Sellers, everything has changed.
It wasn't that long ago when you could put your house up for sale and expect to get people making offers that very morning. In hot areas, you could even expect those offers to be above your asking price.
But now, it's a dog-eat-dog market for real estate. While the National Association of Realtors may continue to paint everything in a positive light, you'll soon face the truth. As a seller, you'll have to deal with huge inventories, increasing foreclosures in your neighborhood, and a likely race to the bottom as other sellers reach their breaking point. In many markets, you'll be competing not only against other families but also against homebuilders such as Toll Brothers (NYSE: TOL ) , Centex (NYSE: CTX ) , and Pulte (NYSE: PHM ) , with newly built homes to sell.
Even though you might be one of the lucky ones who find a buyer, it pays to be prepared for the worst. If you're having trouble selling your property, here are a few things you may be able to consider.
- Upkeep. If it's been a while since you took care of some regular maintenance on your house, find out how much it would cost to get the work done before you sell. With a glut of homes on the market, demand for fixer-uppers can drop -- if there are other houses for sale in your neighborhood that are in better shape, you'll have to set your sale price appropriately. And even then, some buyers will either demand additional concessions or simply be unwilling to consider a house in need of repair.
- Renovations. For older homes, you might want to consider adding more modern features that prospective homebuyers will want. While there are many ways to spruce up your home, you have to be careful not to spend money that won't help your resale value. According to Remodeling Online, putting on a new roof or installing new windows added less value per dollar of cost than kitchen remodeling or adding a bathroom. Home-improvement stores such as Lowe's (NYSE: LOW ) and Home Depot (NYSE: HD ) are excellent resources for getting help to evaluate what renovations might work best for you.
- Renting. If you haven't been able to sell your home, one alternative is to try renting it. Depending on rental prices in your area, renting your home may generate enough income to pay your mortgage payments, real estate taxes, and insurance costs. But be sure to check first: Many areas where home prices soared had relatively cheap rents, leaving homeowners unable to make enough rental income to meet their obligations. When housing prices were rising, that wasn't a problem -- you could always sell when you wanted to realize your profits. But now, cash flow is far more important.
- "Fast cash" buyers. When you can't wait to find a traditional buyer, you're not totally out of luck. Some companies specialize in buying homes from desperate owners for well below market value, with the hope of cleaning them up and selling them for a big profit. If you're really stuck, this is an option -- but expect to take a sizeable hit on what you expected to receive for your home. You should also be sure to check with your local Better Business Bureau, to make sure the company you deal with is reputable.
Times may be tough for people trying to sell their homes, but that doesn't mean you're doomed to failure. For more on the basics of buying, owning, or selling a home, take a look at our Home Center. In addition, our personal-finance newsletter, Motley Fool Green Light, has a lot to say on matters involving your home.
In the meantime, be resolute but realistic. The go-go times of the housing boom may be over, but you can still get a fair price for your home if you work at it.
With hundreds of dollars of ideas every month within its pages, you can't afford not to try out Green Light today. You can get a free pass for a whole month with no obligation -- you'll get access to all past issues, helpful resources, and much more.
Fool contributor Dan Caplinger is hoping not to have to sell his house for a good long time. He doesn't own shares of the companies mentioned in this article. Home Depot is an Inside Value recommendation. The Fool's disclosure policy works well in any market.