Sellers: Lower your expectations

As painful as it might be to realize that your house isn't worth what you thought, asking too much in a slow market is a mistake.

By Ellen Florian Kratz, Fortune writer

NEW YORK (Fortune) -- In order to seal the deal in Mesa, the Bairds need to sell their home in Plymouth, Minn. Initially their concession to the slowing market was to price their home at $310,000, which is less than the $324,000 asking price for the most recent sale in the neighborhood, even though their house has a slightly better layout and nicer views.

But after noticing 'for sale' signs lingering too long in other people's front yards, they reconsidered. Last month they put their 2,200-square-foot home on the market for $299,900.

"It's a little depressing," says Bret. "But that's what we think the market is willing to pay." Assuming they get full price, they'll be lucky to make a few bucks more than the $279,900 they paid two years ago after commission and closing costs.

But they made the right call. As painful as it might be to realize that your house isn't worth what you thought, asking too much in a slow market is a mistake. "Trying to get last year's price is wishful thinking," says Hessam Nadji, managing director with real estate advisory firm Marcus & Millichap. "Often you're unable to sell your house, which compounds itself, and you keep chasing the market down."

Just ask Rob Sakey, 46, of Northampton, Mass. He and his siblings put their grandparents' Victorian in Cambridge, Mass., on the market for $2.1 million last year, when real estate in the area was starting to slide. After four months they lowered the price to $1.9 million. Then $1.7 million. At $1.5 million, they started getting bites. The house is now in escrow for $1.2 million.

You'll also need a reality check when it comes to the physical appeal of your home. In the days of bidding wars and waiting lists, buyers were so happy to land a house that they scarcely noticed carpet stains and chipped paint. Today they are picky about the cosmetic stuff. Already Bret and Tricia have laid new carpet, repainted, and replaced the kitchen sink. "We're making lots of trips to Home Depot," says Bret.

That's the spirit all sellers should adopt. "If it takes repaving the driveway or retiling the bathroom to get the house sold, do it," says Zandi. "Don't play a game of hoping the right buyer will come along just in time."

6 strategies to survive the bust

Lower your expectations

Next: Drive a hard bargain

Consider renting

Step away from the exotic mortgage

Shop for a rate drop

Keep an eye on your equity

Reporter associate Doris Burke contributed to this article.

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.