Selling your house in a tumultuous market

By Jan Lindsey

Home prices have been falling in much of the country. In some areas – Florida and California come to mind – the declines have been steep.  To make matters worse, a global economic meltdown has thrust thousands and thousands of people into unemployment. Banks have been foreclosing on unpaid mortgages left and right and all those homes have been dumped on the market at fire-sale prices.

Trying to sell your home in such an environment can be trying.  If you can stay put, you might want to do it.  But if you must sell for some reason – perhaps a new, lucrative job in a distant city – here are some things you should know.

If you owe more than your house is worth, you may want to talk to your lender about doing a short sale, in which your bank agrees to take less than is owed for the house. A short sale will damage your credit and the deal will take longer to close than a straight sale, but it will get you out of the house.  If you owe less than your home’s fair market value – which may now be considerably below the amount you paid for it – you are one of the lucky ones and you are in a much stronger position.

Whether or not you intend to use a realtor to handle the sale, you need to invite at least three of them in to take a look and give you an estimate of your home’s fair market value. They will give you a price based on their knowledge of your local market and a comparison of your home to similar, nearby homes that have sold recently. They also will have information about whether prices in your area are generally rising or falling, and the average amount of time a home remains on the market.

You may not get exactly the same price and market information from each realtor, but it should be close. The realtors can also make suggestions about improvements you can undertake to make your home more appealing. Most buyers prefer to buy something that is ready to live in.  Sometimes, the changes will be simple: planting flowers near the front door or applying a coat of paint. Sometimes more is required: replacing the roof or installing new carpet.

The realtors should be able to tell you whether the work they are recommending will increase the price you will get for your home or simply make it sell faster by increasing its appeal. Then, it is up to you whether to spend your time and money on the fixes.