News and Events
September 28, 2007
9 Steps to Sell More Quickly in Stalled Markets
9 Steps To
Sell More Quickly
In
Stalled Markets
by Peter G. Miller
We're well into the prime real estate selling season for
much of the country, a marketplace less certain in many areas than in the past
few years.
We don't fully know what will happen in 2007, but to date
many markets have stalled if not declined. For most long-term owners selling in
such a marketplace, appreciation from past years assures profitable sales, but
perhaps not as profitable would have been the case in 2006.
But still, owners in all cases would like to maximize their
profits. What to do? If you're a seller, there are 10 negotiating steps you can
take to make sure your home has the best chance for a top price and a quick
sale.
Step 1: Get a local real
estate company. In
a slow market there are relatively fewer buyers. It follows that to generate
the most demand you want your property exposed to as many purchasers as
possible.
Step 2: Read the sale
agreement.
Virtually all jurisdictions have a standardized real estate contract which over
the years have become lengthy and complex. If you use one then you're
automatically agreeing to all unmodified terms and conditions, so read the
entire agreement so you know what is being said.
But is there something in the proposed agreement that should
be changed, removed or added? Brokers should provide a copy of the sale
agreement they expect to use at listing presentations and this document should
be read to avoid surprises and misunderstandings. Since these are form
agreements, anything not required by law can be changed with a suitable
cross-out or addenda. For details, speak with your broker or attorney.
Step 3: Know the
marketplace. In
terms of negotiation it's not good enough to know recorded sale prices because
they frequently don't tell the whole story. For instance, two homes may both
have recorded sale prices of $500,000. One may actually have sold for $500,000
while the other sold for $500,000 but the owner gave a 3 percent seller credit
to the buyer for a new roof and appliances -- that's $15,000 off the top. Local
brokers who actually make sales know the innards of recent transactions are
thus are in the best position to provide negotiating advice.
Step 4: Know your
terms. You know
your property will sell at some price point, but rather than a given price it's
best to think of a home as a package of price and terms. For instance, in a
slow market it may be better to pay a "seller contribution" to help
buyers off-set closing costs than to lower the sale price. In many cases, the
seller contribution may be smaller than a price reduction and much more
attractive to buyers who need cash to close.
Step 5: Reduce deposit
requirements. To
make a contract work there's a need for a buyer deposit, the
"consideration" necessary to bind a deal. If you're a seller you want
the largest possible deposit, but in a slow market you may have to settle for
less. Buyers, for their part, want to make the smallest possible deposit if
only because a big deposit represents a huge psychological commitment -- and a
financial one.
Less consideration may be appropriate if the buyer is
pre-approved for a loan, the purchasers have a strong interest in the property
and no better offer is in the picture.
Step 6: Throw in stuff. Do you really want to move a swing
set or a washer/dryer? In some cases it may be best to "reluctantly"
part with such items if only a buyer will make an offer.
Step 7: Update photos. If it's August and your photos
show a home with four feet of snow in the front yard then buyers can guess that
the home has been for sale for a long, long time -- meaning the price and terms
are, um, flexible. Perhaps more "flexible" than you would like.
Step 8: Visit open
houses. It's always
good to visit open houses or, as they're otherwise called, the competition.
It's not easy to be objective, but is there something other owners are offering
which might work for your property? Something you can make into a bargaining
point? Maybe an offer to re-paint the living room in a color of the buyer's choice
is not a bad idea.
Step 9: Have context. It's silly to worry about small
costs and concessions when your core goal is to sell the home.
In one situation, a buyer demanded an extra $500 to resolve
some alleged concern just before closing. We thought this was simply an example
of buyer's remorse and said yes, got an otherwise terrific price, and closed.
Soon thereafter the local market slowed and prices softened. It was far cheaper
to "lose" $500 then to locate another buyer a few weeks or months later
when the market was harsher and our final sale price might have been many
thousands of dollars less.
Would we have rather not paid the $500? Sure. But $500 was a
small cost in the context of a rapidly changing market, one where delay could
have meant a serious price reduction.
