Real Estate Tips: If you're a seller or speculator
Price it right, and don't be afraid of agents. Plus: a word of caution for flippers out there.
NEW YORK (FORTUNE Magazine) - Each day brings fresh evidence of peaking home prices. But, with the right strategies, sellers can still command top dollar.
Price it right
The worst mistake a seller can make in a softening market is to overprice a home. Even putting a high price on your home to "test the market" for a few weeks (with the notion that you can always lower it later) is a bad idea.
Your goal should be to seal a deal during "the first two or three weeks your house is new to the market," says Lyle Martin, co-founder of Assist-2-Sell, a discount realty firm. That's when your home generates interest from serious buyers who have their radar up for fresh properties.
If you're asking too much, they'll move on, and your house will get lumped in with the rest of the inventory. And if it lingers too long, "it can become stigmatized," says Pam O'Connor, CEO of Leading Real Estate Companies of the World. "Buyers will think there is something wrong with it."
How can you be certain that you're pricing it right?
Start by checking out your rivals: similar homes for sale in your neighborhood. But the numbers that you really want are the actual prices comparable homes have sold for recently - a market analysis that any good real estate broker will prepare.
And don't cling to memories of what houses were commanding six months ago; if your area has seen a slowdown in sales, you're not going to get top dollar. "The silver lining," says Gil Campos, a 25-year Boston real estate veteran, "is that houses priced correctly are selling for what they're asking."
Set the stage
In a faltering market you need to stand out. That's where something called staging comes in - that is, sprucing up your home in a way that encourages prospective buyers to envision themselves living there.
The first step is to rent a storage locker and fill it with all that clutter from the attic, basement, and garage. Also remove any furniture that makes your home look overcrowded. And you may want to sweep your house clean of such personal items as wedding photos, framed diplomas, or children's fingerpaintings - it's difficult for prospective buyers to see your home as their castle if your family's signature is all over it.
Tone down unique decor. That nude oil painting hanging in the foyer may turn off buyers. Rooms painted in unusual colors should be redone in neutral tones.
"You're not selling your things, you're selling the space," says Barb Schwarz, CEO of StagedHomes.com.
Curb appeal is equally important. Says Long Island, N.Y., agent Diane Saatchi of the Corcoran Group: "The trip from the driveway to the front door can kill a deal."
So slap a fresh coat of paint on the door, hang a wreath, hide the garbage cans, and plant flowers along the walkway.
Hire an agent
You may hate the idea of parting with 6 percent of your home's value, especially when you're facing the prospect of getting less than you dreamed of. And with the Internet making do-it-yourself sales easier than ever, you may be tempted to dispense with an agent.
But in a tougher environment, marketing is everything, and an experienced agent--that is, one who didn't recently jump into the real estate gold rush - can be invaluable in helping you price your home correctly and in getting it noticed by prospective buyers. An agent can also steer you through the tortuous sales process and keep a deal on track when the inevitable glitches crop up.
So are there ways to save on those steep commissions? Any real estate professional will tell you that fees are always negotiable. But just as investors with hefty portfolios often pay smaller percentage fees to their advisors, sellers of high-end homes have the most leverage when it comes to commissions.
Paul Butler, a Windermere broker in the Puget Sound area, recently reduced the take on a $900,000 property to 4 percent. You may also be able to get a package deal if you use your listing broker to buy another house in the same market.
If you're a speculator ... get out now
In 2005, investors accounted for 28 percent of the housing market, up from 23 percent in 2004, according to the National Association of Realtors. But the game of buying a home - or two or three or 17 - holding it for a bit, and then flipping it for a handsome profit has pretty much played itself out.
"Get out as fast as possible," says Mark Zandi, chief economist with Moody's Economy.com. "The market is moving away from the investor, and even when it stabilizes, I don't think it's going to come back anytime soon."
So don't repeat the mistake that tech investors made during the dot-com bubble. As stocks spiraled downward, they held on, thinking that the market would bounce back quickly. Just accept that you're going to lose money on that Miami deal.
"Take your lumps," says Jon Duncan, a Tacoma financial planner. "If you're feeding this thing cash flow, it won't take long to make this a very bad investment."