8 Tips For Pricing Your Home In A Buyer's Market

Written By Dana Dratch
Source www.Bankrate.com

Getting ready to sell? The more you know about conditions in your local market, the better your chances of getting the best possible price for your home.

It's tough being the seller in a buyer's market. But you can improve your odds with the right research.

In many cases, making a smart deal and getting the best price come down to studying your market and being an educated seller.

"You've got to know more than you would have if you'd sold a year ago," says William Poorvu, professor emeritus at Harvard Business School and author of the upcoming book "Creating and Growing Real Estate Wealth." "If you want to protect yourself, you have to become knowledgeable."

1. Recognize that housing markets are local.

Home prices are like the weather -- very different in different areas.

In many markets, home prices have actually gone up from last year, says Dick Gaylord, president of the National Association of Realtors.

In addition, demand will change depending on the price range and even the neighborhood. What you need to know: What's the demand for a house like yours in your area?

"You have to look at what's being sold and at what price," says Poorvu. "That's important."

Look at comparables for similar houses. Study prices and sales for one year ago, six months ago, three months ago and current numbers, says Gaylord.

What are the trends? Are prices going up or down -- and by how much? How many days are homes staying on the market? If they are on the market longer, how much of that could be seasonal? In many areas, spring and summer are the busy seasons.

Pay special attention to "the delta between the list price and the sales price," says Ron Phipps, broker with Phipps Realty in Warwick, R.I. That is, look for a meaningful relationship between list price and sales price. Perhaps most homes are selling for 5% less than the list price.

"An agent who works the market will be in the best position" to find "the tipping point between nice, attractive and interesting -- and being sold," Phipps says. You want to find the point between, "Hey, that's interesting," and "It's too good to pass up."

If you're not using a real-estate agent, it's especially important to use the Internet, visit open houses in your area and study home sales in your Sunday paper, says Greg Healy, vice president of operations for ForSaleByOwner.com.

But you also need to realize that the paperwork alone tells only part of the story. While sales and prices are public, many times seller concessions are not.

2. Analyze who is buying and selling in your market.

What's your competition? Who are the buyers, and why are they shopping?

Do you live in an area like Phoenix, which Poorvu calls "a growing market with people coming in"? Or are you living in an area that doesn't attract a lot of new residents, where many shoppers don't have to buy but are looking to pick up a bargain?

Are you competing against a flood of new houses from builders eager to sell, or are you selling a newer home in an area where most of the housing stock is older?

3. Ask the professionals.

Don't ignore the elephant in the living room. Ask your real estate agent about the market conditions for your area and price range.

Specifically, ask about the "absorption rate," says Phipps. What that means: In the current conditions with the current inventory, how long would it take the market to absorb, or sell, all the houses on the market?

If the supply is much larger than the demand, ask potential agents how they would "price to offset that inventory," he says.

4. Know what your house is worth.

Talk to your agent. Get an appraisal from a certified professional appraiser. Look at your comparables. Taken together, that information will give you a pretty good idea of what your home is currently worth.

5. Consider strategic pricing.

Here's how it works: If prices in your area are dropping 1% each month, and you want to sell within the next three months, you take 3% off your price right off the bat, says Phipps. So if you were going to put your home on the market for $400,000, you set the price at roughly $388,000.

The upside: You'll have the competitive edge over the guy who's dropping his price every month, without the air of desperation. Plus, in a market where prices are falling, you'll make more money if you sell quickly.

The downside: Predicting the market is a tough call, even for the pros. And it's really difficult to raise the price if your market starts to rebound, Phipps says.

6. Rebate your "commission."

If you're selling it yourself and need to move quickly, consider subtracting half of what would have been the commission from the sale price, says Healy. The standard commission is about 6%, so if you subtract 3%, your $300,000 house would go on the market for $291,000, he says.

Listing a home for "$9,000 to $10,000 under that value should create higher interest," especially if it's new to the market, says Healy.

The downside: If the house doesn't sell and you end up hiring an agent, you'll need to cover the commission, which may mean raising your sale price or taking a smaller profit.

Evaluate whether you really have to sell now.

If you want to get the best possible price for your home and the local market is tanking, "see if you can delay the sale," says Poorvu. Otherwise, in a lot of markets, sellers have "to be willing to accept a pretty good haircut over what they thought their home was worth last year," he says.

The downside of waiting: The market could decline or your circumstances could change to the point that you might need to sell quickly.

But for situations where the move is optional (or you might be able to rent the property until your local market improves), waiting is a solid option.

Just because you've already planted that "For Sale" sign doesn't mean you can't change your mind if you're not seeing the interest you expected.

"If you know there are no sales or sales are decreasing, and you have the opportunity," taking it off the market is a decent solution, says Healy. "I think we're seeing a lot of that."

7. Assess the market where you plan to buy.

If you're selling one house and buying another, look at the market where you plan to move. Says Poorvu, "It might be that, with the housing there, it's a great time to buy."

Would you like to make selling your home easier on you? Give us a call at 972-772-7000 or email us at rockwall@kw.com.

Debt Management for Homeownership

Written By Carla L. Davis
Source Realty Times

Learning to manage your finances is a great first step towards owning the home of your dreams. Whether this is your first time to buy, or you are looking to move-up, managing your debt is important.

Among the most important of the debt management qualities is holding yourself accountable. What does this mean, exactly? Being accountable means taking an honest look at your budget and your spending. The $5 latte every morning on the way to work, the cash withdrawals spent without record, or even the extra martini with dinner adds up to money spent, not saved.

An easy was to increase your own accountability is to use a debit card and online banking for all of your purchases. Online banking is offered by nearly every banking institution, and allows you to access your account anytime, anywhere. Now you'll know if you are spending $100 a month on little extras.

The next step in accountability is to create a monthly budget. On a sheet of paper write down each of your monthly expenses. These might include: rent or house payment, car payments, insurance, phone bills, cable and internet, alimony, child support, and student loans. It's time to take a hard look at what you think you are spending versus what your real expenditures are. If you can, don't forget to add up how much you spend on all the extras, such as nights out, entertainment, books, hair cuts, and household products.

If you'd prefer to use an online calculator to show you a monthly budget, consider using financial guru Suze Orman's tools at Suzeorman.com.

Next, begin to cut and adjust your spending. In this economy, everyone can take note of this tip, even if they don't have debts. Where can you cut? Experts recommend limiting your trips for eating out.

According to Christine Bockelman with Smartmoney.com, "Americans now spend roughly half their food budget dining out, and restaurants expect revenue of more than $537 billion in 2007. That's a 67 percent increase since 1997." How much is the food really marked up? Bockelman notes, "At a fine-dining restaurant, the average cost of food is 38 to 42 percent of the menu price."

Make your morning coffee at home and take it in a travel mug to work. Rent movies, instead of paying $10 a ticket for each member of the family to go see a "new to the theater" attraction. If you have the money to spend and splurge, it's fine. That's what makes our economy go round, but spending what you don't have, and adding to your already mounting debt, is no way to work your way towards homeownership.

There is a difference between wants and needs, and this is a time to re-evaluate how you define them.

Once you have freed up some cash, you can start working on paying down debts and building up savings.

It is recommended you develop a savings schedule. After you've set your monthly budget, you will know how much can be earmarked for savings each paycheck. If you can't trust yourself to make the transfer yourself, then set up automatic deposits out of your account.

A separate savings consideration is an emergency fund. Review your budget and see how much you would truly need each month to get by. Multiply that number by 8, because that is the number of months you should be prepared to survive without a job. If you need $2,500 a month to pay all of your bills, then should have $20,000 in savings. Most Americans don't have a fraction of that, part of the reason for the foreclosure crisis running rampant across the nation.

The latest statistics indicate that most Americans have a personal savings rate of less than 5 percent, but owe $8,000 in credit card debt (MSN Money).

When it comes to credit cards, don't. It's as simple as that. If you can, avoid carrying a balance on credit card. We live in a society of margins, with 43 percent of American living beyond their means, but there is something quite liberating about living on your income and no more. If you must use a credit card to carry a balance, or if you already owe, then consider paying more than the minimum each month. Not only does a minimum payment set you up for possible interest rate and fee increases, it costs a whole lot more in the long run.

Consider this equation. If you owe $10,000 on a card with an 18 percent interest rate (fairly normal), and you make minium payments, according to bankrate.com, it will take you 342 months, that's 28 years, to be rid of your debt. In that time, you will pay $14,423.30 in interest!

On the other hand, at just an extra $25 dollars a month, or a fixed monthly payment of $275, it would take you 53 months, or 4 years, to be rid of your debt. In that time, you will pay $4,563.28 in interest. This is a deal compared to the minimum payment equation.

A common question that credit card users ask, "Should I close the account when I have paid off the card?" The answer is simple. If you owe any money on open cards, then no. This will negatively affect your FICO score. This is because the ratio of credit available to credit used will shrink. If you don't owe any money on any cards, then closing cards should have no impact on your FICO score.

So, take a moment to consider your finances, and see if you really are living within your means. If not, what can you do to adjust your spending and savings to get there?

Are you financially ready to own the home of your dreams? Give us a call at 972-772-7000 or email us at rockwall@kw.com.