The current declining market has put sellers (and listing agents) in a difficult position, since many factors are now coming together to place additional downward pressure on real estate prices.
- Inventory levels are very high, forcing motivated sellers to compete by lowering their price to stay competitive.
- Distressed sales (short sales, foreclosures, lender-owned) have increased dramatically and have reduced values markedly in some areas.
- The sub-prime debacle has caused lenders to be overly cautious and "raise the bar" for loan applicants, to the point where it has become challenging to qualify for conventional loans. Fortunately, FHA came to the rescue.
- Loan underwriters appear to have no business sense and are picking apart applications to the point of absurdity. This normally delays transactions and in some cases it causes them to be cancelled, because after the underwriter is done, the applicant may no longer qualify for the loan (why don't they have the same stringent requirements when applying for the loan instead?)
- Appraisers must now be at arms' length from lenders and are under a lot of pressure to consider distressed sales as real comparables and to note when a market is declining, resulting in many contracts not going through because of a low appraisal value.
Very often sellers struggle with the fact that the best way to sell their home in a timely manner is to provide OUTSTANDING VALUE for the buyer from the day they list. By heeding the advice of a savvy REALTOR®, sellers can stage their home right and price it right from the start - even setting the stage for receiving multiple offers (yes, even in this "soft" market). Sellers must now think like buyers, because an able and willing buyer is who will determine what the "market" price for their home will be. The old adage: "location, location, location" has now changed to "value, value, value".
Here are a few additional pieces of advice for sellers:
- Price it right (yes, aggressively) from day one. Evidence shows that the longer a home remains on the market, the lower percentage (of the LAST list price) it will eventually get.
- Stage it right from the beginning. Fix all deferred maintenance issues before placing it on the market. Provide a Home Warranty and a Termite Bond.
- Your first offer will probably be your best offer, even if it is very low. Remember, the market is still declining!
- Don't be offended by a "lowball" offer. Any offer is better than having no offers. The buyers are telling you that they prefer YOUR home over the dozens of other homes available. Don't ignore it, and keep the momentum going - you don't have to give in to all their demands, but grant concessions that would send the buyers a message that you are motivated to sell.
- Finalizing a real estate transaction today is like landing a 20 lb. fish with a 5 lb. test line! Skillful negotiating and lots of patience from you and your REALTOR® could possibly raise a low initial offer to an acceptable level. However, it may take 6 to 10 iterations to get to this point!