you if the roof needs work, or electrical items that need repair, or plumbing problems. Once you have identified and fixed the problems, it makes the house that much more attractive and worth the asking price to a would-be buyer.
An inspector might spot flaws that would be obvious to a buyer, but that you no longer notice. A good Realtor does the same, but an inspector will look deeper.
Prepare to pay for some or all of the Buyers Closing Costs…
Many buyers in the mid level and lower price range are short cash or slightly under the bar of qualifying for a new home. If you are in the right frame of mind to help them out you may find that you have just dramatically increased your potential pool of buyers.
With closing cost for buyers that are short of funds; you may find buyers asking for assistance in the $5-12,000 range depending on the type of loan they are qualified for.
Let's say the buyer needs you to drop the price by 3 percent in order to qualify for a loan. You're firm on the price but are willing to be flexible by working to lower the buyer's interest rate and income tax bill.
You offer to pay discount points and lower the buyer's mortgage rate. By paying the discount points instead of selling for less, you get your price and the buyer makes lower monthly payments and gets to deduct the points from income taxes. Ask you Realtor to take his commission on the adjusted price…it’s only fair.When mortgage rates rise a couple of percentage points, it will be a opportune time for sellers to pay discount points in order to attract buyers.
Put yourself in the right frame of mind by considering these options. It makes you think like a buyer and that will give you a competitive edge over most sellers.
Good Luck, feel free to let us know if you have any questions or need help.
The Crown Team
Real Estate Consultants for Apple Valley, Hesperia and Victorville homes for sale.2/15/2007
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