Whether you’re selling your home with a real estate agent or for sale by owner (FSBO), selling your house in a soft market presents special challenges. It can be tough enough to sell a house in a good market, but many times harder in a soft one.
It can be done however, but you’ll have to be a little creative, and very flexible. Here’s what I mean…
Price Your Home a Little Below Market
Homes sell in all kinds of markets, even soft ones, but price becomes more important. Price is probably the most important factor in even getting your home noticed. Price it too high, and buyers will go elsewhere. Never assume that you can afford to set the price “a little high”, then negotiate down. If you’re priced too high in a soft market, then you’re priced too high, period. You’ll be closing the door on many buyers who might be available.
So how do you price it just right? If you’re working with a real estate agent, the agent will (hopefully) provide you with a reasonable price. But be sure to ask the agent to list the property to sell, which means to set the price at a level that the house will move quickly.
If you sell the house yourself, check the value of your home on popular websites like Zillow.com and Trulia.com. You can also have a real estate agent perform a competitive marketing analysis, and most will do it free of charge in the hope of eventually getting the listing on your home should you decide to go that route.
If you really want a solid number, hire a licensed appraiser. It will cost you a few hundred dollars, but it can be money well spent.
However you determine the value, price it a little bit below the prevailing market value. A 3% to 5% reduction in the price could work wonders. For example, if the market value of your home is $200,000, set the price at $190,000, and you’ll likely get more buyer prospects.
For Sale By Owner Will Give You More Price Flexibility
To give yourself breathing room to be able to price your home below market, for sale by owner will allow you to do that without cutting into your sales proceeds. Since the typical real estate commission is 6% of the sale price, you can price your home at 5% below market value, and still come out with a little more cash – and sell your home faster. In fact, sometimes just pricing your home at 3% below market will get the buyers coming in. In that case you can cut the price and still come out with 3% more of the sale price in your pocket at closing, than if you sold with an agent.
If your sale price is $400,000, that will mean $12,000 more in your pocket after closing.
If you’re unsure as to how to sell your own home, check out my Selling Your Home Made Simple program. It will show everything you that you need to do to market and sell your home without using a real estate agent.
Time is Money
At least part of the reason you want to set the price your home below market is to get it sold quickly. Houses don’t get better as they sit on the market longer. And once your house has been on the market for more than three or four months it can be seen as damaged goods (or at least not a good deal). You’ll start getting even lower offers than you ever imagined when you first listed it.
This is an issue any time you’re trying to sell a house, but it’s a bigger one in a soft market. You will need to sell quickly, or you will very likely end up selling for less – maybe a lot less – than you thought the house was worth.
Don’t Play Hardball
A soft housing market is usually referred to as a buyers market – and there’s a good reason for that. In a soft market, buyers are in control, not the sellers.
If it’s a buyers market, you can’t play hardball with prospective buyers. You have be ready to give and bend. Accept it, and go with the flow – it’s your best strategy.
Not playing hardball means being flexible in the terms of both your property listing and your closing. You may need to be prepared to offer repair allowances and to pay certain (or all) of the buyer’s closing costs. These are incentives for buyers, and they can make a difference, particularly if your price is not discounted.
One of the most important areas to be flexible with is with your closing date. Many sellers have a certain closing date in mind that’s convenient for them. In a buyers market, the buyer is in control, so you’ll have to do your best to accommodate them on this critical issue.
Don’t Buy Another House Until You Sell the One You Have Now
A lot of sellers are afraid to close on their old home if they don’t have a new one to move into. In a soft market, that’s usually an exaggerated fear. Buying a house in a soft market is easier, for all the same reasons that selling one is harder.
Remember that you will become a buyer in a buyer’s market and that’s the superior position. It is much easier to buy a home in a soft market than it is to sell one. And if you have already sold your home, your bargaining position as a buyer will be even stronger.
Selling your house in a soft market can be done. But it requires a different strategy than selling in a strong market. Be prepared, and you can make it happen.
(Photo by Images_of_Money)
