Make the Most Out of the Market

It’s been a while since I’ve had to address the subject of how you might plan your real estate transaction when the market isn’t on fire. The hard truth is that things have slowed down since the days of quick sales and multiple offers. There will always be hot pockets in the market, there always are. Even in very slow times there are spots of very high demand. The question is how do you plan, when the market begins to cool.

In recent years, low interest rates coupled with strong economic indicators created a frenzy in the real estate market that made the lives of sellers and real estate agents pretty near perfect and that combination of forces wasn’t bad for the buyer either. Low interest rates made housing affordable for a whole new strata of the market, folks, who heretofore were unable to manage a purchase.

However with interest rates ticking up toward 7 percent and the price of gasoline hovering near $3/gallon, there are those who can no longer consider home ownership as an option. Now don’t misunderstand what I’m portraying, 7 percent is still a darn nice interest rate, historically the norm has been in the 8 to 9 percent range. It is just a mathematical fact that as rates increase, ownership costs go up and fewer people are able to afford the purchase of a home.

What I’m attempting to convey here, is how to develop a strategy to market your home when conditions aren’t as optimal as they had been. Perhaps you should delay and await the return of the fantasy market. You can certainly do that, but you will need to be prepared to wait a long time. We are in an upward trend, so in the short term things will get less favorable. In my opinion the longer you wait, the longer you will have to wait. My advise if you’re selling, sell now, but be smart about it, out think your competition.

Let’s consider some elements you have to think about. First be honest with yourself, see your product for what it is really, extract the emotion from the equation. The fact that you have loved and enjoyed your home has no impact on its salability, and no, the home isn’t more valuable simply because you have lived there, as one of my former colleagues had imagined. See the flaws, correct those that you can, and understand the impact of those you can’t. How about some examples? Let’s start with the easy ones, is your home a cluttered mess? No, clutter doesn’t make the home look homier, it is distracting. If your prospective purchaser is focused on trying not to trip over the junk under foot, they may not look up long enough to see that fabulous crown molding. Are your walls covered with smudges, handprints and just looking worn? Paint them. It won’t increase the value, but it will improve the first impression. I’ve heard many real estate agents advise their clients not to paint, “that’s something the buyer will do anyway.” It may be true that the buyer will paint, but what I’ve learn in these last 36 years in this business is that the first thing to go on a buyer is their imagination. If you want them to envision your home as neat and clean, present it to them neat and clean. These are the easy things to address, painting, cleaning, keeping the lawn and shrubbery trim, but what about more difficult items? What if your kitchen is out of date and really should be replaced, but you don’t have the money to do it. That’s ok. Just make it as pleasantly presentable as you can. Straighten up the counter tops, put away the “stuff,” clean it up, shine it up and make it look as good as it can look.

You’re not concealing or misrepresenting anything, the buyer will notice that the kitchen is dated and probably should be replaced. What you are showing them is that it is possible to live with it until they are able to make the improvement.

However, it isn’t enough to simply recognize the flaws in your property. It isn’t much of a sales pitch to say, “I have identified a number of things that could stand improving in this house, here is the list, now buy it because I’ve been really realistic and honest.” Go ahead and make that list, but then sit down and read it! These are all the things that your buyer is considering as reasons not to purchase you property. How do you compensate? In the price and knowing you competition.

You’re thinking, “Straub! pay attention! I’m not in business, I don’t have a competitor.” Well actually you do, everyone else with a house on the market, that is somewhat similar to yours is your competitor. So be sharp! Do your homework, what are these other houses, what sort of shape are they in, what do they have that you don’t have? If you know these properties, what they have, how they are priced and how your house stacks up against them, you’ve made the first step to getting ahead of the market. I suggest, make a little field trip, have your Realtor show you your competitors (now don’t jerk them around, if you’re going to make them work, give them your listing), but it is a very good exercise in realism.

Finally, listen to that Realtor when they make suggestions about preparing your property. Don’t be offended, remember, I said put aside the emotion, this has to be a cold hard process. Save the emotion for the buyers. Most importantly, when you ask your agent for their pricing advice, TAKE IT! A price of $252,500, doesn’t mean $260,000. Your length of time on the market is in direct proportion to the distance between the real market value of your home and the price you decide to ask. Don’t be mistaken, if you insist on over-pricing your home, your agent will likely go along with you, they’re realistic enough to know if they don’t, one of their competitors will. But understand that refusing your agent’s pricing advice is similar to asking your Doctor’s advice; He says hemorrhoids, you say headache and treat yourself with aspirin and then wonder why you still have that same old pain….

So avoid the pain, listen to the Pro and go get ‘em.

Gary Straub is the AVP for mortgage production with Fifth Third Bank of Western PA and has been a real estate professional in the Pittsburgh area for 35 years.