Everyday someone asks me ‘how is the market ?’. My answer is always the same – it depends if you are buying or selling. If you want to purchase a home then now is the best time ever. There is a dip in the market that favors buyers right now. If you are planning to live in the house for a while then your investment will eventually pay off.
However, if you are a seller in this market, then things are a little tough. Sales prices are off a bit and the time that it takes to sell a home is longer than it has been in the past. So the question remains, should I sell my home right now or wait until things improve? Ruling out foreclosure type circumstances, here is my answer. There are two main issues to consider when thinking about selling your home in this market – price and condition.
Price – do you have enough equity in your home to price it to sell? If you have owned the home for a while and have seen sustained price increases over the years, then you may have the equity to price your home for this market. However, let me caution you, if you are basing the value of your home in 2007 on what your neighbor sold their home for in 2006, then you are way off base. Appraisers are valuing homes on recent sales – within three months and certainly no older than six months. Even at six months, the value is going to be a bit off.
In order to sell your home in today’s market, you have to be willing to be aggressive in the pricing. You must realize that full price offers are hard to come by but setting a realistic price will get you close. You may have to consider price reductions if the home does not sell within 30-45 days. Also, you have to be willing to offer buyer incentives such as assistance with closing costs, home warranties, etc. All of these items will affect the bottom line so count the cost before putting your home on the market. Sit down with a realtor that knows your area of the city and go over the numbers in a realistic manner. The realtor will do a “net sheet” which shows sales price less all of your expenses (loan payoff, buyer incentives, taxes, etc) and what you will net at closing once the home is sold. If you can live with the bottom line then you are one step closer to selling your home.
The second issue is the condition of your home. Does the outside need painting? Do you need new carpet? Are the light fixtures up-to-date? Is the color scheme dated? Most of us grow accustomed to our homes and over time we no longer see that the rooms are cluttered and the doors are scratched. We live there. If you can’t be objective, call a friend and ask for their opinion. Go out to new home sites and see what the model homes offer. Then go home and compare what you have seen. That is exactly what buyers will do. Sit down, watch an episode of “Sell This House” and hear what buyers say when the seller is not home. Can your home pass the test?
If you are thinking that you will offer an “allowance” to the buyer and they can fix up the home themselves, think again. Many lenders are shying away from allowances because of the rise in mortgage fraud. Those lenders that will permit allowances, do so under very tight circumstances that may rule out some buyers. Also, buyers realize that they are in the drivers seat right now and they want to buy a home that is “move in ready”. If they have to work on the home then they will expect a deep discount in the price.
Sounds like a lot to you – maybe so but the upfront work is worth the effort. A realtor should be your best friend if you are even thinking about selling your home. I am not saying this because I am a realtor but for the following reasons. A savvy realtor understands the market, the trends, pricing and buyer expectations. An experienced realtor will negotiate the best terms for you in a difficult market. A realtor will lay out the picture in terms that you can understand – pricing, costs, financing, buyer programs, sales terms, marketing strategies, etc. and then allow you can make the final decision. At the end of the day, this is a business decision and you need an expert to help you make it.
Before you make the final selling decision, sit down with a lender and go over your finances. You need information on the various loan programs, lending guidelines and income requirements. Do you need to pay off some debt prior to moving? Are you in a position to pay more monthly for your new home? How much will you need to put down on the new home? Will you net that much on the sale of your current home? Can you afford the new home of your dreams? Consider all of these factors before you sell your home.
Now back to the original question. Should you sell your home in this market? Can you price it aggressively and is it in “move in condition”? Are you in a position to financially move up in price for a new home? If the answers to these questions are ‘yes’ then start packing. It is time to move.
This entry was posted on Friday, December 21st, 2007 at 1:58 am and is filed under Sellers. You can follow any responses to this entry through the RSS 2.0 feed.
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Rita Cox – Associate Broker
Keller Williams Realty Atlanta Partners Cell - (678) 467-1229 Direct (678) 252-1946