It's been awhile since I've talked about the lowly housing market, slowing housing sales and the like, so I thought it was about time to bring up the subject again, but this time from a how-to perspective. Specifically, I'm going to share Smart Money's suggestions for how to sell your house in a buyer's market:
1. Tempt the buyer or the buyer's broker
2. Stage your house
3. Throw a party
4. Do your homework
5. Rent it out
This is similar advice to what I saw in December's issue of Money magazine (their #2 and #3 tips are the same as Smart Money's #2 and #5 tips above.). Their best suggestion was to "price your house like a buyer" if you wanted to sell it (in other words, don't list a place for $299,000 when similar houses in the same neighborhood are selling at $249,000.) Their thoughts on this issue in particular:
The reason so many people are stuck with a house they can't sell is that they haven't priced it right. Most of us grow attached to our home, and good memories and ego can distort how much we think it's worth. Go to open houses of similar properties in your neighborhood and decide how much you'd pay. Then list yours for that price. You may know that your house is better for entertaining, but that won't get a buyer to pay more. That's knowledge you gained only after living there. Forget about charging more than a neighbor because you have a new kitchen. "These days upgrades will get your house sold, but they won't get you any more money," says Lars Fahlberg of Prudential California Realty.
My thoughts on this subject:
1. I am amazed at how much people think their home is worth. We get fliers of homes for sale in our neighborhood all the time, and I'm familiar with many of the homes. They are similar to ours, but are asking $20,000 to $50,000 more than the price I'd ever ask for our house. Is it any wonder their house sits for months? (I have a house two doors done from mine that's been for sale for six months or so now because the owner is in la-la land on what he thinks he can get for the place.)
2. In addition to the emotional issue, I think many people price their homes at what they'd LIKE to get out of them or what they NEED to get out of them. The former is simply someone wanting a certain amount of money for their home. The latter (which is common) happens because people buy a house they can't afford (instead of using my formula for buying a house), finance it with an evil home loan, then find themselves in a net loss position because of having to pay selling costs when they move. So they price their home higher to cover these costs (and maybe to help them pay for their new house.) Neither of these have anything to do with what the market will bear or with what a buyer is willing to pay.
3. We keep our home about $20,000 below its fair market value in Quicken when we compute our net worth. This way, we're protected a bit against downward market pressure as well as selling costs.
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