7 ways to beat the short sale competition
If your residence is surrounded by distressed properties, you're likely concerned about the dampening effect on local home prices. Such concerns naturally become more urgent when your own home is for sale.
The term "distressed real estate" includes short sales, pre-foreclosures and bank repossessions, also called bank-owned homes or real estate-owned (REO) homes. Short sales, in particular, can be priced like bargain-basement goods. The extent to which they depress the prices of other nearby homes depends on the local market, but the effect is real, and since distressed homes account for about a third of all U.S. homes sold, you shouldn't overlook the negative impact they can have on your home's current market value.
"Unprecedented levels of all-cash purchases, primarily of distressed homes sold at deep discounts, undoubtedly pulls the median price downward," says Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., and 2011 president of the National Association of Realtors, in a statement. Still, "traditional homes in good condition have held their value," Phipps adds.
That suggests you can make your home stand out, and here are some ways to do it:
• Incentivize buyers' agents: Realty commissions are negotiable, as are the commission splits that agents offer one another through a multiple-listing service (MLS). To make your house more attractive, offer a higher commission that will entice buyer's agents, suggests Linnette Edwards, an associate broker at Better Homes and Gardens Real Estate in Piedmont, Calif. Ask your agent to prepare a schedule of the commissions and splits on homes that are currently for sale and advise you on how much to offer.
• State your case: Many buyers are leery of distressed homes due to their poor condition, lack of disclosures from an owner-occupant seller and the "as-is" terms of sale. To signal that your home isn't subject to those drawbacks, ask your agent to describe it as "not an REO or short sale" in the MLS, Edwards suggests.
"By stating that in the MLS, everyone who is searching online will see that it's a regular sale," she explains.
• Include the appliances: Distressed homes are often stripped of appliances. That means a refrigerator, dishwasher, laundry machine and the like can be a big plus, especially if your home is likely to appeal to first-time homebuyers who need to conserve their cash for a down payment and closing costs, Edwards adds. Ask your agent to promote the fact that appliances are included.
• Prep for sale: A home inspection and appraisal, obtained before you put your home up for sale, can help you make necessary repairs and price your home appropriately, suggests Paul Bell, a Realtor at Prudential Americana Group in Las Vegas and 2011 president of the Greater Las Vegas Association of Realtors.
• Let the buyers in: Rarely does anyone buy a house sight-unseen. To make your home more accessible to prospective purchasers, allow your agent to use a lockbox, which lets realtors get inside, Bell suggests. If your home is rented out, you'll want to get the tenant's cooperation as well, perhaps by offering a temporary rent reduction.
"Tenants need to help keep the place presentable because people can be very sensitive to the property's cosmetic condition," he says.
• Ready, set, close: Short sales are notorious for delays. But offering a rapid closing date that doesn't depend on a bank's approval might not be as significant an advantage as it once was since, as Bell explains, asset managers and investors are now more savvy about short sales and respond sooner than they did in the past. Still, it's not a bad idea to discuss a speedy closing with your agent and be willing to offer that should the buyer want to move quickly.
• Price to sell: Regardless of whether a home is a distressed property or a regular sale, price will always be a buyer's bottom line. Don't choose a realty agent solely on the basis of his or her pricing recommendation. Also, do your own homework, researching for-sale homes online and visiting local open houses, before you make a pricing decision.
"A regular sale adds a little bit of value to buyers, but it's not significant," Edwards explains. "They're always looking for the better deal, so you do have to price (your home) competitively."
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Marcie Geffner is a Los Angeles-based freelance reporter, who has been writing about real estate, homeownership and mortgages for more than 20 years.