This is me in the Arizona Republic (permanent link):
Appraisal, inspection could swing the balance toward sellers
It’s not fun to be a home seller right now. We’ve talked about why your home must be priced right, prepared right and presented right in order to sell. But — guess what? — even that might not be enough.
There are subdivisions where twenty or more essentially identical houses are for sale. There may be at most one buyer for all of those homes in any given month. Still worse, that buyer’s loan might not hold up all the way through the closing process.
The good news is that the belt-tightening the mortgage industry has been going through may be loosening up by a notch or two. There will be no more reckless loans to unqualified borrowers, but buyers with good income, good credit and good debt ratios are qualifying for very aggressive interest rates. And jumbo loan borrowers are being welcomed more warmly than they were a week or two ago.
But the problem remains: There can be so much inventory that buyers are literally paralyzed. On the one hand, they want to see everything before making a choice. On the other, they rightly fear that prices might be even lower a few months from now.
What should you do as a seller? Whatever it takes.
Here are a couple of ideas:
First, have the house appraised, price the home below that appraisal and leave the appraisal report out where buyers can see it.
Second, have the home professionally inspected. Do all of the repairs in the inspection report, then have the inspector back to confirm your work. When everything is ship-shape, leave that report out where buyers can see it.
You can’t control lenders or interest rates. You can’t control the price of homes into the future. What you can do is take away every buyer objection over which you have control.
Nothing matters more than price, so if you won’t price your home to the current market, you needn’t bother with anything else. Your house will not sell. But if you’re committed to doing whatever it takes, these ideas could swing the balance.
Technorati Tags: arizona, arizona real estate, phoenix, phoenix real estate, real estate, real estate marketing
BR says:
Very wise words- great strategy for a tight market.
September 7, 2007 — 9:43 am
Eric says:
Definitely agree. In my time working with a local warranty/service company that arranged inspections and appraisals as well, even the small things could sway buyers to another home when inventory is what it is.
When there’s 1-2 houses you’re looking at and something’s wrong, you’re in the “It’s ok, we’ll just fix that when we move in” mindset. When there are 10-15 houses, it’s much easier to detach and move over to the next house.
September 7, 2007 — 10:38 am
Apella says:
Thank You! Thank you for this post and logic! I could not agree with you more and support your post as you look out for homeowners. I love that problems are being addressed ahead of time. If I can help you please let me know.
September 7, 2007 — 11:07 am
Robert Kerr says:
Nothing matters more than price, so if you won’t price your home to the current market, you needn’t bother with anything else.
Are sellers in Phoenix finally getting the message and adjusting prices downward?
Sales and inventory numbers seem to be saying: “No, not yet.”
September 7, 2007 — 7:42 pm
Sam Chapman says:
You’re absolutely right about sellers in many areas needing to take extra steps to get a house sold. A lot of buyers have been cut out of the market in many markets and not just in the subprime segment. People who were counting on no doc, interest only, second loans (80-20, etc.) and other creative financing aren’t getting the money. That has cut the number of buyers at all levels.
September 8, 2007 — 9:20 am
Wade Young says:
I like Greg’s advice about getting a professional appraisal. When I sold my first home for $174,000 it was by far the most expensive house in the neighborhood with the rest of the houses selling in the $125,000 range or even below. The real estate agents wanted me to list it for $155,000 and see what offers I got.
I knew the house was a unique house in a historical district of tiny quaint houses. The house was restored by an artist, so it was magazine material even if it was small.
I went against the real estate agents’ advice and I had the home appraised by an appraiser who knew the area well. The appraisal came in at $174,000. I put “asking appraisal value” on my FSBO add, and I left the appraisal in the kitchen for all to see. The house sold for appraisal value within a week. The buyer didn’t even try to offer less than appraisal value.
After that experience, I’m big on getting professional appraisals to show to buyers even in addition to the real estate agent market research. It alleviates every buyer’s number one concern, which is paying too much for a house.
November 30, 2007 — 11:25 am