In most parts of the country, the New Year will dawn on a housing
market that's shockingly different from just a year ago. Overzealous
speculation, too-lenient lending and aggressive overbuilding have
combined to create the type of home-inventory levels and price stagnations
that haven't been felt in the U.S. since the early to mid-1990's.
In short, the housing market, after a historic run-up
in prices, is correcting. While that's of little concession to current
and would-be sellers, it's not the end of the world either, especially
if you don't need to sell immediately. Economics elsewhere are encouraging.
Recession doesn't appear imminent. Wall Street appears healthy.
Unemployment is low, and the general economy is good.
The market, as it always does, will reach equilibrium
again, though probably not before mid-2008 or so, most economists
estimate. So reset that panic button and sit back to raise a glass
to 2007 as a transition year that will bring us one step closer
to healthier home sales. In the meantime, take note of how home-buying
and home-selling strategies change in a down market.
Here are seven selling tips and seven buying tips,
for '07, that could help save you a little grief in the short term
and a lot of money in the long term.
|7 selling tips for the down cycle
1. Price to sell. If you really must sell now, don't mess around. List your house
based on what the market dictates today, not the prices that friends,
relatives and co-workers got last winter or last spring. And consider
that some -- certainly not all -- real
estate agents may suggest you hang on to a higher sale price in
hopes they'll earn higher commissions. At the same time, be wary
of agents who will urge you to set an excessively low price -- just
so they can collect fees.
all credible offers. Holding fast for a better offer might
put you in a situation where you're merely playing catch-up with
a moving market. Don't assume there'll always be another offer coming
down the pike. You may need to come off your price 5 percent in
some areas and 10 percent or more in others.
to proffer. Buyers are requesting all kinds of enticements
to spice the pot. Club memberships, prepaid lawn maintenance, moving-expense
reimbursements, all appliances included and liberal repair credits
are just a few possible throw-ins. Don't be shocked if you hear,
"Throw in that plasma TV and we've got a deal." Consider
in advance how far you'll be willing to go, but draw the line, however,
at "first-born child."
4. Catch the wave at the source. Prepare your home for sale at the very earliest point this "spring" (actually early March or even late February), the time when seasonal buying interest is just starting to build.
your equity. Until the market stabilizes, refrain from borrowing
from home equity (or raiding your 401(k), for that matter) to pay
your bills, or for vacations and other purchases.
6. Gain in a sell-buy scenario. If you'll be buying another home at the same time you're selling your current one, the price reduction on the new one can compensate for the "loss" you're taking on the old one. If you plan a "move up" to a better neighborhood and are paying 10 percent below list after selling your old home for 10 percent below list, your net dollar savings will actually be more.
if possible. If you're happy in your home and are meeting
your expenses but want to sell due to continuing "housing bubble"
fears, sit a spell. A home is a shelter first, and investment second.
Except for a handful of markets that are still hyperinflated, odds
are that it will pay to ride out the storm. Generally, the early
stages of a downturn are the scariest because that's when amateur
investors are dumping "spec" properties cheaply.