Selling a Home in a Buyer's Market

As far as home values go, Texas has been lucky in the current economic crisis. Other states have seen far more foreclosures, largely a result of high unemployment, as in Ohio and Michigan, or because overvalued homes resulted in owners being deep “underwater” on their loans when home values normalized, as in Florida and California. 

Despite the favorable mortgage rates of the last two years, it’s been a buyers’ market even in Texas, meaning that qualified buyers tend to have the upper hand in a market where there are more sellers than buyers. The number of buyers is more limited now than before because mortgage companies are requiring larger down payments and better credit — a good thing for the health of the industry going forward, but a condition that reduces the number of qualified buyers. 

The federal government stepped in to help first-time buyers — and, later, all buyers — with rebate programs, but those are gone for now. And it’s likely to be a buyers’ market for some time; even when conditions change and there are more buyers, the pent-up supply of homes from sellers who would have sold earlier if they could have will result in a glut of homes on the market.

More than ever, then, sellers are in direct competition with other homes on the market. It’s buyer’s choice, and a seller who wants to sell in a reasonable time (say, three months) is going to have to go the extra mile. The extra mile consists primarily of three areas of focus: price, condition and marketing.

Setting the price
Setting a realistic price is essential, so it’s worth putting in some time to find the right price. Setting it too low may mean a quick sale, but it may also mean you leave money on the table. Setting it too high may mean the buyers that would have been perfect for your home never bother to come see it; and if a price that’s too high results in your home’s not selling within a reasonable time, you’ll either have to reduce the price to where it should have been in the first place, or it will become “shopworn,” and potential buyers will be wary. 

In my opinion, a buyers’ market is no time to go it alone, especially when it comes to setting the price. In addition to finding qualified buyers, giving you advice on staging your home and taking care of a mountain of paperwork, a Realtor® can pull up recent sales on homes comparable to yours and, using his or her experience in the market, recommend a price. Realtors’ financial benefits are not unlike yours: They benefit in terms of time and effort if a house sells quickly but lose money they could have had if the selling price is too low.

If you think the price is too low, rather than just insisting on a higher price, visit homes nearby that are listed at the price you think your home is worth and compare — remembering, of course, that those houses may be overpriced. You can also hire an appraiser to appraise the value of your home. Another advantage to having an appraisal is that you can leave the appraiser’s estimate on the kitchen counter for buyers to see, which can help them be realistic if they’re thinking of putting in a low offer.

Getting your home in condition to sell
With so many homes on the market, an existing preowned home has to be especially attractive to compete with new homes. Even if you’re in a part of town where homes are known for their “character” and buyers in that area prefer a little patina, most buyers prefer homes that have been well cared for. 

Repairs
Several months before you plan to put your home on the market, start compiling a list of the little things you notice that could use maintenance — a cracked window, chipped paint on a baseboard, dated hardware, crumbling grout, a wobbling ceiling fan. These are all things you may hardly notice any more — that’s why you need a couple of months to compile the list — but that will stand out to a prospective buyer like warning flags. Don’t forget the outside; dead plants, brown spots on the lawn, teetering fences and broken outdoor light fixtures are no more acceptable than peeling paint on the bathroom wall.

Then hire a home inspector to take a look at the bigger things so you can make repairs to pipes, HVAC systems, roofs, gutters and other items that might escape your notice. The last thing you want is a contract with a buyer that falls through because the buyer’s inspector comes up with a list of 20 repairs that need to be made. You may think that buyers will be willing to make such repairs themselves if you give them price concessions — and they might — but you’ll also be eliminating potential buyers who just want a nice home to move into that doesn’t require that they spend the first two months up to their knees in dust and maintenance workers.   

Last, clean, clean, clean. Don’t forget the windows, the gutters and the cobwebs around the front door.

Staging
You’ve probably heard about burning candles that smell like fresh-baked bread, putting on soft music and opening all the curtains when potential buyers are looking at your home, but today’s successful home sellers go way beyond that. 

Conventional wisdom is that homes that are occupied show better than vacant homes. I don’t necessarily agree with that; as a buyer, I’m always distracted by vestiges of other people’s lives, and if I don’t like the couch or the bedspreads, I tend to transfer that feeling to the house itself. However, most people cannot afford to vacate a house before it sells. (In this market, most people certainly should not succumb to the lure of a great price on a new home before they sell their existing home because they’ll invariably inflate the price they think they can get on their existing home and underestimate the time it will take to sell it, during which time they’ll be paying two mortgages.)

Whether you’re in the house as you try to sell it or not, it’s essential that it be attractive inside and out. On the outside, trim the bushes, plant some flowers, clean the glass on the light fixtures, edge the lawn, sweep the walk, get a new welcome mat, shine up the doorknob, update the house numbers and make sure the front door has a fresh coat of paint. 

If you can’t relocate before you sell, it’s essential that you have a “showing plan.” The plan consists of two stages — the permanent changes and the last-minute changes. The permanent changes are those that declutter your home. Take everything possible out of the house that’s personal — family photos, junk on the refrigerator door, old magazines on the coffee table, stacks of DVDs next to the TV, toys your kids and pets don’t use, tattered paperbacks in overstuffed bookcases, the rattier furniture you keep meaning to replace, extra clothing that makes the closets look overstuffed and too small — and store them off-site in a storage unit. 

Like it or not, potential buyers will open your cabinets and drawers, so clean them up as well. Don’t forget the outside areas, so declutter the patio, yard and garage. If possible, ship Fido and Fluffy off to a friend’s house for the duration; doing so will help clean up the clutter and improve the odors in your home. Be ruthless. The sooner your house sells, the sooner you can have everything back.

The permanent changes also include permanent changes in family behavior. No longer can there be beds left unmade, crumbs on the counter, toys on the floor, damp towels squashed over the towel bar — everyone has to do his or her part to ensure that the house is ready for visitors every morning. The TV Guide is placed in a drawer, not thrown on the couch; the aspirin and tissues next to the bed go in the bedside table drawer, not on top of the table; the bills and other papers on the desk go in neat desktop boxes; the bathroom counter and mirror are wiped off after use. 

The last-minute changes are what you do when a buyer is coming. It’s important that you be able to implement the plan in half an hour or less, so you need to know what you’re doing in advance. If Fido and Fluffy are still in residence, take them, their bowls and their litter box with you when you go, or at least put everything outside. Have a container ready for toothbrushes and wet washcloths and take those with you as well. Have a cabinet cleared out in the kitchen so you can take as much as possible off the counters, and do the same in the bathrooms, not forgetting the tubes and bottles in the shower. Remember that our sense of smell is one of our strongest memory triggers, so spray the house with a light, neutral air cleaner, avoiding cloying flowery scents or vanilla. Battery-operated candles in the fireplace can also add warmth to an otherwise cold, dark spot.

If you can afford to relocate before you sell, you may want to retain the “blank slate” of an empty home, but you can have the best of both worlds by hiring a staging company to bring in the perfect furnishings that will show your house in its best light. The service can be pricey, but it has also been known to be very effective in getting good offers quickly.

Marketing your home
When you choose your Realtor, be sure you ask questions regarding how he or she plans to market your home. You’re paying the real estate agent (at closing) to do a lot of things, but not least among them is to get qualified buyers in to look at your home, and the agent should be willing to spend some time and money to do that. If all he or she plans is an MLS listing, a “for sale” sign and a couple of open houses, you may want to look further for someone with more innovative ideas. 

If your home is at the higher end of the market, does the real estate agent have contacts with relocation companies who deal with executives moving in from out of town? What Internet resources does he or she use? What would the agent do if there were no showings for a week? How would the marketing plan change if the house hasn’t sold in three months? (Is the Realtor’s only idea to lower the price?) What other homes has he or she sold in your neighborhood, how long did it take, what percentage of the asking price did they get, and how did the Realtor market them?

Gone are the days of bidding wars on homes, and here to stay (at least for a while) is a time when a seller has to work for every penny of the final selling price. But take heart: Nearly every successful seller then becomes a buyer, and then you can be on the easy side of the buyers’ market.