Real estate values are stabilizing across the US, with home prices moving away from double-digit appreciation to more healthy levels. With more inventory hitting the pipeline in many markets, buyers have a lot more options, but sellers have it tougher.
Here are strategies that can help home owners appeal to more potential buyers…and make more when they sell…
Fix it up first. “Fixer-uppers” tend to receive less attention in a real estate market that is seeing an increase in inventory because buyers can find good deals without breaking out their tools. If your home is in need of substantial repairs, it is best to get the work done before placing it on the market.
Pay attention to curb appeal. Home buyers have so many options that if a property doesn’t look attractive from the street, they will drive past it without even stopping for a look inside.
What to do: Spend a weekend beautifying the front of your home. Replace damaged window screens… tidy up the lawn and landscaping…pressure-wash the sidewalk…add mulch around trees and in flower beds. If necessary, have the home’s exterior repainted, particularly the front door and trim…and upgrade outdoor lighting fixtures, doorknobs and your doorbell switch or knocker. These small details can evoke an emotional reaction in a home shopper that can lead to a sale.
Freshen up inside. A fresh coat of paint and new carpet or refinished wood floors can make a big difference. It also pays to hire a professional cleaning service to remove years of grime from your kitchen and bathrooms.
Smell matters, too. It is extremely difficult to sell a home that reeks of cigarette smoke, pets or cooking odors. Perfuming the house with scented candles or potpourri doesn’t fool anyone.
What to do: Hire a building restoration company to remove odors if scrubbing does not do it. Services range from a few hundred to a few thousand dollars. (Look online for “Building Maintenance” or “Building Restoration.”) You will recoup this expense if your home is worth $300,000 or more.
Don’t start with a high price. Asking price is the single most important reason that a property does not sell. You might have to be a bit more competitive with your price, especially if your local real estate market has more than a six-month supply of homes for sale. In any market, it is a mistake to set a high price and assume that you can lower it later, if necessary, in negotiations.
Most listings that do sell receive offers in the first two to three weeks. This is due to the “backlog of buyers” waiting for new listings to hit the market. If you start out too high, by the time you do lower your price, real estate agents will have newer listings to show buyers. The buyers who do see your home will view your price cut as a sign of desperation and bid low.
Pricing your home as a slight bargain ensures that as many potential buyers as possible will walk through your door and can often result in a bidding war.
Recheck the asking price of comparable listings every two to four weeks if your home has not sold. You might have to lower your price to remain competitive. When you do a price reduction, make it large enough so that the new price is very competitive with comparable homes or is even a “best buy.” A 1% or 2% price reduction will probably not motivate buyers to take a second look, just like a 1% sale won’t motivate you to walk into a clothing store.
Important: The amounts your neighbors sold their homes for a year or two ago should not even enter your thinking when you set your asking price. It was a very different market then, and those prices are irrelevant today.
Helpful: If your home is not attracting many showings, the price is probably the problem. If it is attracting showings but not offers, the home itself is most likely to blame.
Mention special features and construction details in your Multiple Listing Service (MLS) listing. French doors, mosaic tile or a gated entry sets your home apart from others in the area. Be descriptive. Rather than writing “inground pool,” you or the agent should write “inground pool with waterfall and hot tub.”
Offer incentives to buyers and brokers. Many home sellers are “bribing” buyers with cash, cars and flat-screen TVs. But the most effective incentives can be more simple such as…
Help with closing costs. Cash-poor buyers might have trouble paying up-front mortgage expenses. Offer to pay a portion of these costs, and buyers have another reason to choose your home.
Pay for buy-downs. Many lenders will lower interest rates by one-eighth to one-quarter percentage point in exchange for an up-front payment. The payment usually is 1% or 2% of the loan amount.
Include details of your incentives in your MLS listing, social-media boost, flyers, on your website and anywhere else you advertise the property.
You also can offer real estate agents a bonus, which often is an extra 1% to 3% of the purchase price, on top of their usual commission at closing if they find you the buyer. Mention the bonus only in the MLS listing.
Important: If you offer a sales incentive, disclose this in your sales contract with the buyer. If the incentive is not mentioned in the contract and the buyer later defaults on the loan, the lender could claim that you and the buyer engaged in fraud by manipulating the sale price of the home to include an asset that the lender could not foreclose upon.
Don’t overnegotiate. If a potential buyer’s first offer is reasonable, consider accepting it rather than making a higher counteroffer. Buyers have more homes to choose from today, so they sometimes move on to other properties rather than make second offers when sellers don’t accept their initial bids. If you do not need to sell quickly or your home is garnering lots of showings, counter—but if you need to sell fast and the initial offer is reasonable, do not risk losing the sale over a relatively small amount of money.