Want to Sell? / Selling Your Home In a Changing Market
One of the most often asked questions I receive is, "Should I sell my property in this market".
Well, the first thing to ask yourself is, "Do I really need to sell?"
If you are happy with your home and your neighborhood, then really there is no reason to sell. Some people look at this market and see the erotion in their equity. They panic and feel they better sell before any more losses are realized.
The reality is, you don' have any loss until you sell. Just stay the course. You don't need to go anywhere and the market will come back.
"But what if I need/want to sell?"
The short answer is, "The sooner the better".
Let me explain... I think if one were to pose the question, "Will the economy get worse before it gets better?" Nine out of ten people would respond, "YES!".
The reality is... properties are facing and will continue to face downward pressure. So, for the foreseeable future you are not going to be able to sell for more than you can today. In essence, tomorrow your home is going to be worth less than it is today.
So, Pitter Patter...
There are 3 types of sellers;
1) Need to Sell but not Buy - They may be selling for a variety of reasons (estate sales, divorce, deaths, etc.) but they all have one thing in common... they are not entertaining a purchase at this time.
2) Need to Sell but will Buy & 3) Want to Sell but will Buy, are in the same situation. And not necessarily a bad one.
Let me explain. Typically those who Sell will be buying a larger, more expensive property. So if prices are off 10% (this number is somewhat arbitrary as each neighborhood will see different depreciation) and one were to SELL a $400,000 and BUY a $500,000 property then the market is working in their favour. (consider that at a 10% depreciation, the $400,000 is down $40,000 and the $500,000 is down $50,000 essentially you will be $10,000 more to the plus side than if we were in a stable market.)
The next thing for Seller's to keep in mind is that when they sell, their home becomes a commodity... a product. AND, as with any product... competition, condition and price will dictate when it sells and how much it sells for.
ALSO, keep in mind that the market is slow... NOT DEAD. Every month thousands of homes are sold. The only question that remains is, will yours be one of them?
This, you have some control over. Despite the fact that there is more competition and fewer sales, there are things within your control to help you enhance your odds.
Top 3 Things Sellers can do to sell their home
#1. Pick the Right Realtor - Interview at least 3 Agents. All Realtors are not created equal and the interview process will help you to determine which one is right for you. (see "10 Questions to ask your Realtor")
It's essential that your Realtor...
i) Determines the right price for your home. This is key and even the best Realtor's can miss in a market like this. Estimating your homes value is an art at the best of times. In this market the selling price is a moving target. Once a price has been decided on, IT IS VERY IMPORTANT TO SELL WITHIN THE FIRST 3 WEEKS.*
ii) Provides you with the information you need to properly prepare your home. Remember there is lots of options for Buyer's. You need to set your home apart from the competition.
iii) Promotes your home. What is your Realtors strategy for marketing your home?
#2. Ensure your home is presented in the best possible condition. A Realtor can spend their way into oblivion and it won't help you if your property is over priced and in poor condition. The maximum return on your home isn't a right... it is earned.
#3. Proper Pricing. As previously mentioned, this is key to your sale. If you have picked the right Realtor, they will be able to determine a legitimate price for your home and substantiate it with lots of market data.
AND because the market it moving downward you are going to want to sell ASAP as next month your home is going to be worth less.
*Selling in the first 3 weeks - Assuming the market is loosing almost 1% a month, then you want to sell your home quickly. Also, if you have your home "staged" you are paying by the month and don't want to incure a second months cost.
Your Realtor will have outlined a marketing plan that is contingent on selling in the first 3 weeks. (In the best market 54% of homes don't sell in 90 days... the listings expire.) In a market like this you are looking at 75% to 80%. Your Realtor only gets paid if your home sells so for them to continue to lay out thousands in marketing is not feasible. Consequently, the bulk of their promotion will occur in the first 3 weeks.
Buyer's look at all properties currently in their price range. If you have listed to high and miss their price range you will miss a huge opportunity. ALSO, if they don't like the current offerings of properties they will focus on the new listings as they come to market. Properties on the market for more than 3 weeks are quite often ignored! Even if your price reduction places your home within their range, the perception is that there must be something wrong with it because it has been on the market so long.
Statistically, showings of your home will decline with every passing week on the market!
Statistics show that properties generate the highest price if sold within 3 weeks of their listing.
NOTE: Another method you can use to increase traffic to your property is to offer a larger commission (ie. 6% instead of 5%). Realtor's are hurting as well in this market and with so many properties to show you can provide additional motivation to get your property shown.
The additional 1% paid in commission on a $400,000 property will be an additional $4000... If your property remains on the market for more than 3 weeks and you have to reduce the price, you may be looking at a $10,000 hit.
You do the math!
