The environment for home sales becomes more difficult with each passing month. Some estimates put 11.1 million mortgages, about 23% of the US total, underwater, meaning that homeowners owe their banks more than the underlying properties are worth. Home foreclosures reached 212,764 in July. The number for the year could rise above three million according to research firm RealtyTrac. Foreclosed homes are usually sold at a discount to market so that banks can rid themselves of inventory. These artificially low prices pull down the value of homes in adjacent neighborhoods
The federal government let its tax benefit for homeowners expire in April 2010 and has not renewed it since then. The program did boost sales in 2009 and early last year. Shoppers must now face a market without the credit in which many home prices continue to fall.
The clamor over flawed foreclosure paperwork and robo-signers could further chill the housing market. People who might buy have bought a home in foreclosure will now worry about obtaining proper documentation and effective transfer of title.
24/7 Wall St. spoke with experts at real estate research firms, Zillow.com and RealtyTrac to find the best way to sell a home. We also interviewed management from the National Association of Realtors, a number of real estate brokers, banks managers and elected officials in affluent communities. What emerged from these conversations and our research is the following: successful home sellers often do the same small number of things correctly. Often, these tactics are often the difference between finding a buyer and not.
1. Pick the Best Broker
Many people who decide to sell contact a real estate brokerage with a sterling reputation, or go to one that has the largest number of listings. Frequently, when potential sellers call these firms, they are turned over to the first available broker in the office. That person is often not the best representative. As a matter of fact, what is a successful broker doing in the office anyway? There are a small number of brokers in most markets who have a better track record than their peers. Most of them have been brokers for a long time and did not lose their jobs when the housing bubble collapsed.
2. Get an Appraisal
Sellers should obtain an appraisal for their home before they put it on the market. One of the major reasons house sales fall apart is that the bank assesses the home for less than the buyer has agreed to pay. For example, a buyer and seller agree on a price, of say $250,000. Then the buyer goes to his bank to get a mortgage. But, the bank appraises the house for $200,000. Now, the buyer has to put up more money. Sellers who get their own appraisals get a realistic idea of what price a bank would value a house at before they enter into a sale. Most appraisers already do some work for banks. An appraisal often tells a seller what a “safe” price is. And an appraisal’s average cost is only about $200.