How to sell your home in a down market
Let’s face the fact that selling a home in a down market is always difficult; no matter how many times you lowered the asking price, buyers just didn’t bite. Few people are willing to take the risk catching a falling knife. Deep down, human beings are risk adverse. What can you do to up your chances selling your home that net you the most money in the least amount of time and with minimum hassles?
Before we examine different selling approaches, let’s first try to understand current market situation.
Hypothetically, let’s assume in market area “A”, there are 100 homes listed in the past 6 months, out of which 60 units were sold. Any well-prepared real estate professional can pull this data easily from his/her local MLS database. This data tell us there were 10 homes sold every month with an absorption rate of 10%. If all homes were to be sold, it would take a total of 10 months, i.e. the inventory level. Further data revealed that price mark-down on the average sold property is 96%, and days on market before a home enter escrow was 140 days. What do these data mean to a seller who has an average $100,000 home to sell in market “A”? Well, the probability to sell his home in the next 30 days is merely 10%. If it did get sold, it would takes 140 days to get a contract price of $96,000. By the way, there is a good 40% chance that this home will never get sold.
Now there are more than 4,000 active real estate agents in Orange County; literally there are 4,000 different approaches to sell a home that vary according to each individual agent’s professional background, training and experience. But we can sum them up as the following categories:
1) Price to sell: These practitioners believe you can almost always sell a home if the price is low enough to lure a buyer in. That is why you see sellers are constantly pressured to lower asking price several times until it gets sold or it gets to the point where it makes no economic sense to sell at all.
2) “Bribing” selling agents with higher commission: you ought to understand that sales people must work for themselves while trying to serve their clients’ best interest. If you give them enough incentives, they will bring buyers.
3) Staging or fixing up to enhance the perceived value of the property: most homebuyers don’t have the patience or financial resources to fix or remodel a resale property. You deserve a premium by saving them time and eliminating the uncertainty of fixing cost overrun.
4) Offering concessions to sweeten the deal: Most homebuyers need help to overcome major obstacles to qualify for mortgage. Here seller can offer carry-back 2nd loan, interest rate buy-down, or pay for closing costs, etc.
5) Property auction: if you run out of options and need a quick sell, you can do it fast by paying higher fees at discount price. We never want to recommend it had you acted sooner.
6) List it and they will buy: Some real estate professionals might still believe they can pull off a quick sale in slow market with minimum efforts. Well the Big difference is getting the home sold or NOT sold.
Life teaches us a valuable lesson: don’t be average in everything you do. The difference between ordinary and extraordinary is a big “EXTRA”. As sellers, you now have an important decision to make: get your home sold or let your listing expire. When a home didn’t sell, a real estate professional tended to convince you that it was the market to blame. In reality, we can’t change the market. But we do have a choice to change our course of actions to make your property to be extraordinary. The difference lies on the professional, but it ultimately lies on seller’s choice to pick the right professional to get the job done.
- Last edited February 26 2008
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