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Housing market timing
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October 26, 1998: 10:00 a.m. ET
Sometimes you want to sell your home but your local market won't let you
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NEW YORK (CNNfn) - You may want, and even need, to sell your home. Unfortunately, your local housing market may not accommodate you.
But even if your home is right in the middle of an uncooperative housing market, there are things you can do to increase your chances of slapping a "sold" on the sign in your front yard.
Home sellers in the United States are increasingly finding greater challenges when they put their houses up for sale.
A booming housing market has been transformed into a merely average one, according to Gary Eldred, author of "The 106 Common Mistakes Homebuyers Make."
"We're moving from a frenzy to just stable demand," explained Eldred. "While the stock market was doing great, all that wealth was generating housing demand. Now, the equity markets are taking a hit."
While recent national existing home sales figures don't indicate dire problems in the housing sector, that doesn't necessarily mean home sellers can expect to unload their houses immediately.
"It's not a national housing market, it's a regional market and even a neighborhood market," said Robert Moles, chief executive officer of Century 21, a Parsippany, N.J.-based real estate company. "It can be great in the Northeast and not so great everywhere else."
Indeed, things can change relatively quickly even for those areas which have seen incredible housing demand in recent years.
For example, Atlanta, whose booming housing market has kept construction firms and real estate agents extremely busy during the 90s, may be due for a slowdown over the next couple of years.
According to real estate consultant Robert L. Siegel of Robert L. Siegel & Associates, Inc., more people are picking up and leaving Atlanta than are moving there. He predicted new housing permits -- an indicator of future home construction -- will decrease by 34 percent over the next three years.
Seller beware
If you're going to try to time the selling of your home with regard to local economic trends, you'll first have to get an idea of what the selling climate is like.
Real estate markets usually fall into two types of categories:
A buyer's market, where there are more of the desired homes for sale than there are purchasers willing to buy them. In a market like this, the seller has to make concessions in order to sell a house and will possibly have to wait longer to do so.
A seller's market, where more buyers are pursuing fewer houses. Sellers have more leverage in this type of market and can usually have a higher asking price.
While you can start skimming the classified ads in the newspaper and checking out online listings in order to get a sense of how tight the housing market in your area is, it's probably somewhat inefficient at giving you the whole picture.
If you're using a real estate agent, she can be a good resource for determining what the local selling landscape is like, said Eldred.
"On of the best ways to tell if the market is in a downturn is if the inventory of listings go up dramatically," he said. "If they decrease sharply, the market is getting tighter."
The local real estate board compiles information like this and releases it to area real estate agents. It also amasses other information, such as the percentage of the sales price as a percentage of asking price.
Simplified, this figure basically tells you how close the selling price was to the asking price. In a slowing real estate market, the figure might fall to 85 percent of asking price, according to Eldred. This means a home with an asking price of $200,000 would have sold for $170,000.
Timing is everything?
Trying to time the market is a wonderful thing if you're selling a home in an up-and-coming neighborhood but sellers rarely have that luxury.
Often, people must sell their homes because they are being transferred by their employer or a life change necessitates a move. Either way, they can't exactly wait around until the next boom cycle hits.
Eldred suggests a half-way measure that can at least buy you some time until the next strong housing market comes along in your neighborhood.
If you're planning on moving from a depressed housing market, such as Los Angeles, to a stronger one, such as Austin, Texas, Eldred advised renting out your L.A. home until the market there stabilizes.
Some people do have the option of trying to time the housing market, but unfortunately their attempt is predicated on the idea more buyers are out in force during the spring and summer months.
While there may be some truth to that assumption, the conventional wisdom is also probably being followed by other buyers and you may find yourself competing with a glut of other sellers.
Selling your home in the fall or winter may run counter to your instincts but it may also allow your home to stand out more in a smaller market. In addition, prospective buyers who are moving during that time may have more incentive to purchase a home than more leisurely browsers in the spring.
Timing the market may be less important even if you are in a down market, according to Eldred. If you are simply planning to buy a more expensive home in the same market, a slower housing market might even work to your advantage.
This is because while you may be selling your house for less than you had envisioned, you are probably also buying a house which has a lower asking price than it might otherwise.
"In recent downturns, even people who sold and took a loss and traded up came out ahead because of lower interest rates," said Eldred.
Cleaning house
There's no reason to accept defeat if you find yourself selling in a buyers' market, according to Century 21's Moles. Starting with a comprehensive marketing plan for your home can help.
"The electronic media is an efficient way to market homes," said Moles. "Having your home get exposure online can only be a good thing."
Moles also advised getting your house in cosmetically the best shape you can. Increasing the curbside appeal is a great place to start.
While some easily-repaired problems such as replacing broken fence gate hinges and mowing the yard may be obvious, others may not jump out at you but will to prospective buyers.
Cleaning up the grease or oil spots on concrete surfaces and providing an unobstructed view of your home from the street by not parking cars or boats in your driveway can do a lot to make your home look better.
Indoors, you'll want to clean any surfaces a prospective buyer might come in contact with, such as doorknobs, countertops and handrails.
Fortunately, no matter where your home is located you've had an ally recently. Interest rates have continually inched downward, guaranteeing that you'll have an easier chance of selling your home, even if you're in a tough market.
-- by staff writer Randall J. Schultz
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