Chitownproperty

From the Chicago Tribune:

“… the disadvantages of for sale by owner (known as FSBO) efforts are potentially just as large as the savings. That’s especially true in a buyer’s housing market, where drumming up interested sellers is much more difficult than a few years ago.

Cutting out the real estate agent could end up being a decision that’s penny-wise but dollar-foolish.”

The rest of the article weighs the pros and mostly cons of selling a home by yourself. While some people can save money by marketing a home on their own, most find that the expertise and hard work of a listing agent are more than worth the costs.

Sometimes the trickiest part of buying a new home is timing the sale of your existing one. As this syndicated article from the Tribune points out, a good rule of thumb these days is to start marketing your home at least 90 days before you need to move, or more. That time may differ depending on your local market times, but you also have to allow time for packing, moving, and making repairs on your old place before the sale. Regardless, it’s always best to err on the side of selling your old home too soon, because at most you’d have to make a temporary move before your new home is ready. Living with Mom and Dad again for a few weeks may not seem like fun, but it’s better than carrying two mortgages.

The classic rule of thumb about pricing your home is that you should look at what your neighbors sold their homes for in the recent past. But that only applies, of course, if all things are equal, and your home is more or less the same as those recent sales. That isn’t the case, though, when you’re selling a more modest home in a pricier neighborhood. Then you have to stay realistic and not expect to get the same asking price as everyone on the street. This article in the Tribune talks about strategies for marketing a home that is not in the same price bracket as its neighbors.

The importance of first impressions applies to real estate as well. It may seem trivial, but the appearance of your home’s entryway can make a big difference in potential buyers’ decision-making. Many agents contend that buyers know within the first few minutes whether they like a place or not, and an unkempt front porch, door, or foyer could dissuade buyers who might otherwise love your home. Simple cosmetic improvements to landscaping and front doors, making sure your locks and doorbell work properly, and a neat and clean entry way can impress potential buyers and get them in the front door, literally, and give the rest of your home a chance.

The New York Times ran a great piece this weekend about the thought process that goes into setting a market price. The number are huge because they’re talking about New York, but whatever the market, an asking price isn’t so much a flat statement of how much the seller would like to get for their property. It’s a complex calculation of value, strategy,and pride:

The asking price of a property is rarely a straightforward reflection of comparable values. While comparables may be a starting point, the price at which a seller offers a property is often also based on wishful thinking, propaganda and ploy.

Buyers, in turn, parry by deconstructing the price. They aim not merely to assess a dwelling’s fair value but also to plumb a seller’s bottom line and vulnerabilities. How a price tracks with similar properties, how large and hasty any reduction is, and even how parsed or rounded a number is — all these are grist for concluding, rightly or not, whether a price is firm, desperate or a sign of painful dealings to come.

You may take pride in decking your own halls for the holidays, but take care to tone it down if you’re trying to sell your home this holiday season. As with any time you’re staging your place to look its best for potential buyers, you want to reduce clutter and depersonalize your decor as much as possible so they can envision themselves living there, not peer into how you live. Holiday decorations — especially kitschy or overtly religious ones — are the most personal decorations of all. Just take it easy this year and remind yourself: if you can sell your place quickly for a good price, that’s the best gift of all.

Life doesn’t stop when you sell your home, so you have to be able to continue to manage your day-to-day routine while tackling the big issues of getting your house ready. This article in the Tribune breaks down a number of to-do’s for busy families preparing for a sale. None of it is earth-shattering or even specific to real estate, but it provides a good checklist to get started on all the repairing, painting, packing, and throwing out that you’ll have to do to make your home look its best.

Negotiating a purchase price is hard enough these days, but many real estate deals break down during the second round of negotiations over inspection issues. Both buyers and sellers have to be willing to compromise, and perhaps forfeit a little money or pride in the name of closing the deal. This article from the Sun-Times article looks at both sides of the problems that can arise during post-contract home inspections

Pricing your home in a cooling real estate market can be tricky, because you can no longer rely solely on the sales prices of comparable properties in your neighborhood. When all was going well, sellers and their agents could count on finding recent sales data, adding a time-appropriate increase to that price, and getting offers at or near that level. But now with increasing inventories, homes sit longer on the market, and some people are looking for more creative ways to entice buyers (and no, we’re not talking about offering a free H2 Hummer).

Gone are the days when you can expect to sell your home fast for top dollar. Whether it’s the effect of rising interest rates, overpriced housing markets, or high local inventory, sellers need to alter their strategy to get the highest market value out of their homes in a reasonable amount of time. The American Homeowners Foundation offers this advice via the Sun-Times:

• Face up to the new reality – Buyers realize they have the leverage right now, and sellers have to face the fact that they can no longer expect to squeeze top dollar out of their sale. Sellers need to understand that if they don’t price their home competitively, buyer’s don’t have any reason to look at their home because there are likely three others for sale for less in the same neighborhood.
• Price competitively according to the very latest sales – Sellers should base their asking price on the most recent sales data available. Even comparable sales from three or four months ago may be unrealistic today.
• List in the MLS – Whether you go with a full-service or discount broker, make sure your home is listed in the MLS to reach the widest possible audience. The MLS feeds many other real estate websites, including sites for the major brokers and Realtor.com, the largest listing of homes for sale on the web.
• Offer incentives – We don’t mean silly, eye-catching perks like throwing in a new car, but tangible, cost-saving incentives to sweeten the deal for a potential buyer. Even if your house is in great shape, consider offering a decorating allowance to help the buyer defray furnishing expenses. Offer to pay for some closing costs, or pay down the buyer’s mortgage rate for a short amount of time. Also, whether you use a full-commission listing broker or not, you should strongly consider offering a commission to the buyer’s agent. They have to make a living too, and whether they do it consciously or not, will always be more enthusiastic about showing their clients a home that offers a commission.
• Put your best face forward – As always, your home has to look good to stand out. Make sure your finishes in important rooms like the kitchen and the bathroom are up to your market’s standards. If you can’t or don’t want to pay for remodeling, expect to have to lower your asking price to accommodate. Again, you want to give the buyer every reason to choose your home over a neighbor’s.

Staging a home is crucial to selling it for the best price. We have some quick tips for getting your home ready for showings here, and this article from CNNMoney goes into more detail. But who pays for that staging expertise? In the past, agents had been able to charge extra for those services, but now most agents (including us), will help you stage your home as part of the commission.

Two separate articles in the Tribune and Sun-Times today about the cooling housing market, both with the same gist: the market peaked last year, sales will decline across the board this year, and if you’re mortgaged up to your eyeballs, you’re in trouble.

For the most part, I agree with these assessments. The housing market is slowing down, and any bubble that existed is deflating. We’re not like the National Association of Realtors economist David Lareah, who repeats his stock quotes about how the market is merely “stabilizing” every time you pull the string on his back. The market is cyclical, and we had a good run the last five years. Now it’s time for some sanity.

Debbie and I had an interesting discussion with our pediatrician today about the housing market. He said, “When the nurses are talking about their real estate investments, that’s when I know it’s time to get out.” That’s not meant as a slap to the fiscal responsibility of nurses. What he meant was that when everybody and their brother thinks they can flip a condo with $1,000 down for a 50 percent profit after two months, well, something has to give. Home values can’t continue to increase at the same rate they did the last few years forever. But people will always need a place to live, and fortunately for them, it may be a little more affordable again.

In our business, we are seeing longer market times for properties. Buyers don’t have the same sense of urgency because there is a larger inventory out there. They don’t have to snap up the first one-bedroom with a view of the backside of a dumpster that they find. They can afford to look around for the right place. On the flip-side, sellers are learning to be more realistic about the resale value on their homes. It’s probably unreasonable now to expect 15-20 percent returns each year like people were getting in the last few years. But that doesn’t mean they’ll have to sit on their place forever–if it’s becoming a buyer’s market, that means people will be on the lookout for deals. And as long as interest rates stay low, buyers will stay in the hunt, albeit more patiently.

The cooling market demands more resourceful buyers and sellers, to capitalize on the dynamics of their local market.

Buyers are taking their time and sellers are still a little unrealistic with their asking prices.

From the Tribune:

For many inheritors…deciding what to do with the family home is not so simple or straightforward. The process can be fraught with heartbreak, sibling rivalry and–given today’s superheated real estate market–pressure to cash out quickly while home values remain high.