How to make a home sale in the midst of a meltdown

Realistic pricing, cosmetic improvements, and greater patience are needed for today's sellers.

from the April 28, 2008 edition

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The Murrays decided, after consulting with their real estate broker, to be realistic in pricing their home. They are not expecting to make any money on their five-year ownership, but hope to recover their mortgage and closing costs. They have decided to sell, rather than rent their home, as they are not interested in a long-distance leasing arrangement and plan to utilize a portion of their home equity to repay outstanding medical school loans. The family has set a flexible timetable for moving. They have already begun looking in a suburb of Denver, planning initially to rent in a good school district.

"We are surprised by how affordable rents are for a home larger than what we currently have," Mrs. Murray says. "This is a good time to be a renter – we will save money, upgrade our living space, and wait out the housing downturn."

Not panicked by today's market conditions, the Murrays incorporated three savvy decisions:

•Realistically pricing their house to reflect today's declining values. The Murrays educated themselves to market conditions through Zillow.com, an online real estate service; their Realtor's multiple-listing service, reviewing latest sales data; and visits to neighborhood open houses. Real-estate prices are local – know the price-per-square foot value of properties in your market area and, if necessary, engage a professional for a prelisting appraisal.

•Selectively undertaking cosmetic improvements to attract buyers. At the minimum, Realtors urge home sellers to clean carpets/drapes, paint outside trim and reduce the pileup of unused items in the garage and basement. Mrs. Murray understands, "In a more competitive market, there is a fine line between costly repairs and attracting buyers. We are focusing on maintenance items that would be addressed in a home inspection report prior to closing escrow, such as recaulking our bathtubs."

•Extending the time period to sell their home. In an appreciating housing cycle, the average time on the market was four to six weeks. In today's weak housing environment, time on the market has extended to three months or longer, depending on the number of for-sale properties, the condition of a home, and local foreclosure inventory. The Murrays' Realtor expects a sale within 90 to 120 days.

By being informed of real-estate values, both in their current market and in their new neighborhood, the Murrays are assuring that they will be well positioned for a future home purchase. They are smart sellers who will continue to revise their strategy as market conditions change.

• Kathleen Connell, PhD, is creator of lifecalculator.net.

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