Updated on Jan. 4, 2010.>
The winter months are> traditionally the slowest in the housing market. But with favorable interest rates and an expanded home buyer tax credit the usual seasonal patterns may shift in 2010.
For prospective home buyers and sellers, there have been some signs of firming in the housing market: Sales of existing homes rose 7.4% in November over October, according to the most recent data from the National Association of Realtors; they were up 44% from a year ago.
Meanwhile, the latest S&P/Case-Shiller Home Price Index reported that home prices in 20 major cities dropped 7.3% year over year in October, but were flat compared with the previous month.
With more foreclosures expected to hit the market in 2010, home prices could fall a bit, but the majority of price adjustment has probably already occurred, JP Morgan economist Abiel Reinhart wrote in a note last week.
While buyers in many areas have the upper hand, sellers aren't completely hamstrung. They just need to know what it takes to stand out in a crowded market and how to appeal to buyers without sacrificing too much financially, says Tara-Nicholle Nelson, a real estate broker in Oakland, Calif.
To get the best deal when selling your home, try to avoid these all-too common mistakes.
1. Failing to vet your real estate agent.
Without an experienced real estate agent who is familiar with the ins and outs of the sale process, your home may languish on the market. When shopping for agents, ask for references, as well as their track record with homes in your price range and geographical area. Equally important is their list-price to sell-price ratio (that's the original asking price compared with the actual sale price). You want to see that the agent is selling homes at or near the asking price. If an agent s listings were in the $400,000 range, but sold in the $325,000 range, consider looking for someone else. (For more on choosing a broker, read our story
2. Setting the price too high.
Sure, you may have bought your house at the market peak, but be aware of the correction that's since taken place. When figuring out the right price, don t rely too much on national statistics instead, focus on your local market. Some areas but not all have seen a decline in inventory because of a pick-up in sales. Be sure to price according to your neighborhood, says JP Endres-Fein, a real estate broker and partner at Homes of Westchester in New York.
To price your property appropriately, find out what comparable homes in the area sold for and how long they stayed on the market, says David Hanna, president of the Chicago Association of Realtors. Real estate search engine sites like Zillow.com and Trulia.com give buyers an automated and estimated valuations. If your listed price is significantly out of sync with the results, you ll probably have a hard time drawing buyers, he says.
3. Waiting for a market rebound.
No one knows when home prices will rebound and don t expect values to return to 2005-06 levels soon. But that doesn t mean you should wait until then to sell your home. In fact, waiting could cost you thousands of dollars in home value, says Pam O Connor, president of Leading Real Estate Companies of the World, a national network of real estate agencies. If your home is worth $300,000 now, but area prices are expected to sink another 5% by the end of the year, that s $15,000 you missed out on by postponing the sale.
Also, listing later in the traditionally busy spring season will limit your pool of potential buyers and your eventual sale price. That s because many house hunters will be after the home buyer tax credit, and the credit requires a written binding contract to be in effect on April 30, 2010; the purchaser will have until July 1, 2010, to close.
4. Skimping on listing photos.
The Internet is the first stop for many home shoppers. How you present your home online is just as important as how it looks during the open house. Sellers should include as many pictures as allowed on real estate listing sites and on the local Multiple Listing Service, an online clearinghouse of property listings, says Nelson. Highlight the rooms and features home shoppers care about the most: the kitchen, bathrooms and outdoor space.
5. False advertising.
Don't misrepresent your house either through your description or by retouching photos to the extent that it's misleading and don't let your agent either. Altering a photo to add shrubbery to the front yard or making the neighbor s house look farther away than it really is won t fool anyone, says Nelson. Similarly, don t list your three-bedroom house as having four bedrooms by including that additional room in the basement. Most buyers looking for a four-bedroom want all the bedrooms on the same level, says Endres-Fein. That s one of the things that buyers complain about most.
6. Be careful about incentives.
In the housing market s headier days, prospective buyers might have been lured by extra perks like offering to pay for a year's worth of dues at the local golf club or a $1,000 decorator allowance. Now, though, sellers would do better to reduce the asking price by that incentive amount or offer it as a credit toward closing costs. No one buys a house because there is a $1,000 credit they buy it because it meets their needs, Endres-Fein says.
7. Waiting to fix up the place.
If you know a part of the kitchen's hardwood floor needs to be replaced, do it before the open house. Deducting the cost of such necessary repairs from the asking price will cost you a lot more than just getting the project done yourself.
8. Taking offense at lowball offers.
Home buying is one of last great bastions of haggling in the U.S. And now more than ever, buyers are testing the waters to see how low they can go, says Hanna. Rather than turning your nose at what you think is a low bid, listen to every offer and present a realistic counter offer. That way, you can spark a real negotiation.
9. Failing to make sure the buyer can afford the house.
Any offer you receive should specify that the buyer has been pre-approved for a mortgage big enough to purchase your home. Transactions often fall through because of financing problems. I don't care if [a buyer] offers $100,000 above your asking price. If they can t get a loan or afford it, the offer is meaningless, says Endres-Fein.
10. Being inaccessible.
Agents love to show homes that are easy to get into. So make it easy for buyers to arrange to see your home. If I need to call you numerous times just to get a buyer in your house, it won t get shown or sold, says Nelson. Leave a lockbox with a key at your door so the buyer s agent can get in when you re not home. (Only members of the local Multiple Listing Service can get an electronic key, which opens the box that holds the house key.)