Looking around our neighborhood, I saw fewer “for sale” signs in December than the year earlier. In fact, several homes that were on the market for over a year sold last autumn and are now closing.
It still isn’t easy being a seller, but times are slowly getting better. Home values are starting to stabilize and even inch up. And fewer homeowners are underwater — just 23 percent according to the latest data from CoreLogic, a data aggregator.
About 22 percent of existing home sales are distressed, but the discounts are lower. A friend of ours who lives outside of Detroit was pleased to discover that the month he bought his home (November 2010) appears to have been the trough of that market, and a home on his block just sold at a higher price per square foot than he paid.
At the end of 2011, mortgage interest rates touched 3.7 percent. We’re going to end 2013 with mortgage interest rates around 3.5 percent for a 30-year fixed rate loan. Lots of homeowners are refinancing to 15-year mortgages for 3 percent, and those who can afford the payments are going for a 10-year mortgage at 2.75 percent. The Federal Reserve has indicated that it will continue to spend about $85 billion per month buying mortgage-backed securities and Treasury securities in order to keep interest rates at historic lows through 2015, or when the employment rate falls to 6.5 percent.
Although there are more buyers out there now than in the past six years, sellers haven’t been that quick to put their homes on the market. That’s why prices have begun to rise — housing inventory is at a low 4.8 months, meaning it would only take that long to sell all of the houses currently on the market at today’s pace of sales. The norm is around 6 to 7 months of housing stock available for sale.
If you’re hoping to sell in 2013, consider adopting my classic New Year’s resolutions for home sellers:
Overcome any possible objections a buyer would have
Buyers are always looking for a reason not to buy your house. Your job as a seller is to eliminate any potential objections that would stand in the way for a buyer to make an offer. If you really want to sell quickly, you’ll work hard to exceed the buyer’s expectation of your home as well. If your home is competitively priced, and your home’s condition exceeds a buyer’s expectations based on other homes in the neighborhood, you’ll get an offer — even if it isn’t the offer you want.
Get your home into selling shape
Cleaning your home is a must. After that, you should consider hiring a stager to give your home the television-worthy polish so many buyers expect today. (Yes, they want your home to look like something they’d see on HGTV.) Assess what other sorts of work needs to be done, such as fixing things that don’t work, touching up paint, or cleaning or replacing your carpets. Decide if you need to update your landscaping, and paint, clean or tuck point your home’s exterior. If you’re selling in January, clear out the holiday decorations as quickly as possible.
Invite at least three agents to create a comparative marketing analysis (CMA)
Often, sellers simply call the agent who sold them their home to list it. While you may wind up hiring that person, you’ll be doing yourself a favor if you invite a couple of other agents in from different firms. That’s because each will bring different ideas to the table about how much your house is worth and what kind of marketing plan will work. They’ll all have different experiences to draw on and have different buyers in mind who may want to make a quick offer.
Understand what it will take to sell your home
If you live in an area littered with foreclosures, you may have to meet that price point in order to sell. Is it worth it? Probably not, but you’ll have to really evaluate price and timing in order to get the most for your property. If homes have begun to appreciate, you might be pleasantly surprised. Again, a CMA will be incredibly helpful.
Be realistic about the market.
Find out what types of properties are selling in your area and how many days they’re sitting on the market. Accept the reality of your local market and make sure you price your home realistically. Don’t blame your broker if you don’t get three offers over your list price within 24 hours of putting your home on the market. Sellers who set sky-high (or even pretty high) prices could wait months or years for an offer (one of my neighbors has been trying to sell his overpriced home for four years) and may wind up with the same price they would have had if they’d priced their home correctly the first time — or a lot less. In this real estate market, one of the worst things you can do is overprice your home from the start. The more realistic you are, the better off you’ll be.
Rent if you can’t sell and buy at the same time
We don’t recommend putting in an offer on another property until you have some serious interest in your current property or unless you have enough cash to cover the expenses of both properties for six to 12 months. It’s fine to start researching other neighborhoods, but if you’re not sure what you want to do, consider renting on a short-term or month-to-month lease. While a double move is a pain and does have some added costs, it’s a lot cheaper than carrying two mortgages for two years.
Read all documents thoroughly before you sign them
Why would someone sign a legal document he or she hasn’t read? I’m not sure, but home sellers do it every day. If you’re going to sell (or buy) in the coming year, promise yourself that you’ll take the time to read and understand the listing contract, offer to purchase and loan documents for your next purchase. (If you’re taking back a loan for the home buyer, have an attorney prepare the documents so you are sure to be protected.) Unless you’ve got cash to spare, a mistake in these documents and the warranties they contain could seriously affect your finances.
Don’t be driven by greed
One big mistake many sellers make is to get a little greedy, particularly if the first offer is above the minimum acceptable price they have set. Then the negotiation becomes a game of how much they can get.
Remember, a successful sale means everyone walks away feeling happy. If you get so greedy that the buyer walks away, you’ve let the deal get the best of you. Resolve to be reasonable and you will end up shaking hands with the buyer at the closing. You should also know that there aren’t unlimited buyers out there, and if you lose one it might take you quite some time to find another.
Ilyce R. Glink’s latest book is “Buy, Close, Move In!” Samuel J. Tamkin is a Chicago-based real estate attorney. If you have questions, you can call Ilyce’s radio show toll-free (800-972-8255) any Sunday, from 11a-1p EST. Contact Ilyce and Sam through her website, www.thinkglink.com.
By Ilyce Glink and Samuel J. Tamkin, Tribune Media Services