Monday, March 24, 2008

How I Sold My Home in a Slow Real Estate Market

I did all the things everyone else suggests such as cleaning, decluttering, and deodorizing. These things were a no-brainer to me and were completed well before my home went on the market. Once these things were finished, I took the following steps and successfully sold my home in a slow real estate market in less than three months.

I hired a realtor. No one likes to pay a realtor 5% - 6% to sell their house. But if you want to sell your house, bite the bullet and hire a realtor. I am 99.9% confident that my house would not have sold for sale by owner (FSBO). I was very particular when I hired a realtor. I hired someone who had a successful track record with over 15 years of experience. The realtor I hired was a full-time realtor. I would never hire a part-time realtor. Finally, I hired someone I had good rapport with.
I studied the competition. Once I hired a realtor, we did a complete market analysis. On paper we reviewed the prices of all comparable homes sold in the past 6 months. We also reviewed all comparable homes currently listed on the market. We then walked through every comparable home listed in my neighborhood as well as surrounding neighborhoods.
I priced my house competitively. I decided to set my home’s price slightly lower than the comparable homes we researched. Overall, we felt my home provided the best overall value in my neighborhood as well as surrounding neighborhoods.
I re-evaluated. As my house sat on the market for over a month I continued to study the competition. Every weekend, I visited all open houses in the surrounding area. I also received feedback from other realtors and prospective buyers. I started to notice, a few other houses offered more value to potential buyers. I knew buyers were in short supply so I had a decision to make. I could either lower my price or I could make improvements to my home. The most negative feedback I received was the worn carpet in high traffic areas and a cracked sidewalk. I quickly decided to replace the carpet in the entire house as well as fix the cracked sidewalk. This was quickly completed within one week.
I wasn’t discouraged by a low offer. Shortly after I made these improvements, I received my first offer. Unfortunately, the offer came in $30k below my asking price. At first I was discouraged. However, I knew buyers were scarce and I didn’t want to lose this opportunity.
I was realistic. After receiving the low offer, I took a closer look at comparable homes sold in my area. It turns out that based on what has actually sold, my home was overpriced. Even though my home was one of the top values compared to other homes currently listed on the market, I quickly came to realize everyone was overpriced. Recognizing that my home was overpriced was not easy but it was necessary to get my house sold. After a week of intense negotiations, I finally came to an agreement to sell my home for $20k below my original asking price.

I learned a few things from my experience. If I had to do it all over again, I would have set my original asking price lower. I based my original price on comparable homes currently listed on the market. Basing my price on recently sold homes would have been more successful. I think this is the #1 reason why homes don’t sell in a down market. I also should have replaced the carpet and fixed the sidewalk before my home went on the market. The competition was fierce and the buyers were limited. My home should have been in top condition from day one.

Overall my strategy proved to be successful. A little luck probably didn’t hurt either.


Kristen Zirkle said...

Do everything your realtor asks you to do! We took a month to complete all our items our realtor asked us to do to make our home stand out. It took a little $ and a lot of sweat equity, but in the end we sold our house in 3 days for only $2K below asking price.

T Struck said...

That's true if you have a good realtor. When I interviewed realtors in my decision process, I noticed some were reluctant to give honest feedback. They were more interested in getting my business and didn't want to give me any negative constructive criticism.

Get Out of Debt Squirrel said...

Sounds like you were mush smarter than the average seller. I'm one of those people that just purchased a home in this crazy market and what made the difference was that the sellers did everything they could have to make it a house worth buying.

People forget that the true market value of everything is not what you think it is worth but that price at which the buyer and seller agree.

An agent that tells you your house is worth more than a fair market price just to get your listing is doing you a disservice.

It sounds like your agent was super. Maybe you should provide a link to them from your blog as a reward?

T Struck said...

I was very happy with my agent. If anyone needs a real estate agent in Minneapolis, let me know. I will be happy give her a referral.

Your comment on true market value is right on. Sadly, I see so many people today asking for a price based on their mortgage pay-off amount. I'm afraid many people who put less than 20% down on their home are now upside down on their loans.

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