Can’t Sell Your Home In Today’s Market? Here Are Some Suggestions.

by Millionaire Mommy Next Door on February 26, 2009

in Mailbag,Real Estate,Resources

A reader asks, “Our family needs to move to another state soon because of my husband’s job transfer. But homes for sale in our area are sitting on the market for a long time. We have enough in savings to cover a couple months of mortgage payments after our move, but after that, our unsold home will put us in a financial pickle. Do you have any suggestions?”

My Suggestions:

Drop the asking price. If this means you’ll be upside down with your mortgage, ask your mortgage company to consider a short sale.

Hire a home staging service. These expert home image consultants can dress up your home to appeal to buyers better.

Exchange free housing for private property caretaker services. This way, you’ll have someone around to keep an eye on your home, maintain the lawn, and keep it tidy for Realtor showings.  Advertise your exchange in the Caretaker Gazette or in your local craigslist.org classifieds.

Alternatively, rather than selling, consider turning your furnished home into:

  • business travelers / short-term corporate housing* Hotels get expensive and are often less comfortable for long-term business travelers. Contact local corporate housing departments to discuss their needs.
  • family vacation rental* This could be a viable option for you, depending upon your home’s location. Charge by the night or by the week. Peruse Vacation Rentals By Owner to research this potential market. You’ll probably need to hire a management and/or housekeeping service, so charge accordingly.
  • special needs housing* For example, lease to members of a substance abuse recovery program on a per-bed “all bills paid” basis. Give one tenant a discount for acting as “house manager”.
  • university student housing* If your home is located near a university, lease it on a per bedroom, per semester basis. Once again, provide one tenant a discount for acting as manager to maintain your home.

*Before selecting one of these options, make sure you check with your local zoning department and homeowner’s association first.

When calculating cash flow, don’t forget to consider the following expenses: mortgage payments, insurance, taxes, maintenance, repairs, management fees, utilities, a vacancy allowance, and lost opportunity costs.

Readers, please share your suggestions in the comments below.

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{ 9 comments… read them below or add one }

Erica Douglass February 27, 2009 at 7:05 am

Many sellers make the mistake of listing at the price an agent offers them, which usually means the house sits on the market for months.

Whatever your agent recommends you list at, list 10% below it. Best case, you will have a bidding war. Worst case, the house should move quickly. If it doesn’t move within 30 days, drop the price by 10% again. You must be aggressive in this market.

If your house is more than the median price of the area, consider listing even lower. If that means you’ll be underwater, ask the lender for a cash for keys situation. They should give you $1K-$5K to be out within 30 days for a fast foreclosure. With a short sale, you may wait months for the bank to come back with an approval for any offer, during which time you will have to continue paying the mortgage. Short sales are really only viable if you plan to continue living in the house.

Yep, a foreclosure will wreck your credit for a few years. A short sale will, too, though for somewhat less time. But a cash for keys situation leaves you with money in savings, which is more critical right now than perfect credit, IMHO. (I know others will disagree, but we’re talking about getting you out of the house as quickly as possible without you losing all your savings.)

A foreclosure means you should be able to buy another house in 3-4 years. Use that time to rent cheaply and save, save, save. The more down payment you can put on your next house, the better.

-Erica

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Cathy February 27, 2009 at 7:25 am

Jen, I love your suggestions. I think what you offer is the idea there is a solution to every situation. The best thing people can do is switch from fear (or could of, would of, should of), to creative problem solving.

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Jane R February 27, 2009 at 9:17 am

Another option (I think) could be for the couple to have someone stay with the children if there is any, and go ahead to find a home while the husband gets settled. If they can not afford a house before the other one is sold, then the husband goes ahead and finds temporary housing and the wife stays at home until the house is sold…

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Kathryn March 2, 2009 at 3:49 am

Hats off to you, Jen. As usual you came up with some outside-the-box innovative thinking. I would have never thought of “caretaker services”, “corporate housing”, or some of the other things you mentioned in the article.

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George March 9, 2009 at 9:07 am

Does anyone know which are the best months to put a house on the market for sale?

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patricia March 9, 2009 at 9:26 am

My Husband has been working on contract in the USA for just over three years (We have loved it here) we know that he is facing a layoff it could come any time from now up untill May,
We will most probably have to return to Canada as his visa allows him to be here and do the job that he was contracted to do, mine just allows me to be here with him.
We put a healthy deposit into our home so that we could keep mortgage payements reasonable as we have only been in this house for just over two years ,we are also in a bind as to our asking price cannot afford to loose the money like so many we have taken a hit with our tiny nest egg that we were hoping to grow.
It is difficult to start over at any age my Husband will be 62 and I will be 59 this year, and I know that there is always someone worse off, I am not sure if this was a forum for venting but thank you
I think my question might be does anyone know if there are any laws that would prevent me from renting our home out if we are non residents,untill such a time that the market recovers and we can sell?

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Tony Barker March 28, 2009 at 4:05 pm

Jen,

Great BLOG! God is with you.

For home pricing:
The best solution is a 7 step pricing system. 1st determine 3 price ranges in the neighborhood on price per square foot. 1 Notice why those homes are in the ranges. Usually based on bedrooms, stories, pool, year built, total sq ft. 2 Next look at what did not sell, expired homes. 4 Determine the range (small, mid and large) price per foot. 5 Taking the sq ft of your home times the lower $/ft and highest in THAT range you have a value range. 6 Look at the competition in that market and determine who is your TRUE competitors (ACTIVE). 7. pick your price entry point on your needs and the average number of home sales for you home type and timing need.
It sounds hard but it gets easier with practice.

Tony Barker
Broker Houston TEXAS

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Kristin March 31, 2009 at 9:31 pm

Just wondering… what about HOW you sell your home. What I mean is “For Sale by Owner” or hiring an agent? We met with an agent last fall who wants $7,500 as her fee (6% of $124k). Although we will still be making a profit, that fee turns my husband totally off to hiring the agent… ANY real estate agent. I guess I always assumed that houses sold faster with an agent in charge. Maybe I’m wrong. We’re not in any hurry to move, but I will be graduating and can’t find work around our small town.

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Vicky April 17, 2009 at 1:42 pm

Kristin,
You don’t need to throw 6% at a real estate agent. The 6% is split between listing and buyer’s agent. Real estate agents will not tell you, but all commissions are negotiable. Price fixing is a violation of federal law – a real estate agent knows that very well but will completely ignore that. However, a house listed with an agent does sell faster. Not because an agent knows how to sell/market a house. No, only because an agent has the means to put it on the MLS (multiple listing service). It takes 5 minutes to list a house and then slap a lockbox on it. That is what you get for the 3% of the listing agent side ($3,750).

Before I became a real estate broker to deal with my own real estate, I paid a discount agency $500 to list it on the MLS and slap a lockbox on it. I still offered 3% to the buyer’s agent because otherwise no agent will show it to their client. Since commissions are paid out of the seller’s proceeds, the vast majority of buyers will employ a buyer’s agent. By not going on the MLS, you effectively cut out 80%+ of your potential buyers. All the other marketing stuff that agents offer such as open houses, color ads in nice magazines etc. are not very effective and you can do without it or do it yourself if you are compelled to do so. Ask the listing agent to give you a list of houses in the area with address and listing prices, sold prices, CDOM and ADOM in case you are in a non-disclosure state and set the price yourself. You want to price right, not too low but also not too high to avoid getting a stale listing that is shunned. Since the market is not that superhot no more, the exposure to the MLS is very desirable.

An other option instead of a flat listing fee is the ‘exclusive agency’ listing. Real estate agents truly dislike the ‘exclusive agency’ listing which allows you to market and sell the house while the agent tries to sell it too. If you find the buyer, the agent gets absolutely nothing compared to the traditional listing of ‘exclusive right to sell’ where he gets paid regardless when the house is sold.

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