When my husband and I bought our home in April 2005, the Washington, D.C.-area housing market was in a frenzy. We'd paraded through homes, all priced at far more than half a million dollars, with cracked foundations, slanting floors, and "slight" flooding problems. We'd been told that it was likely we'd lose bidding wars to folks willing to waive the home inspection contingency. In fact, we had lost bids on two other homes, even with escalation clauses that sometimes went thousands over asking price. The market around the area had been red-hot for several years, long enough that many of us forgot it could be any other way.
But sure enough, the slowdown hit, bringing with it a record inventory of homes and a sea of sellers perplexed by their misfortune. Now, three years later, there's still no end in sight.
So what do you do if you're on the wrong side of a slowing market? Selling in a slump is part mental adjustment, part common sense.
Here are some critical pieces of advice for selling your home in a slowing market:
- Price it right. Most real estate agents agree that pricing your home correctly is one of the best strategies you can employ in a competitive market. But this is also one of the toughest hurdles for sellers who remember last year's asking prices. Because things have been changing in this market from month to month, it can be hard to get a handle on what kind of pricing the market will allow. This means you must rely heavily on the expertise of your real estate agent and a property appraiser.
- Remember: That was then, this is now. Simply forget that your neighbor sold his fixer-upper back in 2004 in three hours for $20,000 above the asking price. The new "normal" is likely to involve making concessions to your buyer, such as price adjustments, home repairs, or help with closing costs.
- Get picky. Invite a brutally honest friend to walk through your home and point out potential turn-offs for buyers. A fresh set of eyes may catch things (the spot on the wall where your three-year-old squashed PlayDoh, for example) that a proud homeowner no longer sees.
- Remove the clutter. Excess stuff is visually distracting, and it creates a bad first impression. Rent a storage unit to house non-essentials while your home is on the market. For just a few hundred dollars, you'll have given your house a mini-makeover that buyers will appreciate.
- Create neutral territory. While you don't have to paint everything white, it does help to tone down unusual color choices and to remove personal items from view (bye bye, Elvis memorabilia!). You want potential buyers to be able to envision themselves in your home, not critique your taste.
- Sweat the small stuff. Repaint, replace fixtures, clean, plant flowers -- in short, do whatever you can do to make your home put its best foot forward to a potential buyer. With a glut of inventory, buyers can afford to be choosy.
- Think on your feet. Sellers need to stay alert in this kind of market. Another house comes on the market in your neighborhood? Ask your agent to visit it and sees how the price and condition compare to yours. Get a lowball offer? Before you turn it down, get the latest comps for your area to see if prices have shifted. Getting traffic in your house but no offers? Make sure your agent is calling other real estate agents for their feedback. Staying on top of your home-selling process is the key to securing a good offer.
While the sellers of today must be made of sterner stuff than in years past, there's no reason to panic. People are still buying, just not with the same wild-eyed intensity of yesteryear. Follow these tips to optimize your position all the way to the closing table.