Home for sale by any means
By Carolyn Bigda, Money Magazine writer-reporter
May 1st, 2008
Are you really serious about selling your home in this market? Then be prepared to try anything - and everything.
(Money Magazine) -- For nearly two years, Adriel and Lance Bush tried unsuccessfully to sell their 1925 home in West Palm Beach, Fla. First the couple went the traditional route: They hired a realtor (three of them, in fact) who gave them standard advice, like getting rid of all the clutter caused by their twin toddler boys. They also renovated their master bath and added granite counters to the kitchen. Still no takers, which wasn't surprising: Home sales in the West Palm Beach area have fallen by double digits.
Then Lance, 43, who had already accepted a new job in Tucson, relocated his family out West. That's when the Bushes got desperate. Between the mortgage, property taxes and insurance (including hurricane coverage) on their Florida home - along with their Arizona housing expenses - the couple was shelling out more than $7,000 a month.
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Though they had already slashed the price on their 3,500-square-foot Mediterranean-style home several times - from $1.3 million to $795,000, which is about what they originally paid - they were willing to go even lower.
They also got creative. For instance, they decided to consider a lease-to-own deal, which makes it easier for cash-strapped buyers to take the plunge.
And they even went so far as to hire a feng shui expert, who for a fee of $250, added minor touches around the front entrance of their home to give it more "positive" energy. "I figured it wouldn't hurt anything, so why not try it?" says Adriel, 38, a professional organizer. A few weeks later, they found a buyer.
Of course, the Bushes aren't saying it was feng shui that triggered the eventual sale. But in today's market, where there are more homes for sale than corn in Kansas, one thing's becoming increasingly clear: You've got to be open to anything.
At last count, there were 4 million pre-owned houses for sale. That's up 14% from the start of last year. In cities and counties hardest hit by the real estate downturn, the numbers are even more dizzying. In Orlando, for example, there are now 26,000 homes up for sale. In 2004, "we were lucky if we had 3,000," says Lydia Pisano, former president of the city's local board of realtors.
In such a hypercompetitive market, you have to go way beyond what everyone else is doing - especially if you want to move your home quickly. Old standbys like slapping a fresh coat of paint on your clapboards or throwing in a complimentary plasma TV just won't cut it.
Instead, you have to rely on guerilla marketing tactics to get your home noticed. Maybe you start pitching your home on popular message boards. Certainly you'll need to seek out buyers rather than wait for them to find you. And you can no longer limit yourself to conventional sales agreements.
Here's what you have to do to move your home quickly in today's market.
Find your hook
When Kelly Andrews, 28 and just married, decided to sell her one-bedroom Atlanta condo in February, hers was one of about a dozen on sale in a 936-unit complex. Being in public relations, though, Andrews knew to play up the condo's one unique feature: its former owners.
So she called up a reporter for the Atlanta Journal-Constitution and told a tale of how she and the two prior owners of unit No. 163 were single women who ended up finding their future husbands there. After the paper dubbed Andrews' unit "Cupid's Condo," she was flooded with calls from single women (and agents representing them).
One of those women offered to lease the unit for the precise amount of Andrews' mortgage payment. She thought this might work out even better than an outright sale, since leasing would allow her to build equity while waiting for the market to improve (Andrews hopes she can sell at a higher price).
The lesson: Highlight what makes your house special. Generic descriptions about "spacious bedrooms" or "modern appliances" are too common. "If I see one more listing that says 'sparkling pool,' I'm going to throw up," says Veronica Mullenix, a broker associate at Coldwell Banker United, Realtors in Katy, Texas.
Instead, "paint a lifestyle, a story," Mullenix says. And be as specific as you possibly can. Don't simply mention that your home is near local amenities. Let buyers know they can live within "a five-iron shot of the 15th tee."
Be a hunter, not a gatherer
In today's market, you can't wait for potential buyers to find you - you have to go to where they are. This means marketing your real estate in the virtual world.
The fact is, 84% of buyers search for homes online, more than double the percentage that did so in 2001. And looking for them online is even more important if you're in an area that appeals to out-of-town buyers. Patty Kelley, president of the Greater Las Vegas Association of Realtors, says real estate in Sin City is being bought sight unseen through sites like helloWorld.com, which allows agents to do business over a live broadcast.
In addition to traditional spots like Realtor.com, check out alternative sites where buyers are flocking, like Craigslist.org, Realestate.yahoo.com, Zillow.com, Trulia.com and Base.google.com, Google's classified section.
Because many home seekers are getting to these sites through a search engine, it's critical to offer a comprehensive description of your home, so searches will find you through any number of listed features.
And don't just look for buyers - look for people who know potential prospects. John DuPriest, a real estate broker in Penryn, Calif., suggests a simple way to generate word of mouth offline: In addition to basic marketing fliers, make up business cards with a picture of your home, contact info and the price. Cards are easier to hand out - and be passed around - than fliers.
DuPriest noted that he recently passed out four or five cards to people who looked at one of the homes he was showing. One of them gave it to a member of his church, who then passed it along to another agent, who then showed the home to his clients. It wasn't exactly viral marketing, but the property eventually sold for $495,000 - just $4,000 shy of the home's list price.
Don't just sell - swap
If you're having trouble drumming up buyers through a traditional listing, consider swapping your home. Hey, it worked with lunches in the school cafeteria, why not in the real estate market?
The idea is simple. Instead of struggling to rope in reluctant buyers, look for like-minded sellers who'll need a new place to move into once they close their own deals. In the past year, free websites such as DomuSwap.com and GoSwap.org, along with paid services like OnlineHouseTrading.com ($19.95 to list), have cropped up to bring home swappers together. Keep in mind these services are still new. A recent search on DomuSwap showed a listing of 1,021 Florida homes but only 43 in New York.
Once you post details of your property - and what you're looking for in a new home - these sites will ping you back with a list of houses that come close to your wish list whose owners are interested in a property like yours. If you find something you like, just click on it and send the owner a message. Once a match is made, the transaction can move quickly. Within four days of posting their home on DomuSwap, Sherry Crosslin, 53, and James Ray, 63, of Hampton, Va. were contacted by a prospective buyer. And nine weeks later, the deal closed.
Keep in mind, you don't have to trade for equivalent value. While it's called a swap, it's really two separate transactions, where both trading partners take out mortgages based on the price they agree to pay.
So if you're an empty-nester who wants to downsize - and pocket some of the equity you've built in your home - you might choose to swap with a younger couple with a growing family.
Lock in a future buyer now
With banks tightening lending standards, your problem might not be finding an interested buyer; it could be attracting a buyer with the means to purchase your home. One option is to give the buyer time to improve his credit or save for a bigger down payment through a lease-to-own contract.
Here's how it works: You agree to rent the property to the interested buyer. At the end of the lease, which normally lasts 18 months or less, the buyer has an option to purchase at an agreed-upon price. With the help of an attorney, you can draft these contracts however you see fit. Some homeowners, for example, charge a nonrefundable "option fee," as much as 2% of the home's value. This fee, which is typically applied to the down payment if the renter buys, also serves as a penalty if he decides against purchasing.
For the Bushes of West Palm Beach, the lease-to-own option they offered their prospective buyers helped seal their deal. That couple, who showed up shortly after the Bushes experimented with feng shui, needed time to clean up their credit report. Today their rent covers the Bushes' mortgage, insurance and property taxes - and they're expected to buy in July.
"It's a huge relief," says Adriel. "We can finally move on." She doesn't know if the lease-to-own offer turned out to be more crucial than feng shui. All she knows is that she and Lance were able to get out of the home and go on with their lives in one of the most difficult markets in recent history. Now that's positive energy.
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