How To Sell Your Home Quickly In A Down Market

Tricks of the Trade

Many people ask us, “How do I sell my home in a declining market such as this one?”.

There is a proven step by step stradegy to sell your home effectively and quickly for the most money in this market.

Here is a quick overview of the topics that will be addressed:

Analyze if you are in a short sale situation (meaning you owe more than the home is worth)
Learn how to prepare you (and possibly your family) mentally for the months ahead
Gain insight into how to prepare your home to attract the most buyers
Obtain the tools to do a detailed anlaysis of real estate agents
Know that you have the steps in place to eventually walk away with peace of mind

Preparing Your Home with Minimal Cost but Maximum Return

When there are several homes on the market, buyers become extremely picky. Most of the time, in a hot market the buyers didn’t care if there were cracked windows, dirty floors or unattractive furniture. However, that has all changed. In this market people are looking for that perfect home and it all comes down to presentation, presentation, presentation. You need to set the mood. You want your home to stand out from the rest and seem as though it was well put together.

Mindset

You need to be prepared that your home is not going to sell right away. Mentally preparing yourself for this will relieve a lot of the stress. You should expect that in a declining market homes will take a few months (if not longer) to sell. If you want to move in May, put your house on the market in January or February. You will have to include that fact that after an accepted offer is agreed upon you still need to make it through escrow which will typically take between 30 to 60 days.

Before the House is on the Market

When you are deciding on which agent to use, you should also be thinking about important “home improvements”. Here are a few ideas:

Paint inside walls (use a neutral color if you want to appeal to the masses)
Paint front door
Clean out gutters
Change door handles
Change electrical face plates
Ensure carpet is free of stains or else replace it
Update light fixtures
Eliminate all odors, especially if you have a pet
Eliminate clutter and organize closets
Ensure your basement is not damp

If you want to go the extra mile, here are a few ways of going above and beyond:

Accent walls
Crown molding
Lay down new grass
Minimal landscaping
Remove popcorn from ceilings
Laminate wood flooring

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While the House is on the Market

If the home is vacant, you might want to consider staging the home. This is a bit of an expense but could be worth it because buyers have trouble relating to an empty house.

However, if you are living in your home and the house is on the market, there are a few rules you should follow to make the buyers experience as pleasant as possible.

Do not be in the house when the seller is there (including pets if possible)
Ensure the house is clean. Nothing is worse than a dirty bathroom or kitchen
Have serene background music playing when buyers visit
Place of fruit on kitchen countertop
Remember to minimize clutter (pack up counter top kitchen appliances and excess picture frames)
Place silk flowers around the house

Tips, tricks and methods to quickly get you into escrow.

Escrow is that last step in getting paid! But once you’ve hired the right agent, it can be a long process to get into escrow and then all the way through escrow. Until escrow closes, there is no deal. Here we will give you real estate tricks of the trade, incentives to move the property, and tips if your home is not selling.

Ensuring the Price is Right - Value Range Marketing

Value range marketing (VRM) is a unique pricing strategy that is being used with listings today. This is apparent especially in the higher end homes. Instead of setting one fixed sale price, a price range is implemented. For example, instead of listing the house for $500,000 the price will be listed as 465,000 to $515,876. It is designed to bridge the gap between seller and buyer expectations. It opens up an arena for negotiation. Once the buyer and seller are actually in negotiations, a sales price will typically be determined that is acceptable to all. Half of the battle sometimes is getting a buyer wrapped up in the emotion of buying your house. However, it is important that VRM is not used as a bait and switch. Using value range marketing is a tool for bringing offers in and opening the lines of communication between you and a potential buyer. Be sure that if you set a value range that you are ready to consider all offers that come in within the range. Typically in this market, people will be leaning towards the lower end of the range so be prepared for this. Refer to Figure 2 for a comparison of fixed price marketing and value range marketing. As it can be seen by the yellow area, value range marketing typically appeals to both the seller and the buyer in terms of finding an acceptable price for both parties. Sometimes with fixed price marketing, a buyer may feel the home is out of range and will not even make an offer (even if the seller is willing to accept it). Also, when a real estate agent will do a property search they use certain variables such as location, bedrooms and obviously price. Lets say your house is on the market for $525,000 but the buyers do not want to spend more than $475,000 or $500,000 max. When the agent is searching they might not search high enough to catch your listing. However, if value range marketing was used, they would probably catch and show your listing. In this market you want as many factors as possible in your favor.

In some states, the MLS is not structured to hold variable range prices. In this case should have your agent list the top price and then the range should be specified in the range section.

In summary, it is critical that you home is priced correctly. Marketing and other venues are helpful but not as much in this market. Typically if there are more than 10 showings and no offers than you have set the price too high.

Agent and Buyer Incentives

Agent Incentives

Let’s face it, the real estate agents could suffer in this market. With a significant decrease in sales in previous hot markets nationwide there are fewer transactions to fuel the glorious and what used to be easily lucrative profession of a real estate agent. Therefore, when an agent has a purchasing buyer, they want to get the most for their time. So why is this important? With so much inventory on the market, the agent has a lot of options to choose from when deciding which properties to show his/her clients. Of course, we would hope that the agent will pick the properties that are best for their clients needs however what happens when there are 100 homes that have the perfect square footage, large back yard and great freeway access? That fact is that if an agent has two identical properties, they will probably show the one with a higher buyers commission or incentive. Its impossible to show it all, so wouldn’t you want your property to be one of the first to been seen?

Buyer Incentives

If you have an incentive for the buyer’s agent and the buyers, your home will definitely stand out. Buyers always love to get something for free so here are a few perks to consider offering:

Home Warranty Plan. This is a type of insurance that will give the buyers a guaranteed repair if anything breaks or needs repair. A good buyer’s agent will write this into the offer anyways so why not advertise it as a bonus.
Closing costs. Offer to cover $5000 towards closing costs if sold by a given date.
Gift Certificates to Home Depot, Handy Man or Lowe’s.
There have been incentives from cars to plasma TV’s.

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Tips if your home is not selling

If you have done a majority of the recommendations above and your home is still not selling, consider the following:

Listen to feedback
- Ask your agent to poll those who come into the home to find out what is repelling buyers. If it is location then there is nothing you can do. However, there might be something obviously that you are missing that could greatly improve your chances of selling such as appearance or odors.
Drop the price
- If it has been a few months, as your agent to do anther comparative market analysis to asses where prices are right now and what your competition is.
Change your agent
- If your listing contract is about to expire, evaluate your agents performance. If they have been responsive, attentive to your needs and some of the other attributes we speak about in choosing an agent, keep them. However, if they have inflated the price to keep your business or have been ineffective you might want to consider choosing another. Choosing an agent can mean getting top dollar for you home versus losing thousands of dollars. If you need assistance in locating a top agent(s) in your neighborhood, contact our Customer Support.
Take your home off the market
- If you are not in a rush, take your home off the market for a short while before it is characterized as a no-sale home. The MLS shows how many days a home has been on the market. If the buyer sees that your home has been on the market a long period of time, i.e. six months or longer, they will question the quality of the home. Also when you re-list it in the MLS, buyers will be notified (assuming they are set up with automatic notices) that a new home has come on the market.

The Right Agent can Mean Fortune or Failure

Choosing the right agent to sell your home is critical. In this market you do not want to blindly hire your brother’s girlfriend’s cousin as a family favor. You can still interview them but compare them to other agents out there. This is not the time to just choose anyone. You need the best representation possible. We recommend interviewing 3 to 5 agents for listing your property. Yes, we know you might be thinking that you want to sell your home yourself. Though we do not recommend it in this market we will talk more about that option later on.

There are a series of steps in analyzing real estate agents.

Find the right agents to interview
Conduct an effective listing interview
Score each agent and choose the best using the tools provided

Finding top agents to interview

First let’s understand how to find the best agent out there.

Ask around for legitimate referrals
Check web sites such as www.Realtor.com
Go to local open house
Go to local real estate offices

OR, utilize our Customer Support to help you locate the top agents in your area.

Referrals from friends or family can be a very powerful tool but always take them with a grain of salt. Ultimately you need to make the final decision no matter how someone rants and raves about their agent. Maybe their home sold in a few days due to a hot market. Sometimes personality compatibility will differ between you and the agent so be sure to interview, interview, interview! Utilizing our customer support, we will provide you with all of the resources free of charge to help you find the prefect agent.

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The Listing Interview

When interviewing various agents there are several questions you should ask to get a good understanding of what they can do for you.

How long have you been in the business?
What makes you stand out from the rest?
Can you provide references?
How do you plan to market my home? (i.e. Online? Direct mailing campaign? Advertisements?)
Do you have any creative ways to sell my home?
How much do you charge?
What is your list-price to sell-price ratio?
Please describe your negotiation style?
Are you familiar with this area? Please describe it to me from your perspective.
Can you provide all of the documents needed for a successful transaction (i.e. a copy of everything I will need to sign)?
What haven’t I asked you that you would like to share?

Before you ask these questions and have the interview, write down what you would like to hear from them in order to compare it to the agents response.

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Score each agent and choose the best

Contact our information desk for an excel worksheet that will assist you in evaluating the agents after you have interviewed them individually. The Agent Score Card includes hard coded formulas and conditional formatting to give you a total score for each agent. Instructions are as follows:

Go through the checklist and rank the agent from 1 to 5 in each category (1= worst and 5 = best)
Once all the questions have been answered for each agent, record the overall score next to their name in the Summary of Interviews section

You would want to pick the agent with the highest score unless there is some other reason for being inclined to use one over the other. An example of the Agent Score Card is listed below:

excelExample