Seven Money-Stretching Tips For Sellers in a Cooling Market

After a prolonged housing boom, homeowners are discovering that getting a good price for their residence is harder. Tactics to help you make the most out of the sale of your property.
By Lauren Baier Kim: The Wall Street Journal Online
A drop-off in buyer demand and rising home inventories has made putting a house on the market trickier for homeowners whose properties appreciated during the boom and who hope to retain their gains.

House hunters can now afford to be choosy. "Not everyone can set a price and figure buyers will come," says Rob Gross, a senior vice president with Prudential Douglas Elliman in Manhattan. "It's a transitional market."

Sellers are lowering their price expectations. Take one South Kohala, Hawaii, homeowner, whom real-estate agent Ric Rocker of Kamuela, Hawaii, says he convinced to chop off $10 million from his asking price. The owner, who is asking for $35 million, lowered his price in part to speed the sale, Mr. Rocker says. "He wants to send the message that he wants a fair deal," Mr. Rocker says. He adds, "We're not in a market that buyers will pay what sellers want."

Attracting a shrinking pool of buyers without losing too much financial ground can be tough. To make the most of your real-estate dollars, follow these tips:

1. Size up the playing field. Study your local market and investigate other homes for sale, local asking prices and what buyers are paying. "Be savvy to market trends and know what things are worth," Mr. Gross says. Use Web sites like Realtor.com, or look up listings in your local paper or real-estate publication. Ask your realtor to show you area selling prices, or find them with RealEstateJournal.com's Comparable Sales Tool, or Zillow.com.

Kayser Dixon, a real-estate agent with Coldwell Banker Hunt Kennedy in New York, suggests visiting area open houses to evaluate your competition. "If you look at a [price] on a piece of paper, it doesn't do anything for you," he says.

2. Price competitively. In recent years, sellers were able to set a price and wait for the bidding wars. No more. "If a home is overpriced, a buyer will dismiss it and move on to the next one," Mr. Dixon says. Because of the growing number of properties on the market, buyers have a greater number of homes from which to choose, he explains.

Mr. Gross suggests pricing a residence just below what the market will bear. For instance, for a $1 million home in Manhattan, he would ask for $995,000 to "get traffic," he says. "You want to be perceived as a real seller," he explains.

Homeowners mistakenly think they can get housing-boom prices, Phyllis MacBeth of Main Street Realtors in Long Beach, Calif., says. "I have to work hard to convince people - without offending them - that their house isn't better than the one that just sold for $1 million," she says. Again, check with your real-estate agent or go online to research local selling prices, and set your asking price accordingly.

3. Do legwork. Instead of letting his agent do everything, home seller William Casper, who recently put his Pikeville, Tenn., house up for sale, is using the Internet and some networking to locate a buyer. He has been emailing a property brochure to real-estate investment groups, he says, and encouraging friends and relatives to talk up his house to anyone interested in purchasing a vacation residence in the Smoky Mountains. According to the deal he worked out with his agent, he will pay a 3% commission (instead of a more typical 6%) if he finds a buyer on his own, Mr. Casper says. He used a similar deal four and a half years ago when he sold his former home in Port Washington, Wis., he says, paying his agent 3% on a $176,000 sale.

4. Don't snooze. Time is money. The longer your house takes to sell, the more money you lose, Ms. MacBeth says. "I was talking to an agent whose client turned down an offer when her house first came on the market," she says. "That amount is what the homeowner has lowered her price to now, two months later, and the house isn't selling." Don't be too quick to turn down an offer, she suggests, because making a deal now, instead of later, can save you money in the end, especially if the housing market maintains its downward trend.

5. Negotiate. Offer concessions to potential buyers, such as making minor fixes, Ms. MacBeth says. These gestures will repay you and may earn you more money in the long run, she says. "People have to weigh the cost of doing minor repairs," she says. "All those little things, especially now that there is more inventory, are things that make a house more appealing. People forget that." Small expenditures, by possibly speeding a sale, can go a long way in preserving the substantial home-price gains that property owners experienced during the housing boom, she says. For example, in her area, she explains, some homes have appreciated a few hundred thousand dollars in recent years.

Strike a deal with your agent. Even if he can't find a buyer himself, Mr. Casper won't pay a 6% commission, he says. He has negotiated to pay 5% if his agent brings in a buyer, he says. "Homeowners don't want to spend the 6% - it is a lot of equity," he says. You might also want to consider using a discount broker to sell your home - these providers typically offer fewer services than traditional real-estate agents do, but in exchange, charge a reduced commission.

6. Play up assets. Now that there are more properties on the market, sellers must impress buyers, Manhattan homeowner Jim Savio of New York says. He says he hopes to sell his residence for $1.2 million. In anticipation of putting his property on the market, the fiction writer and professor has repainted the interior and has pared down the artwork on the walls. "The strategy is to allow a new owner to imagine himself in the place," he says.

Ms. MacBeth encourages removing clutter. "Clean out the closets and the garage," she says. "Send it to storage, donate it to charity or have a garage sale. You want to enhance your home's appearance and make it look bigger."

To attract buyers, determine what the popular "look" for houses is in your area is and mimic it, Mr. Rocker suggests. "I go to the most expensive model homes because they use interior decorators," he says. "I ask for the actual code of the paint they used and steal their colors. I put them in the exact same rooms they did."

Pay for landscaping, Ms. MacBeth says, but not too much. "Use the cheapest thing you can find," she recommends. For her own home, she opted for flowers at $15 a flat instead of ones at $30 a flat, she says. "Cost is an issue," she says.

7. Take the money and run. If local sales are sliding, you might want to get out while you can, Mr. Rocker says. "People don't know when it's time to take a loss and move on," he says. "They will keep their prices up for two years, and at the end of the day, lose 35%." If a cooling market translates into a smaller gain than you expected upon the sale of your home, consider relocating to an area with cheaper housing prices to make your money go further. "In California, people are driving an hour, two hours, to work so they can have more house for their dollar," Ms. MacBeth says.