Housing & Mortgage
Six Rules for Selling a House in a Down Market
If you must move, get humble; buyers will have the leverage
Selling a house isn’t fun in the best of markets. In a tumbling market, it’s torture.
House sales could be affected by the coronavirus health crisis for some time. Americans have bigger things to worry about. If you can wait to put your house on the market, you should.
Yet many sellers have no choice.
They get divorced. They get in financial trouble. Or they get a job transfer.
In early 2008, right as the Great Recession was starting to take hold, I was transferred from Dallas to New York. The Texas house we were selling was in excellent shape, and located in a trendy neighborhood where homes prices had been climbing strongly. We priced our house in line with recent sales. We didn’t get a single offer.
It took many months and several price cuts before we started getting offers and sold it. All the while, we couldn’t buy a home in New Jersey, and our teenager didn’t know which high school he’d be going to. It was an unsettling experience.
Over the years, I bought and sold multiple homes as I moved around the country for different journalism jobs. Here are the six rules I have found for selling in down markets:
Be aggressive on pricing. Sellers can get obsessed with getting “full price” or “not giving away the house.” It’s a trap. You want to get the best price you can, not the price you’d get in a perfect world. In a falling market, that generally means selling your house as quickly as possible because it will only get worse.
Start by pricing below the competition. If that doesn’t work and you need to adjust the price after a month or two, lower it by enough to attract a new group of buyers. It’s brutal. But you’re likely to end up with more money by getting out in front of a falling market, rather than chasing it.
Know your competition. Your house is in a beauty contest with every other house for sale. In a hot market, everybody gets a trophy. In a cold market, few do.
Pore over the internet listings for homes in your neighborhood. Make sure your listing has strong photos and a detailed floor plan so it won’t get lost in the shuffle.
Go to every open house in your neighborhood. If everyone else in your price range has a master bathroom and you don’t, that’s a problem. If other houses have remodeled kitchens, and you don’t, that’s a problem. You’re going to need a lower price to stand out.
Little things matter. In a weak market, buyers seek perfection. There are things you can’t do anything about — like selling a house on a busy street. But you should eliminate any defect that you can without crazy spending.That means painting, replacing worn carpeting and fixing broken hardware. I can’t tell you how many homes for sales I’ve visited where the real estate agent had to struggle to unlock a balky front door. It makes you wonder what bigger problems lie unseen.
When you put a house on the market, it is no longer your home. It is the house you want someone else to imagine as theirs. Get rid of family photos, knickknacks and clutter. Put half your furniture in storage. Suddenly your house will look bigger and more enticing.
Your real estate agent isn’t always your friend. I’ve had some super real estate agents over the years, including one in New Jersey whom we’ve used for multiple sales and purchases. But it’s important to remember that their interests and yours aren’t perfectly aligned. You want the highest price. The real estate agent doesn’t get a fee unless there’s a sale, even if the price isn’t optimal for you.
In 1995, I was transferred to Dallas, and we put our modest little brick ranch in St. Clair Shores, Michigan, on the market. We got one offer, from a buyer who wanted a big discount from our selling price.
My company had a program in which it guaranteed me a low-ball price for the house, and the buyer’s offer was below that. The agent knew he would get no fee if we took the company offer instead. So, without our permission, he disclosed that price to the buyer, and that’s exactly what they bid, not a dollar more. The agent got his fee. I don’t think it harmed us in this instance because the buyer already was playing hardball over price. Still, it was an eye-opener, and I wouldn’t use that agent again.
Don’t lose a sale over a few thousand dollars. In a tough market, buyers may demand a long list of repairs after the home inspection, even if the house is in great shape. It’s disheartening, but they know you don’t have a lot of leverage, and they want to squeeze you a bit more.
Turn the other cheek. Offer a discount in lieu of repairs. In a tough market, it’s not worth letting a serious sale blow up over $5,000 or $10,000. It just isn’t.
The highest offer isn’t always the best. When we prepared to move from Dallas to Maplewood, New Jersey, in 2008, we found a house we liked, negotiated a $15,0000 price reduction, and signed a contract. In New Jersey, however, a sale isn’t a sale until it has gone through attorney review.
During review, a higher offer came in. The seller informed us that if we wanted to stay in the running, we needed to raise our offer. We thought about it and walked away.
The seller of the house was in for a nasty surprise. After signing a contract, the new buyer tried to negotiate a big discount, and the deal blew up.
The house went back on the market for another year as prices declined, and the seller ended up getting at least $60,000 below what we had been prepared to pay.
People who aren’t serious about buying will sometimes offer more money than those who intend to go ahead with the offer. We were moving from out of town, had nowhere else to live, and would have gone through with the purchase.