From "Less" To "Yes"

The painful truth: Sellers who do not price their property competitively are the most likely targets of lowball offers. In soft markets, buyers are more prone to make low offers on listings seen to be priced too high. Listings that don't sell usually require price reductions, which in turn often mean ultimately accepting an offer lower than you could have received by pricing aggressively from Day One.

Since selling your home can be such an emotional and subjective experience, it's easy to understand why you'd be reluctant to counter an offer below your asking price. But rather than feel insulted, try to see it as the beginning of a dialogue that could ultimately produce a sale.

If you feel any of the terms or conditions of the offer are unacceptable, ask your agent to present a counter-offer. Sometimes buyers and sellers don't really know beforehand what price they'll accept until they've begun the negotiations. For example, a buyer might agree to a higher price than planned if interest rates suddenly drop.

If you've received a lower than expected offer, but the buyers have proven their qualifications and commitment by securing loan pre-approval, you have grounds for serious consideration. The process of counter-offering can be swiftly settled or carry on ad nauseam. Be prepared to explore all options and act quickly before letting your negotiations fail.

Making It At The Top

You may be hearing that things are improving in the residential real estate market, and while that is true, not every area is experiencing the euphoria yet. Even where sales are making gains, it often still depends on the ranges of listing prices - bargain foreclosures, mid-range homes, or high-end properties.

My last two columns addressed the approaches that buyers and sellers should take when the transaction involves homes in the first two categories, but luxury listings are a different story. Between the economy and the credit crunch, this top 10% of listings is suffering, largely because lenders aren't committing to financing such large loans.

As high-end prices will probably still drop, buyers who do qualify for financing have more power in negotiating these sales. However, seek loan pre-approval before you make any offers. Jumbo loans require larger downpayments at slightly higher rates, and qualification takes time.

As the seller of a luxury home, you may have to bite the bullet and undercut your competition, if you're truly committed to making a sale. Use your agent's Competitive Market Analysis to make your pricing decision, and if you can, offer to finance the deal yourself.

The painful truth in this high-end market is that recovery will take longer, so you shouldn't hesitate to set a lower price and offer other concessions to make your sale happen.

The Goose & The Gander

When facing a mortgage default, most homeowners try to sell their home - fast. The technique that works in these stressful situations also works for the rest of sellers - namely, aggressive pricing.

As a seller, you control the three factors that determine how quickly your home will sell: marketing, condition, and price. Let's focus on that last element.

First, be clear about your goals. Can you hold out for the highest price you can get, or do you want to move on quickly? Unfortunately, the fact that you paid more than what homes in your neighborhood are selling for is irrelevant in today's market.

Forget about salvaging equity, and price your home aggressively against the competition. Overpricing keeps many buyers from even seeing your listing in their affordability zone. They'll see lower priced homes as a better value, while you'll wait until the lowballers come out of the woodwork.

Start your pricing decision with a Comparative Market Analysis (CMA) performed by your real estate representative. If you're truly motivated to sell quickly, price your home 10% lower than the selling (not asking) prices of other homes in your area.

Now your home becomes a bargain, and it will attract the attention of other agents and their qualified buyers. An attractive price, good condition and savvy marketing will result in offers and ultimately, a sale.

Do The Math

After all your preparations and marketing efforts, what do you do when you get that first offer? Don't jump for joy or wallow in disappointment until you've read all the terms. Price is just the beginning, and other contingencies will ultimately affect your bottom line.

In reviewing the offer, pay attention to seller concessions, which can range from asking you to pay closing costs to including an allowance for roof repairs. Buyers may also request inclusion of certain articles of personal property not physically attached to the home. This might include the refrigerator or pieces of furniture. You can decline or accept the terms, but it's best to establish in your listing those items included and excluded in the sale.

Mortgage and appraisal contingencies indicate that the buyer will seek financing at a certain rate and terms, and that the appraisal must satisfy the lender. Make sure that all of the terms are realistic, and that there is a reasonable time limit for the buyers to secure their financing.

These and other terms in the offer impact how much you net from your sale, regardless of what actual buying price is stated. It's possible that a “full price” offer could result in thousands less than a lower offer with fewer contingencies, so please consult with a representative before listing and before accepting or rejecting any offers.

Launch an Offensive

When buyers become scarce, sellers have to step up and make their offering stand out to attract attention. Without spending a fortune, sellers can easily highlight several of their home's features.

First, beat buyers to the punch with a pre-listing home inspection. By discovering and fixing problems before buyers ever see the home, you can impress them with a worry-free, move-in-now opportunity. Leave your repair receipts out during showings, so that buyers can see all the improvements you've made just for them!

Once the mechanical and structural features of your home have been addressed, move on to the aesthetic details. First impressions count, so make sure your home is inviting from the curb. Spiff up landscaping, paint, entries, and windows.

Inside, pay attention to bath and kitchen details, because those rooms are often most important when buyers are making a decision. Aside from deep cleaning, consider updating bath and kitchen features with new and contemporary drawer pulls, faucets, and even sinks.

Finally, get a jump on your moving by organizing your closets and ditching or packing all you possibly can. A good guideline is to reduce your closets to half-full, so that the buyers can easily picture the space for their own storage needs.

A few "preemptive strikes" should be all you need to attract buyers and offers, so ask your agent for tips today!