How To Sell Your Home In 2008

YOURNEWSPAPER.COM/HOMES

AD / SPONSORSHIP

Make the most of your home investment

We’ve had trouble with our homes since the market went sour. What can we do? Q: About two years ago we refinanced our home in Michigan and got a $550,000 mortgage. The property was appraised at $950,000. We took the $550,000 and paid off two existing mortgages worth $275,000 and put the rest of the money, another $275,000, into certificates of deposit and interest-bearing accounts. We also purchased a $325,000 vacation cottage in Michigan. This property is being financed with a land contract that required $50,000 down and $50,000 more every six months. Since refinancing, our local housing market has gone sour. Our primary home has been on the market since early 2006 and not sold. We also put the vacation home on the market last year for $359,000 and have been trying to sell a Florida condo for $175,000. We’ve made payments of $200,000 on the vacation home, with another $50,000 due shortly. Our monthly mortgage payment is $3,600. We’re just about out of money. We have $45,000 in stocks and mutual funds and $61,000 in an IRA. What should we do?

A: By the standards of most people you are rich, and yet your essential financial worries are similar to those faced by many households: declining asset values, the obligation to pay debt and huge cash-flow needs. In essence, your situation is proof that a falling tide lowers all boats. You had a plan that assumed that real estate values would remain at a given level and that your properties could be sold at some price.The first assumption generally makes sense given the historic record of cash prices for real estate, but not always. Home prices have declined in selected local markets at various times, and, as we are seeing, it can happen again. Michigan and Florida are among the states most impacted by the toxic mortgage meltdown.Alternatively, if you lived in Seattle, Salt Lake or Rapid City you wouldn’t have your current problems because these local markets are far stronger than Michigan or Florida. The second assumption, the ability to sell at some price, is generally true.The problem is that “some price” may be far less than anticipated. Your immediate need is to reduce monthly cash flow and adjust your finances. If this is not done you could See ASK OUR BROKER, Page 2

‘This Blank Canvas Needs a Pretty Picture’ “WHAT SHOULD I DO with this big empty living room? It’s a funny shape and it looks so lonely without furniture,” said my client. She needed a quick sale and to maximize her sale price, as she and her family had already moved into their newly constructed home across town, leaving this house vacant. Her Realtor had explained that vacant homes usually sold for less and lingered on the market longer than staged

MAKEOVERS homes. She was overwhelmed with the prospect of staging it on her own, so she called me in to help. I usually stage “lived-in” homes, using only the furniture and artwork the homeowner already owns, so I looked forward to working with a blank canvas. After touring the house, we sat

by Kit Davey

down on the floor to create an action plan.We decided to fully stage the living, dining and family rooms, using a combination of her things with rented furnishings.We would accessorize the kitchen and bathrooms and leave the bedrooms vacant. This is a plan I suggest to homeowners who can’t or don’t

want to live in the home while it is on the market. If at all possible, do not show a vacant home.A vacant home feels and looks lonely, brings up questions in the buyer’s mind about why the property is being shown in that way, and makes any flaws in the house stand out. It may seem like a good deal of effort and an unnecessary expense, but your efforts will be paid off with a

See MAKEOVER, Page 2

New Year, NEW Strategies

iStock photo

Ask Our Broker

Here are the best plans for selling your home in 2008 BY CHARLES SCUTT CTW FEATURES

T

he start of a fresh new year offers the opportunity to turn over a new leaf – and turn over an existing home to a new owner, as well. But to realize your 2008 resolution of selling your home quickly, experts say you’ll need to plan properly for the spring buying season and face the realities of a challenging real estate market that has carried over from 2007. While experts continue to debate exactly when the spring homebuying season kicks off, Sheila Siderow, president of Siderow Kennedy, Chappaqua, N.Y., says that it starts right after New Year’s. So it’s important for buyers to be prepared even before the last echoes of “Auld Lang Syne” are heard. According to Darralyn Bowers, a broker with ERA Bowers & Associates, Southfield, Mich., sellers can look forward to a more favorable market in 2008, but are cautioned to tread carefully. “The initial shock and scare of 2007 has ebbed, and the absorption of the foreclosed properties has been accepted as a necessary evil,” Bowers says.“The loss in property values will experience stabilization, and there will be some normal market conditions returning to certain areas.Values will not increase. However, the

Adapt-ability:When selling a home in 2008, it’s critical to revisit the listing price with your agent every 30 days, as evolving market conditions may require an adjustment to help keep your home appealing to prospective buyers. rapid decline will cease to cause panic selling.The properties that will sell will be those in the best condition, priced closest to market value, and in the best locations.” Steven Kleiman, founder and CEO of Oakington Realty, Houston, says sales depend on the kind of financial predictions

AD / SPONSORSHIP

made by the government. “Home sales will stabilize in 2008,” he says.“Historically, firstquarter sales are better than fourth-quarter sales from the previous year, due to typical seasonal distractions, weather, and yearend tax and income considerations, all of which impact buyerseller conditions. But if Wall

Street and the Fed and the President and local news pundits all line up with negative viewpoints and wobbly prognostications for housing and financial outlooks, more than a few homebuyers will head for the sidelines.” The New Year will bring “pru-

See STRATEGIES Page 2

MAKEOVERS AFTER

Ask Our Broker CONTINUED FROM PAGE 1

BEFORE

MAKEOVER

but do not rent smaller accessories.

CONTINUED FROM PAGE 1

BEFORE higher selling price and a quicker sale. Since the living room is the first visible space in the house, we needed to make it warm and inviting and look fully decorated and lived in.After deciding on a space plan, we flipped through the furniture rental catalog and made a call to set up a delivery. My homeowner said she would meet me the day of the staging and bring along a box of accessories to “fluff up” the space. Most rental companies offer silk trees, a few area rugs and lamps

STRATEGIES CONTINUED FROM PAGE 1 dent buyers seeking to obtain the most house for their money,” Bowers says.“The issue of a soft market has been drilled into their consciousness, and they are careful and cautious, having learned from the mistakes of others.The financing of the properties purchased in 2008 will likely be for fixed-rate loans with long-term amortization periods.” “Any reason for optimism in 2008 will likely be tied to historically low mortgage rates and the fact that many have held off selling or buying in late 2007,” says Jay Hummer, vice president and regional director for RE/MAX of New England, Natick, Mass. “Factors that could kick-start the spring buying market include rising foreclosures, with more predicted in 2008, and falling prices in the entry-level home buying marketplace.” How the 2008 season begins “will reflect the size of 2007 Christmas bonuses and job retention,” Siderow says.“These days,

• The room had an odd shape, no fireplace and a long wall opposite the seating area. With no furniture, these “flaws” really stood out.We needed to create a conversation area that invited you to sit down and that de-emphasized the room’s weaknesses. • We needed to add some color and personality!

AFTER • We rented a basic couch and matching chairs, along with a coffee table and companion

buyers have more choices. But if you price a home realistically, it will sell, especially if it’s in a highdemand market location.” If priced appropriately, Siderow says a seller should expect to get an offer within three weeks, after which the buyer should consider reducing the asking price. “Properties in an extremely competitive market should sell within 59 days after being placed on the market,” Bowers says. “Today’s market should be characterized as exceptional, and it may take as long as 89 days to sell a residential property. It’s critical that the seller and agent revisit the offering every 30 days due to the fact that adjustments in price may be dictated by changing market conditions.” To maximize selling price and shorten the number of days a home stays on the market, sellers need to research homes directly comparable to their own, Hummer says.“Recent sales and current pending sales of similar properties can be telling.” Despite the home-selling slowdown of the past two years,

end tables.The arrangement filled out the entire space and welcomed visitors into the room. • We added color and a bit of personality with accessories.We searched through the rental catalog for a large piece of artwork to place over the couch. Once we found one we liked, we selected pillows, an area rug with complementary colors and lamps with color-coordinated bases. Staging the room in this manner minimized its flaws and created a warm, inviting atmosphere. Our staging efforts worked

Siderow says that some rules of real estate have not changed. “It still comes down to location, location, location,” he says. “People will also continue to search for the best schools, best transportation options and realistic pricing,” she says.“Also important are consistent and targeted advertising and promotion and a good Internet presence.” Hummer says that more than 80 percent of homebuyers begin their search online.“So it’s critical to ensure that online representation is top-notch,” she says.“Your online presence should include professional photos and virtual tours.” Additionally, the current market “demands tip top conditions for attracting buyers,” Bowers says.“The appearance of the property is a key factor.The staging that a homeowner can effectively execute will inspire the imagination of buyers and cause them to act quickly before someone else gets their ‘perfect’ home.” Kleiman recommends thinking like a buyer and starting at your curb.“First impressions still and

like gangbusters.The house sold for $28,000 more than the asking price in just a few days.

© CTW Features Kit Davey, an interior designer based in Redwood City, Calif., helps clients redecorate their homes through the creative use of their existing furnishings. Email Kit your questions: [email protected]

always do count,” he says.“Make sure the landscaping is fresh and colorful. Clean all windows to draw a buyer’s view into and from within the house. Clear out the clutter, and improve or upgrade the lighting. If the sidewalk is cracked, broken or tilted, make the needed repairs.” Also,“assure that the home is available to show at odd hours and days, and respond promptly and fully to all buyer inquiries, whether by phone, e-mail, et cetera,” Kleiman says. Choosing the right professional to help you market and sell your home is one of your most essential strategies as a seller in 2008, Siderow says. “A seller should engage a fulltime, proven Realtor for a broker’s market opinion and then have a licensed appraiser validate the findings,” Siderow says.“The seller shouldn’t just be swayed by the highest price.Ask for a full marketing plan.Ask about the media plan to market the property, and look for accountability.” As for the agent’s piece of the pie,“your best bet is to negotiate the commission on a perform-

AD / SPONSORSHIP

face foreclosure and bankruptcy.There are several strategies to consider: First, sell the $950,000 property for $675,000 or more.Why $675,000? It’s not selling at $950,000 and you need to pay off $550,000 (the approximate loan balance on your prime residence) plus $75,000 (the approximate loan balance on the vacation home) and closing costs related to the sale (say $60,000). Selling a “$950,000” house for $675,000 or thereabouts may sound like a steep discount, but the reality is that the $950,000 valuation is an illusion. It was the value of the property at one time, but that time has past. Moreover, selling for $675,000 means you have two mortgage-free properties and monthly expenses that have been reduced by $3,600.You also will save big dollars in property taxes, utilities and insurance costs. Second, change the way the prime residence is marketed. Instead of offering it for $749,999 and then bargaining, offer it for $749,999 with a 6-percent seller contribution to the buyer.This leaves enough credit so that someone can purchase without closing costs. Third, a “land contract” is an installment sale.You do not get title until some or all payments have been made. Given your equity in the property, why not finance with a 30-year, $100,000 loan? Fourth, look into renting the Michigan vacation property and the Florida condo if your prime residence remains unsold. Rents could offset monthly costs and that would help. Unlike many borrowers, you have the advantage of equity in each of the properties’ value above mortgage debt. If you did not have equity in each then the story would be different.You would likely try to negotiate a “short sale” with each individual lender or the properties would be foreclosed. In too many cases borrowers around the country are “upside down,” meaning the value of their property is less than the balance of their debts.That’s not your situation and that is an advantage. Also, you have kept up mortgage payments and therefore preserved your credit standing.This is enormously important because once you get past your current difficulties -- and yes, you will get past them – you will have both equity (about $500,000) and good credit.This may not be as good as your situation two or three years ago, but many people would surely trade places with you if they could. © CTW Features Need real estate advice? Peter G. Miller, author of “The Common-Sense Mortgage,” would love to hear from you. Send your questions to [email protected]. Due to the volume received, not all letters may be answered.

ance-based scale,” Siderow says. Also, consider offering a broker incentive “with a bonus or a higher commission than offered on competitive homes.” Lastly, when it comes to dealing with buyers in 2008,“the sell-

er should have a predetermined number in mind that they are willing to negotiate toward and be reasonable with demands if the buyer’s demands are also reasonable,” Kleiman says.

© CTW Features