The Down Market: Sell Now?

"RIDE OUT THE STORM" has been the mantra of many would-be home sellers shaken by poor housing news. But holding on could be costly. After all, home prices are only 4.5% off their peak, and many economists believe they will drop another 10% or more. Plus, if you're waiting to unload a vacation or investment home where you don't live full-time, maintenance and opportunity costs will eat you up — upkeep can run as much as 2% of a home's value annually, while you could invest your home's equity elsewhere. Some tips for selling now:

Think like a buyer

Tour nearby homes for sale, and note whose hot tub is on the fritz and why your place is more kid-friendly. Those homes are the competition, and you (or your agent) need to make a convincing case that your home offers better value, says Kevin Broveleit, market manager for Redfin, a Seattle-based discount brokerage. Also, consider teaming with a real estate agent who has experience dealing with international buyers, who have become active shoppers due to the falling dollar.

Make the price right

Right now there are 10 months of inventory on the market, according to the National Association of Realtors, so buyers have plenty of homes to choose from. Don't open with a lofty sale price on a prayer that someone bites. Buyers know better than that in a down market, and the gambit could be damaging: A study by University of the Pacific professor John R. Knight shows that homes that undergo significant changes in the listing price take longer to sell — and sell for 9% less on average.

Be ready to haggle

For more SmartMoney Magazine features, turn to the April issue.

Most potential buyers these days are going to open with a lowball offer. Don't get insulted. "If you can get an offer, take it very seriously," says Morris Davis, a professor of real estate at the University of Wisconsin. Redfin's Broveleit notes that negotiations in the current market typically stretch out twice as long as they did during the housing boom. His advice: Make a reasonable counteroffer, and don't run off an interested party with unnecessary games. Other potential buyers may prove hard to find.

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