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The changing market


The real estate "boom" is over, experts say. With change comes both risk and opportunity.

5 tips for selling a home in a buyer's market
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Educate yourself about your neighborhood's real estate market
Perch yourself on the real estate grapevine by talking to neighbors and real estate agents about sales in your neighborhood.

Do homes tend to sell for 2 percent over the listing price, or 5 percent under, or what? Was a house recently sold for a surprisingly low price? Maybe the owners sold it to their own kids, a young family without much money. Or maybe it was a "short sale" to avoid foreclosure. That's a good piece of knowledge to have when a buyer tries to use that low sale price against you in negotiations.

Interview at least two, and preferably three or four, potential listing agents, and ask them to prepare competitive market assessments. The agents will look at comparable homes that have been sold recently and at homes that are for sale now, and recommend a listing price and a marketing plan. "Have them walk through the information they used to come up with that estimate," Lyons says.

You don't necessarily want to pick the agent who recommends the highest listing price. You're making a hiring decision, which is an art and not a science.

Hire an inspector
Buyers often make the purchase offer contingent on the home passing an inspection to their satisfaction. Increasing numbers of sellers are hiring inspectors before they put their houses on the market.

An inspector is impartial. "He'll be able to tell you if the roof needs work, or small electrical things that need to be done, or plumbing things," Kerr says. Once you have identified and fixed the problems, "it makes the house that much more attractive to a would-be buyer."

An inspector might spot flaws that would be obvious to a buyer, but that you no longer notice. A good real estate agent does the same, but an inspector will look deeper.

Consider paying the buyer's discount points
Paying points is an incentive you can offer to a buyer, and Uncle Sam sweetens the deal.

Let's say the buyer wants you to drop the price by 3 percent. You're firm on the price but are willing to be flexible by working mojo with the buyer's interest rate and tax bill.

You offer to pay 3 discount points and lower the buyer's mortgage rate three-quarters of a percentage point, give or take a quarter-point. By paying the discount points instead of selling for less, you get your price, the real estate agents get bigger commissions, and the buyer makes lower monthly payments and gets to deduct the points from income taxes.

That's right. You pay the discount points, but the buyer gets the tax deduction.

"It's a win-win-win-win deal," says Bob Walters, economist for Quicken Loans.

Kerr doubts that the time is right for offering discount points. "The market hasn't gotten there yet," he says. When it becomes a pronounced buyer's market, or when mortgage rates rise a couple of percentage points, that will be prime time for sellers to pay discount points.

Whether or not you pay the buyer's discount points, you put yourself in the right frame of mind by merely considering the option. It makes you think like a buyer -- and that gives you a competitive edge.

-- Posted: March 1, 2006
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