Thursday, July 17, 2008

Selling a House? Tips from WSJ

The WSJ has an interesting article, which is really a long list: "How to Sell a House, When You Have to Sell It Now."

The article opens by consoling the seller with "Hey, it could be worse. You could be trying to sell a Hummer." Good point. People don't need Hummers, but they often do need houses, and the seller has to make the most of this need.

Before writer David Crook gets into his list, he says, "...don't think this is just a momentary lull, a short slowdown before the market recovers and then takes off again. What you see today is the market you have...quite possibly, for a long time to come."

We're interested in what Crook says in point 3:

PRICE IT CHEAPLY

"Don't fight the market by trying to price your house at bubble-era levels or by factoring in all those improvements you made. It won't fly."

"Set a realistic, salable price on day one. Don't let the house hang around on the market as you gradually lower the price. Forget what you think the house should be worth or what it was worth three years ago. That's not what it's worth today."

"Smart buyers will be looking for bargains. So you must set your price below comparable nearby properties. Look at the asking prices of neighboring houses, and set your price to beat them. If prices in your area are generally down 20% from where they were at the bubble peak in 2005, then price your house 25% to 30% below its peak bubble value. Your area down 40%? Be prepared to take just half of what the house was worth three years ago. Yes, it's painful. But if you want to sell, you don't have much choice."

"And remember: In much of the country, renting is still a better deal right now than buying. As you try to settle on a price, look at rents on comparable properties. Buyers are not likely to be counting on huge price appreciation, as they did during the bubble, so they may be less willing to take on the higher monthly costs of home buying and owning. You must set a price that makes someone's prospective mortgage and home-owning costs look like a better deal than a month's rent."

The WSJ article's other points include

1. Don't Wait Around - If you have to sell, do it now; don't imagine there will be an "upturn."
2. Fix It Up and Clean It Up - The prospective buyer is going on a "date" with your house. Don't do any major renovations--just present it as well as you possibly can.
3. Hire a Top Real Estate Agent - In the opinion of The Bubble Blog, it's no longer a market in which the seller can try to "save money" by DIY. Get a professional!
4. Play the Banker - If you own the property outright and/or can afford this, do a "private mortgage."
5. Take the Offer - Don't make the mistake of believing more offers are on the way. Sometimes there aren't.

All of the points have narrative and illustrative examples, and it's a good read whether you're a buyer, seller, or just obsessed with RE.

Local wise advice about pricing is also to be found here, on the CAAR Blog. And check out The Bubble Blog's post about how to sell in a bubble market.

3 comments:

Delman said...

as a buyer who is "actively looking" (which is always what the agent asks the minute i step through the door), i can tell you that this idea about pricing and pricing it cheaply is spot-on.

i have the internet at my disposal. i also have a buyer's agent. i know what every property in the five mile radius from the ones i'm looking at has gone for in the past year and i know how many properties are available and i know that the summer selling season has just passed its peak.

so i AM looking for a bargain. i've seen prices falling in the past week. i don't have to buy but there are lots of sellers who have to sell.

i think i'm pretty typical for today's buyer.

Dave Phillips, CAAR CEO said...

It is always important to understand the perspective of the writer/publication in anything your read. This includes my perspective, the Bubble Blogs perspective and the Wall Street Journals perspective. WSJ is a publication focused on the stock market and written for Wall Street readers. Historically, they do not like real estate and have often written negative articles on this competing industry. Real Estate is a competitor to Wall Street in many ways. Of course, that's my perspective.

I'm not suggesting anything is wrong with what the WSJ writes or that it lacks any credibility. I'm just suggesting that it is good to know their perspective.

This article is one of their more balanced efforts and I particularly like #3 where they recommend that you hire an agent to help you in the process. Of course, that's just my perspective.

Real C'ville - The Bubble Blog said...

Dave,

We agree.

We think anybody who tries to navigate this market without an agent is making a big mistake.

There's too much to do, too many properties, and too many people who need to be involved in the transaction to do it alone.

Besides, it keeps more people employed. Very important nowadays.