If you tried to sell your home in 2009, you probably didn’t have a lot of luck.
Home sellers are seeing their properties languish on the market for years, in some cases. It is beginning to seem normal to see properties that have been listed for more than 360 days.
As we end this year, the news isn’t going to look a lot better for home sellers.
Unemployment is extremely high and companies are still laying off workers in many areas. Where unemployment is high, foreclosures are spiking.
Speaking of foreclosures, the number of homes receiving a foreclosure notice hit an all-time high in 2009, but the number is expected to rise further next year (perhaps as high as 4 million).
While the number of homes on the market (known as the housing inventory) has shrunk a bit, there is a shadow inventory of as many as 2.5 million homes that hasn’t even been listed. This includes properties where homeowners are delinquent on their mortgage and bank-owned properties (also known as REO properties).
The only pieces of good news: mortgage interest rates hit a 50-year low twice in 2009, falling all the way to 4.71 for a 30-year fixed-rate mortgage and 4.25 percent for a 15-year loan, and the federal government offered the $8,000 first-time home buyer tax credit and in November introduced the $6,500 trade-up tax credit.
Unfortunately, home sellers are going to find tougher conditions all around next year, as the tax credits end, mortgage interest rates rise, and the number of foreclosures increases.
More economists and industry observers are saying that the housing industry will make an extremely slow recovery due to the lack of jobs and the tightening of credit.
Still, if you have to sell in 2010, keep the following New Year’s Resolutions for Home Sellers in mind:
- Overcome any possible objections a buyer would have.
Sellers don’t often understand that their primary job is to not only eliminate any potential objections that would stand in the way for a buyer to make an offer, but to exceed their expectations as well. If your home is competitively priced, and your home’s condition exceeds a buyer’s expectations, you’ll get an offer – even if it isn’t the offer you want.
- Get your home into selling shape.
Cleaning your home is a must. After that, you should consider hiring a stager to give your home the television-worthy polish so many buyers expect today. Assess what other sort of work needs to be done, such as fixing things that don’t work, touching up paint, or cleaning or replacing your carpets.
Decide if you need to update your landscaping, and paint, clean or tuckpoint your home’s exterior.
- Invite at least three agents to create a comparative marketing analysis.
Often, sellers simply call the agent who sold them their home to list it. While you may wind up hiring that person, you’ll be doing yourself a favor if you invite a couple of other agents in from different firms. That’s because each will bring different ideas to the table about how much your house is worth and what kind of marketing plan will work.
- Understand what it will take to sell your home.
If you live in an area littered with foreclosures, you may have to meet that price point in order to sell. Is it worth it? Probably not, but you’ll have to really evaluate price and timing in order to get the most for your property.
- Be realistic about the market.
Find out what is selling, and what the average number of days on the market it for homes that are selling. Accept the reality of your local market and make sure you price your home realistically. Don’t blame your broker if you don’t get 3 offers over your list price within 24 hours of putting your home on the market. Sellers who set sky-high prices could wait months for an offer and may wind up with the same price they would have had if they’d priced their home correctly the first time – or a lot less. In this real estate market, one of the worst things you can do is overprice your home from the onset. If you price it below where it should sell, you may start a bidding war and will sell your home faster and for more money.
- Know where you’re going.
I don’t recommend putting in an offer on another house until you have some serious interest in your current property. It’s fine to start researching other neighborhoods, but if you’re not sure what you want to do, consider renting on a short-term or month-to-month lease. These days, landlords are hurting and they may be perfectly happy to accept a 6-month lease.
- Read all documents thoroughly before I sign them.
Why would someone sign a legal document he or she hasn’t read? I’m not sure, but home sellers do it every day. If you’re going to sell (or buy) in the coming year, promise yourself that you’ll take the time to read and understand the listing contract, offer to purchase, and loan documents for your next purchase. (If you’re taking back a loan for the home buyer, have an attorney prepare the documents so you are sure to be protected.) Unless you’ve got cash to spare, a mistake in these documents and the warranties they contain, could seriously affect your finances.
- Not be driven by greed.
One big mistake many sellers make is to get a little greedy, particularly if the first offer is above the minimum acceptable price you’ve set. Then, the negotiation becomes a game of how much you can get.
Remember, a successful sale means everyone walks away feeling happy. If you get so greedy that the buyer walks away, you’ve let the deal get the best of you. Resolve to be reasonable and you’ll end up shaking hands with the buyer at the closing. You should also know that there are fewer buyers out there and if you lose a buyer it might take you quite some time to find another one.
NEXT WEEK: Are your finances in order? If not, I’ve got some personal finance resolutions you might want to make for the New Year.
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