1. Price It to Sell
Real estate experts agree that homes have to be priced to sell. Sellers are frequently tempted to list their house at a price that is based on what they paid for the home or what they hope to gain from their investment. But if homeowners want to sell their home, they should base the price on current market condition. If a price is set too high, it may have to be reduced several times before it is sold.
A real estate agent can help a seller set a price that reflects the market by using the price of “comps,” or comparable homes in the area that have sold recently — ideally similar in size, design and acreage.
However, these lists should not be taken at face value, according to Michael Corbett, a real estate and lifestyle expert at Trulia, an online real estate resource. It is important for the comps to be current. Because the market is volatile, only homes that sold less than 60 days ago should be included. The price that foreclosed homes sold for also has to be taken into account because they may be priced well below homes not in foreclosure. Banks will take the prices of these homes into account when they appraise the home for the buyer’s mortgage. Finally, the comps should include the final sale prices, and not what homeowners originally asked for their houses. In the current market, home prices can be reduced two or three times before a home is sold.
2. Do Not Sell Your Home “For Sale by Owner”
Selling your home alone as a “for sale by owner” is generally a bad idea, all of the experts we spoke to agreed. According to Trulia’s Corbett, who is also the author of three real estate books, only an agent can ensure your home has the maximum exposure to the widest range of potential buyers as quickly as possible. “The longer your house sits on the market unsold, the more it becomes stale and a target for low-ball, bargain hunter buyers,” according to Corbett. “Home sellers who do it themselves end up selling for far less,” he told 24/7 Wall St. in a phone interview. The data support Corbett’s statement. According to the National Association of Realtors 2011 Profile of home buyers and sellers, “the typical FSBO homes sold for $150,000 in 2011 compared to $215,000 among agent-assisted homes sales.”
3. Find the Best Broker
While there are exceptions, hiring the right agent is the first and most important part of the sales process. Of course, finding the best broker is not always easy. Many people rely on friends’ recommendations only to end up disappointed with the results. Another approach is to look for brokers with a lot of listings, which may mean that they are successful. But it could also mean that they have so many clients that your home gets lost in the shuffle.
According to all of the experts we spoke to, it is important to do your research. Ask for recommendations from friends, but also go over online agent reviews and recommendations. Cynthia Nowak, a representative for Zillow.com, online housing resource for consumers, added a few pointers. “Make sure to interview at least three agents before making a final decision,” she told us in a phone interview. Find out how long they have worked in the area, how many listings they have and how quickly their homes sell. Finally, make sure it is a good fit. While you do not have to be friends with your broker, you have to feel confident that he or she is the best person for you and for the job.
4. Get an Appraisal
Finding a buyer for your home is crucial, of course, but ensuring a smooth selling process come closing date is no small matter either. Sales can fall apart on closing, and one of the most frequently cited causes is when the buyers are denied a mortgage. This often happens when the sale price — the price the buyer is using to apply for a loan — exceeds the bank’s appraisal.
When the value of residential real estate rose consistently from 2000 to 2006, it was rare that mortgages were worth more than the appraisal on a house. With home prices still falling, in some markets by as much as 10% a year, an appraisal can be obsolete in a matter of a few months.
According to Trulia’s Corbett, it is not necessary to pay for an appraisal if the agent has reliable comparables and the home is priced to sell. However, if sellers are not confident, or there are no recent comps, they should get an appraisal. Appraisers and banks price more conservatively than they did five years ago. For a few hundred dollars, an appraiser can give you a safe price that will not present a possible hurdle when the buyers try to get a mortgage.