The National Association of Realtors recently published its year-end home sales statistics for 2004, including upward revisions of both the number of home sales and the median sales prices. According to NAR, home sales volume jumped 7.9 percent from last year to 6.58 million. New-home sales volume rose 8.9 percent over last year to 1.18 million houses and condominiums.
NAR reports the national median existing-home sales price rose 7.9 percent to $182,500, and median new-home sales prices rose 8.9 percent to $214,600. In 2004, housing starts were at the highest level since 1978.
Purchase Bob Bruss reports online.
What does all this mean and why is it important if you are buying or selling a home?
These extremely favorable numbers show (1) continued very strong home buyer demand and (2) homeowners who are thinking about selling in early 2005 should take advantage of the current very favorable market conditions, especially the low inventory of homes for sale in many communities.
David Lereah, NAR’s chief economist, noted 2004 was the fourth consecutive record year for existing-home sales. He predicts the 30-year fixed-rate home-loan average rate will rise slowly to 6.4 percent in 2005, possibly slowing down the home sales volume slightly.
NOW IS THE TIME TO GET READY TO SELL YOUR HOME. As these statistics show, the market for existing houses and condominiums continues to be very strong in early 2005. Now is an excellent time to consider taking advantage of favorable economic conditions to sell your home. To maximize your sale profit, here are the key costly home seller mistakes to avoid:
1 – DON’T HAVE A STRONG REASON FOR SELLING. As experienced real estate sales agents know, the most difficult home sellers are those who are not highly motivated to sell. Their attitude is, “I’ll sell my home if I can get my price and terms.”
These homes are often overpriced, wasting the time of the sellers and local realty agents. After a few weeks, local realty agents and their buyers quickly learn about these non-motivated sellers and avoid showing those residences.
But motivated sellers usually have strong sales reasons, such as moving to a retirement home, job relocation, birth or death in the family, purchase of another house or condo, divorce, unemployment, pending foreclosure, illness, or other strong reason to sell.
To avoid wasting time, savvy home buyers and their realty agents often ask, “Why is the seller selling?” If there is no strong motivation signal, such as a realistic asking price, buyers and agents won’t even look at the home.
2 – SPEND CONSIDERABLE TIME AND MONEY RENOVATING YOUR HOME BEFORE SELLING. Another costly mistake of many home sellers is to make major home renovations shortly before selling. Such expenditures are usually a waste of money, rarely returning even $1 in increased market value for each $1 spent on improvements.
To illustrate, if your kitchen and bathrooms are outdated, spending thousands of dollars to bring them up to today’s “model home” standards often results in little or no increased market value. Worse, the inconvenience of remodeling your kitchen and bathrooms is an experience most homeowners dread.
The only time it pays to renovate kitchens and bathroomsoccurs if you plan to stay in your home at least five years to enjoy the improvements.
A far more profitable alternative is to thoroughly paint and fix-up your home to prepare it for sale. Paint is, by far, the most profitable improvement, often adding thousands of dollars to market value for a small expenditure of a few hundred dollars. Additional profitable but inexpensive home improvements include new carpets and flooring, new light fixtures, complete cleaning and repairing, and minor landscaping improvements.
3 – FAIL TO HAVE YOUR HOME PROFESSIONALLY INSPECTED BEFORE PUTTING IT ON THE MARKET. The third costly mistake that most home sellers make is failing to have their residences professionally inspected before putting it on the market for sale.
The first inspection should be by a professional home inspector. The cost of about $350 is money well spent. Be sure to accompany your inspector to discuss any defects discovered. Home sellers often decide not to repair defects but disclose them to buyers and give a repair credit, if necessary.
Personally, I prefer home inspectors who belong to the American Society of Home Inspectors (ASHI), primarily because of their tough membership requirements such as experience, examinations, and continuing education. Local ASHI members can be found at www.ashi.org or phone 1-800-743-2744.
Your professional home inspector will also recommend additional or required pre-sale inspections, such as for termites, radon, building code compliance and energy efficiency. By having these pre-sale inspections, sellers can decide whether (1) to make recommended repairs, (2) give the buyer a repair credit (such as for part of the cost of a new roof), or (3) disclose the defect in writing, but let the buyer fix it.
4 – TRY TO SELL YOUR HOME ALONE WITHOUT FIRST INTERVIEWING AT LEAST THREE SUCCESSFUL LOCAL REAL ESTATE AGENTS. The fourth major mistake many home sellers make is advertising their home “for sale by owner” (FSBO), called a “fizzbo,” before interviewing at least three successful realty agents who sell homes in the vicinity.
Each agent’s listing presentation should include explaining all the locally required home sale contracts and disclosures, as well as a comparative market analysis (CMA) form. The valuable CMA shows recent sales prices of comparable nearby homes, asking prices of similar neighborhood homes listed for sale (your competition), and asking prices of recently expired (usually overpriced) listings.
The agents you interview won’t mind spending an hour or two showing you their listing presentation, such as explaining access to the local multiple listing service (MLS) and the Internet, even if you tell them you are considering selling your home alone to save the sales commission.
The reason is most FSBO sellers fail and, within 30 to 60 days, decide to list with a professional agent. Savvy agents who were already interviewed know they are likely to get the listing.
Approximately 80 percent of homes are sold with the help of a realty agent. Of the other 20 percent, many are sales to relatives and friends who don’t require a professional agent’s marketing services.
5 – OVERPRICE OR UNDERPRICE YOUR HOME. The fifth costly mistake many home sellers make is (a) pricing their home too high (most FSBOs do this), or (b) underpricing their home, leaving thousands of profit dollars on the table.
However, as a smart home seller who carefully prepared to maximize your sale profit, you won’t make that error. By interviewing at least three successful local realty agents, and comparing their CMAs and each agent’s expert opinion of your home’s market value, you will correctly set the asking price.
Some home sellers think a better alternative to determine the market value of their home is to obtain a professional appraisal report, usually costing at least $300.
While this approach can be valuable, especially if the home is unique without nearby recent comparable home sales, most appraisers work on past recorded sales price information rather than current up-to-date sales price trends. The result can be an inaccurate too conservative or too optimistic home market value appraisal.
SUMMARY: A successful home sale involves doing the right things right, such as preparing your home for sale by cleaning, painting, and repairing, and avoiding the five most costly mistakes explained above. More details are in my new special report, “How to Avoid the 10 Worst Home Seller Mistakes,” available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet PDF download at www.bobbruss.com.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
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