Five New Rules for Home Sellers

Money magazine lists the five new rules for home sellers as follows:

Rule 1: Get real about price. Too many sellers set their price based on yesterday's market. Big mistake. "The first buyers in tend to pay the best price, so you need to price it right at the start," says Pamela Liebman, CEO of the Corcoran Group brokerage. Set an asking price 10% below what homes like yours have been selling for. That raises the odds of your getting multiple offers.

Rule 2: Vet your agent - especially if it's you. Selling on your own in an unprecedented slowdown means you'll have to work awfully hard marketing your home.

Rule 3: Pimp your house - hire a home stager. To sell today, you've got to glam up your home.

Rule 4: Cash will make your home look even better. Given the number of listings out there, you want to throw in a little something extra to make your house catch the eye of buyers and their agents. Rather than hand out a cruise or a car - skeptics might wonder why you're so desperate -offer something that will make your home more affordable, such as paying part of the buyer's closing costs.

Rule 5: Underwater? Learn to swim. If you're a recent buyer, your mortgage may well top what your home would go for today. If a job or family issue compels you to move, your options aren't great, but you have a few. First, you may be able to persuade your new employer to make you whole on the loan. Second, if the rental market in your area is strong, you can become a landlord and wait out the slump. Third, of course, is to sell for as much as you can (see Rule No. 1) and raid your savings for the difference.

As you know, we're looking at homes and could be a seller at any point in time (right after we buy.) Here's my current thinking on what we'll do regarding these five:

1. We've done a comp study on our neighborhood so we know what people in like homes are asking and what they're getting. In general, they're asking way too much out of the gate and sitting on their homes for MONTHS. We plan on pricing near what the market is selling for and turning over the property quickly.

2. We're planning on using the agent we'll buy from as our seller as well (we got her to reduce her fee from 3% to 1% if we agreed to buy a house using her.) But we're not planning on leaving most of the work up to her. We'll market the home ourselves (more on that when we do it) and we'll try to find a buyer just as much as our agent will be looking for one.

3. We're taking the three important steps in making your house sell. We're already removing clutter, doing a bit of painting (we'll hire a painter to do more), and if we buy, we'll move many items to the new place asap to free up space in the home we'll be selling.

4. Hopefully, we'll cover this in point #1.

5. We own our home outright, so there's no mortgage. Plus, I have the home in Quicken at an unusually low value, so it's likely that our net worth will go up when we sell our current home.

Comments

[D]

I would suggest not using the same agent for both buying and selling. While you might save a little on the commission, there are good reasons for this recommendation:

1. Just because an agent is good at helping buyers doesn't necessarily mean they are good at selling. Selling a house requires a host of different skill sets and focus.

2. From a philisophical point of view you may get confused or even upset when you hear the same agent say:
--"make the best offer you can to make sure you get this house, this is a tough market for great houses in desirable neighborhoods."

Then they turn around when you're selling and say this:

"this is a tough market to sell your house in, it has several faults and you need to be more realistic about setting your price lower. There are few buyers and they are very stingy in this market."

In the agent's mind they aren't being contradictory. In your mind they are. Be prepared for that.

3. An agent who is taking a lower commission percentage has even less incentive to get top dollar. Why? Because an extra $10,000 for you is only an extra couple of hundred of dollars for them. Remember to do the math in your head, because you can be sure they are doing the same math but based on their commission when deciding how hard to work for you.

[Kirk]

I agree with D. Be careful when using an agent for both ends of a transaction. He or she may push for you to lower your price on your home so you buy another one where they will probably get a full 3% commission. Remember, you are in charge. The realtor just gives advice.

Overall, it looks like you have a realistic view of the real estate market and are being very smart about the transaction(s). Of course, readers of your blog would expect nothing less. :)

[Julia]

FMF, it sounds like you have already figured out who your selling agent is. If you haven't, it's a good idea to look at current listings that they're offering. How are the places described? Are the photos of the residence nice? Some agents think they take excellent photos, but getting good interior shots can be tricky. Make sure whoever is photograping the house has an extra wide angle lens, and it's even better if they have additional lights. I've been reading a lot about real estate photography lately, and if I were to sell my house on my own and didn't have the photography lighting skills, I'd hire a real estate photographer to do it. If I were to go through a selling agent, I'd insist they hire someone. It's worth it to have *great* photos of your house on the day it gets listed in MLS.