How to sell your house in a buyer’s market

By ASA AARONS, Consumer Reporter for Babyboomers.TV

Price realistically, make minor repairs and accept the reality that houses are worth less today than they were a few years ago. That’s the consensus of real estate agents in and around the area, who say a three-year slide in housing prices, low mortgage rates and a new $8,000 federal tax credit has shifted power from home sellers to potential buyers.

From quick sales and bidding wars, the market has slid into one of the worst declines since the Great Depression. The large supply of unsold homes, tighter lending standards, record mortgage foreclosures and a crisis of confidence has taken a toll on home prices.

And the end is still not in sight, according to one of the property market’s best-known economists. “Never say never, but it is looking increasingly probable that we will not see a housing market bottom until next year,” said Karl Case, co-developer of the S&P/Case-Shiller Home Price Indices, a widely watched gauge of the housing industry.

Given the state of the economy, the right price can make the difference between a house that sells and one that lingers on the market. The right price, of course, varies by property, its location, architecture and amenities. It’s also affected by the seller’s goals and motivation to sell, real estate professionals explain. But generally speaking, buyers want value — an intangible Kamins describes as a reflection of list price and property condition.

Houses that are in good condition and priced realistically will sell quickest, said Dana Landry, a founding partner of Washington Fine Properties and the firm’s principal broker. “If you begin high, you sit on the market and can expect lower offers and multiple price reductions. Buyers are expecting value, and high prices will prevent them from making an offer.”

Brian Block, an associate broker/attorney with RE/MAX Allegiance in Alexandria, agreed. “If you price too high, you’ll miss a lot of the early traffic — and most of the activity occurs when a new property is first listed for sale. Then you’ll end up chasing the market toward an ever-diminishing pool of potential purchasers,” he said.

Pricing too low is just as problematic. Buyers are more likely to see it as a sign of distress or a marketing ploy rather than a bargain. And unlike a few years ago, when high demand, low inventories and easy credit triggered bidding wars, today’s buyers are reluctant to offer more than list prices.

“Purchasers now don’t want to get caught up in bidding wars. Most, if any, of the bidding wars occurring right now are with short sales and foreclosures, which are typically priced significantly below market values,” Block said.

To maximize showings and get a quick contract, sellers have to price property at or just slightly below market value, agents agree. But pricing is an art, not a science, and it’s especially complicated when prices are falling. “With the market in flux, you can’t go back as far as in the past when you evaluate comparable homes,” Block said. “In fact, you’re better off looking at pending sales and other currently active properties. They can be more of a guide to pricing and what’s going on in the neighborhood than the prices of homes that sold four months ago.”

To encourage sales, some sellers are paying all or part of the buyer’s closing costs, or up to 12 months of condo or homeowner association dues. But the success of any incentive depends on the way it’s structured and the terms of the specific deal. “To most humans, $10 is worth different amounts depending on how they receive it,” Kamins said. “A $10 Starbucks gift card may be valued more than a $10 roll of quarters” — and an offer to pay the $400 condo fee for 12 months may be more of an incentive than a $10,000 closing cost credit.

But in the end, it still comes down to basics: Make sure the house is in pristine condition, shows like a model and price it to sell.

To get more expertise from Asa Aarons, visit his blog at www.justaskasa.com.