How To Survive on a Sluggish Real Estate Market
If you’ve been reading the recent news of the swooning markets, it’s likely your head is swimming with new terminology: Subprime mess. Credit crunch. Discount rate.
For help, I turned to real estate expert Barbara Corcoran.
IF YOU’RE BUYING:
Shop for a mortgage, then the house. Don’t settle for being pre-qualified – get pre-approval for a certain amount of money. Knowing exactly how much you can spend will give you leverage in negotiations with the seller.
However, these days, it’s not uncommon for mortgage commitments to last only a week, as opposed to the old standard of up to three months. Stay in touch with your lender to keep yours updated.
Gauge home prices in your area by going to open houses of homes similar to the one you’re eyeing. Then, get three competitive brokers to give you an estimate of what the home is worth. These steps will help you make a smart offer.
A nice place to start is 15% below the asking price, if it’s properly priced or 15% below what you believe the value is, if it’s not.
IF YOU’RE SELLING:
Price it like you mean it. Almost two-thirds of homes for sale are overpriced because sellers’ emotions get in the way.
Sure, the house holds important memories for you, but they’re no selling point. When you’re selling, it’s no longer a home, it’s a house.
Even if you’re willing to negotiate, if you price too high, you run the risk of closing the door on potential sales. Get expert opinions on your home’s value. You can also check Zillow.com for a rough estimate.
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In addition to the steps mentioned above, as the owner of a regional for sale by owner real estate service, I would suggest the following:
If you’re buying, by all means get a pre-approval letter, go to open houses, etc. You should also start getting a feed of all new MLS listed properties in your area which should include information on price reductions. You may also be able to receive notifications of new to the market for sale by owner properties (we offer this to buyers in Western Massachusetts, for example.) If you are selling in order to buy, make sure that your home is on the market (better yet, sold) before you make an offer on a property. If this is not possible, you may need to look at the possibility of a bridge loan so that selling your home will not be a contingency on purchasing a new home.
If you are selling, we recommend that the expert you choose to help you price your home is a licensed real estate appraiser, not real estate agent. There are several reasons why paying for a professional appraisal will help you in the long run. 1) You will be able to negotiate with a buyer from a position of strength – you will know the true value of your home, 2) You will not risk overpricing your home for the market and should sell faster than homes that will go through multiple price reductions before the true market is found, and 3) You will know that your buyer will be able to get financing. Remember, the lender will hire an appraiser to make sure they are not financing an overpriced home.
Check your local area for a regional for sale by owner service as we know our local markets and can help you design a strategy for selling that maximizes your chances for success. Remember, you stand to save thousands and thousands of dollars selling by owner — don’t think that putting a classified ad in the paper, a generic sign in the yard and holding an open house will get the job done. In a competitive market you will need to make your home stand out above the crowd. A good resource is http://www.fsbonetwork.org, a national organization of regional publishers.
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