Putting your home on the market these days seems to be so complicated. Resale homes have to complete with builder models and the rest of the resale competition. The competition is rough!
Savvy Colorado brokers make sure their homeowners know the value of staging the home, so they hire a stager to provide professional advice to the seller. Stagers arrive at the property with a bundle of suggestions to help make the home more marketable.
Yes, that means yet another “to do list” for the homeowner. Once the staging is compete, the photographer comes in to perform their magic for the MLS.
The home goes on the market and hopefully the phone begins to ring with requests for showings.
BUYER SALE #1
If the seller is lucky the showings provide a ready, willing and able buyer, who wants to buy the home.
The offer is written and accepted, then the inspections begin.
INSPECTOR SALE #2
Now if the seller has maintained the home the SECOND SALE to the home inspector will be a piece of cake. If not, the seller may end up having to do some repairs. Either way the if the seller can get through this process with the buyer still willing, the next step might be the toughest.
APPRAISER = SALE #3
Yes, the last and final step is to make sure the seller’s home value is in line with the market. The current real estate market has been effected by foreclosures and the liquidity crisis in the financial industry. Appraisers are being required to be very conservative in their values plus the fact many areas of Colorado have been designated as “declining” by the private mortgage companies.
In my office we are seeing appraisals come back lower than the sale price. When this happens the seller has a couple choices.
- The seller (or seller’s agent) has the right to provide comparables that might better fit the property. It is up to the appraiser to determine if the new comparables are better suited to the property, if so the appraised value can be adjusted.
- The seller doesn’t have to sell the property if the value is not equal or greater than the appraisal. The seller can keep the property and lose the buyer.
- The seller can reduce the price of the home and sell it to the buyer at a reduced price.
- If the buyer feels the appraisal is out of line and doesn’t mind paying more for the home than it appraised for, they can do so. But the additional amount must be over and above the minimum down-payment required by the lender.
FOR YOUR INFORMATION
- Appraisers are generally looking at no more than 90 days back for sold comparables. Sold comps older than 90 days are likely to be irrelevant.
- The lending rules are changing every day for every loan. Our company is advising buyers to have 2 loan options, maybe with 2 different lenders. Plan A and Plan B.
- Lenders and their support system are at the mercy of the market.
- This too shall pass.
WHAT SHOULD A SELLER DO?
First it is important to know that homes ARE selling. In fact we sold more units this year than last. The issues we are facing can be resolved, but it means some sellers may not get the price they want for their home. The best way for a seller to know where they stand is to do a very realistic analyst of the homes sold in the neighborhood.
- Track homes sold and update every 30 days.
- Watch the current and seasonal trends. Realize the market has busier times of year, so this month’s numbers should be compared to the same season last year.
- Consider the absorption rate. If it is increasing that means longer days on market with more homes competing. Most likely that means values will decrease.
- If values are declining, make a decision to stay with the market or GET OUT.
GOOD NEWS
Even though the Denver real estate market seems to be taking a big hit in values, much of the metro area is not that bad off. In fact 20% of the homes that sell, do so in the first 30 days.
As a seller the goal should be to be one of those that sell in the first 30 days. The homes that are selling typically are in mint condition. The sellers have taken extra care to price and package the home so it is very attractive to a buyer, inspector and the appraiser.
When selling a home, be sure to speak to all three buyers, and the home will get sold.
About the Author
Kristal Kraft
Kristal has been helping buyers and sellers in Colorado since 1984. She enjoys sharing her knowledge of the Metro Denver Real Estate market via blogging and in person while driving around the beautiful Rocky Mountain town of Denver! For fun, Kristal enjoys shooting things with a Canon. Visit Denver Photo Blog
Kristal Kraft
3 Comments
This is a nice, general outline of what a home owner might experience during the sale of his or her home. But it’s worth mentioning, especially in today’s climate, that sellers need to resist the temptation that seems to many others in today’s market, such as setting the listing price too high, and correctly assessing the Market.
There is no doubt that appraisers are being tough these days and also that properties are sitting on the market longer. Hopefully this will encorage listing agents and sellers to pay close attention to listing $PRICE$ and ensure that price stays current with what the market is saying.
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I think this is one of those articles that needs to be distributed widely – sort of as a “must read” for anyone considering selling.
With the change in market values, days on market and seemingly ‘endless’ supply of homes – sellers need to realize that agents are not trying to ‘reduce the money that is owed them’ but that agents are being realistic about the Market.
And the sooner Sellers can realize that – by working with, instead of against the agent- the faster their home will sell.