Generally, existing-home sales have declined broadly over the past year. Some economists don’t see a significant improvement in the home-sale market happening for perhaps another year or so. However, according to a report issued by the National Association of Realtors (NAR) in November 2007, home prices in most metropolitan areas rose or were stable in the third quarter of this year. Some markets even showed modest gains compared to a year ago.
If you’ve been waiting for some time to sell your home in a less-than-perfect market, the NAR report at least gives fruit for thought. But before getting too carried away with the idea that now is the right time sell, step back and assess the overall strength of the current home-sale market in your area.
Residential real estate is an intensely localized business. Although the NAR report is encouraging, it may not give you enough information about whether you would experience a successful sale at this point in time in your local market.
A good place to start your investigation is your own neighborhood. How many houses are there like yours on the market? How long have they been on the market? Have there been price reductions? Were there any listings that didn’t receive offers during the listing period?
Even in a slow market, some listings sell quickly and for over the asking price. If there are any such listings in your area, analyze what qualities made these listings high-demand commodities. One way to succeed in a competitive market is to strive to exceed your customer’s expectations. In today’s home-sale market, this means offering a home that is well-prepared for sale — both in terms of how it looks and the price you’re asking.
HOUSE HUNTING TIP: One measure of the health of a housing market is the time it would take to sell all the inventory of homes for sale in an area at the current sales pace. If the time period is decreasing, this indicates that buyers are beginning to deplete some of the standing inventory. This gives sellers who are new on the market a better advantage.
Are pending sales on the rise or are they sliding? A pending sale is one where an offer has been accepted, but the sale has not yet closed. A surge in pending sales can indicate a pickup in home-buying activity, unless half of these sales fall apart.
Changes in local facilities can have a positive impact on the housing market. New job creation tends to go hand-in-hand with home buying. Communities within good proximity of major metropolitan areas tend to do well. Areas that aren’t well located in terms of schools, shops and transportation can provide a glut of unsold inventory that can be a drag on the entire home-sale market.
It could be some time before it is clearly a good time to sell a home in your neighborhood. However, the real estate market is not static. For instance, interest rates could drop to a level that encourages fence-sitting buyers to get into the game. If rates drop at a time when the inventory of homes for sale is low, you could find a temporary pickup in the market.
To take advantage of an opportunity like this, you need to have your home ready to go on the market on short notice. This may seem like a lot of work for an uncertain payoff.
THE CLOSING: But, if you are able to win the gamble, you won’t have to worry about the possibility of having to sell into a further declining market.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.
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