In past articles we’ve given tips on what to be aware of when buying a short sale or foreclosure as these sales are relatively new to SW Florida in the past few years. We’ve also given tips on how to select an agent to properly handle a complex short sale when selling, but we haven’t yet offered tips on how to sell a normal non-distressed property in today’s distressed environment.
Tips on How to Sell a Property in Today’s Market
Selling a “Normal” sale can be much different than selling a distressed property. A normal seller has some distinct advantages over distressed sellers, and a few disadvantages as well.
A short seller may have limited time to sell if they haven’t been making mortgage or HOA payments. Either the bank or HOA can foreclose, so time is not always on the seller’s side. A short seller needs to price the home competitively, but not too high or too low. If they price too low the bank will reject the short sale and if they price too high buyers won’t be interested.
A normal seller should also price correctly. If the property is priced too high, buyers will either not buy, or will buy something that offers better value. If the home is priced too low, the seller is just giving equity away to the new buyer.
A normal seller typically doesn’t “Have To” sell because of a bank foreclosure. They may want to sell to trade up, trade down, take a job relocation, move closer to schools, family, etc. The “Wish To” sell is very different than the “Have To” sell. Buyers are often more interested in a “Normal” sale because there is just one decision maker. The buyer doesn’t have to wait weeks or months for a decision and there is less stress on the “Normal” seller about deficiency judgments and tax implications, all making for a smoother transaction even if bank accepts the short sale.
When pricing the subject property, we often have to look at the condition of the short sale and foreclosed homes. Many times these homes need appliances, flooring, fixtures, landscaping, air conditioners, and much more. Condition plays such a big part in comparing homes. Normal sellers are competing with short sales and foreclosures, but they’re not always apples to apples and adjustments need to be made.
Using the Correct Comparables
Agents also look favorably on normal sales because they are rarely affected by last minute title, judgment, and lien issues. I can’t tell you how many times HOA, utility, code enforcement, and other liens delay a closing on foreclosed and short sale homes.
Financing a normal home is much easier for a buyer because they can reasonably lock-in they’re interest rate. It’s almost impossible to lock-in a rate on a short sale as you never know when you can actually close, and also true on a foreclosure if any of those last minute title surprises creep up we mentioned earlier.
Normal sellers need to keep their eye on the “Current” of the market. Even though the normal seller has many advantages, the distressed sales aren’t emotionally tied to the home, so many times they’re more willing to look at what is actually going on in the market versus what they “Feel” they need out of home. A bank or the investor may just want out and can afford to dump a property versus a normal seller who has worked hard for their money and need it for the next venture.
Never Chase the Market Down
In a declining market you never want to get caught chasing the market down. This is true for distressed and normal sales. You really need to study the “Current” of the market and see what it’s doing, not only for the overall market, but also competing homes like yours. Traditionally, sold comparables mean more than Active listings as anybody can ask anything for a property, but the proof is what others are willing to pay.
The market doesn’t rise or fall in unison for all properties. It’s possible the market has bottomed and even started going up in certain segments of the market and still declining in others. Recognizing where your home stands in the various sub-markets will be critical to pricing it effectively, and will offer you the greatest chance of selling, even in today’s market.
It doesn’t matter if the market is up, down, or sideways, pricing based on analysis is critical. Marketing is especially important when buyers have many homes to choose from. Make sure you’ve discussed with your agent and have a clear plan based upon your property’s needs. Marketing, pricing, negotiating, and solving the transaction puzzle are the keys to being successful in any market. We hope we’ve offered tips in two of those areas.
Good luck in successfully selling your property.