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How to Sell a House, When You Have to Sell It Now

Eight tips for homeowners who can't wait until the market turns around

So you say you're selling your house?

Hey, it could be worse. You could be selling a Hummer or an Escalade.

If you've been waiting for a good offer to come through, this probably isn't exactly big news to you: This is the worst home-selling market since Herbert Hoover was president. In much of the country, prices are already way down and probably heading even further south. Houses are sitting on the market for months longer than sellers expected.

And don't think this is just a momentary lull, a short slowdown before the market recovers and then takes off again. What you see today is the market you have, for now and, quite possibly, for a long time to come. This is a recession baby!!

September, October and November will have the highest foreclosure numbers in history! What do you think this will do to neighborhood values?

"At best, I think we're a year away from the bottom," says James Anderson, who has sold Ventura-area real estate for 31 years and has never seen a worse selling climate. He operates mainly in the newer suburbs on the far eastern edge of the metropolitan area. It was a super-hot area in 2005, when developers couldn't build houses fast enough. "Now," he says, "you can't give them away."

But even the perennial playgrounds of the upper crust aren't immune. According to Zillow, a real-estate Web site, prices in Palm Beach, Fla., are down about 10% from last year. Prices are down 13% in Santa Barbara, Calif. There is not one community in the United States that hasn’t been effected by the housing bubble and credit crisis!! Not one.

So what's a home seller to do? What does it take to sell a house today?

If your job or life circumstances leave you no alternative other than to sell in this market, you must be prepared to go well beyond the usual feints and gimmicks if you want to get potential buyers in the front door and, ultimately, to the closing table. By all means, feng shui the living room, bury a statue of St. Joseph in the front yard and bake brownies before the open house.

But if you really want to sell the place, you need to think and act like a salesperson. Most important, you must separate your emotional attachment to your family home from your financial interest in your family's largest asset. Selling a house is business, and you must approach the sale in a businesslike manner.

Here are eight points to keep in mind:

1. DON'T WAIT AROUND.

Even in the better housing areas, it's taking a long time to sell houses; and in the hardest-hit metro areas, inventories of unsold homes are stretching well past 180 days.

So, don't try to sit out the market. That's what hundreds of other timid sellers are doing, each of them hoping -- somehow, some way -- that hanging on the sidelines will improve prices and, ultimately improve his or her chances for selling success. It won't. Not if you expect to sell anytime soon. If you want your place sold, the best way to make sure that happens is to put it up for sale. A struggling neighbor of mine recently told me that they will let their listing expire and then keep it off the market for a month so when they re-list it will be a new listing. THIS DOESN’T WORK. Any realtor with more than 2 days experience knows to check the history of the listings. Believe it or not you don’t have an ounce more of negotiating power regardless if the listing is 1 week old or 9 months old.

My advice…..don’t lose 30 days of exposure!

Obviously, you should take advantage of your local market cycles -- early spring is usually better for selling in much of the country -- but otherwise don't try timing the market. You won't have any better luck than a stock trader who's always holding out for the market highs or lows.

2. FIX IT UP AND CLEAN IT UP.

Buyers are taking your house out on a date. It has to make a good impression.

Don't spend a lot of money -- absolutely no big-ticket renovations -- but do see that everything is in good repair. And give the place a new paint job and a general sprucing up. (Caution: This won't necessarily give you any pricing advantage over less fixed-up places, but it will attract buyers and keep them interested.)

As you get closer to the date that the house actually goes up for sale, start moving out by decluttering the place. No buyer wants to see a house filled to the rafters with other people's things. They want to imagine their stuff filling the place. "Stage" the place with only enough furniture to make it look livable; put the rest in storage.

3. PRICE IT CHEAPLY.

Don't fight the market by trying to price your house at bubble-era levels or by factoring in all those improvements you made. It won't fly.

Set a realistic, salable price on day one. Don't let the house hang around on the market as you gradually lower the price. Forget what you think the house should be worth or what it was worth three years ago. That's not what it's worth today. Pick a realtor that is experienced and realistic…….don’t choose that agent that says they can get you more money. No matter what the agent says there is nothing he or she can do to make your house sell at a higher price than the “market price”. If they promise you a higher sales price, run don’t walk, to an agent that tells you the truth! By the way…..sending out 1000 “just listed” cards won’t command a higher offer price in any market.

Smart buyers will be looking for bargains. So you must set your price below comparable nearby properties. Look at the asking prices of neighboring houses, and set your price to beat them. If prices in your area are generally down 20% from where they were at the bubble peak in 2005, then price your house 25% to 30% below its peak bubble value. Your area down 40%? Be prepared to take just half of what the house was worth three years ago. Yes, it's painful. But if you want to sell, you don't have much choice. Keep in mind that the home just up the street went to the bank, therefore they are selling it for a discount – you are competing against them too!

And remember: In much of the country, renting is still a better deal right now than buying. As you try to settle on a price, look at rents on comparable properties. Buyers are not likely to be counting on huge price appreciation, as they did during the bubble, so they may be less willing to take on the higher monthly costs of home buying and owning. You must set a price that makes someone's prospective mortgage and home-owning costs look like a better deal than a month's rent.

4. HIRE A TOP REAL-ESTATE AGENT.

Get the best, most aggressive selling (listing) agent you can find.

When everything was selling before it even hit the market, of course, you didn't need the best. You just needed the cheapest. But not these days.

Fortunately, in this market, real-estate brokers are even more anxious than you. They're eager to get whatever work they can, so don't rely on your cousin with the real-estate license or your best friend's wife. Make sure your agent isn’t a full time fire fighter or teacher that “moonlights” as a realtor.

Ask, instead, for the local real-estate office's top salesperson. All offices have one or two sellers who greatly outperform their colleagues. {80/20 principal revisited} That's who you want. Look for agents that specialize in your neighborhood – it’s easier for them to show you home on moments notice.

Interview various agents and insist that they present you with a well-conceived marketing plan that goes way beyond the usual Internet page, one or two open houses and a yard sign. (Think about using a professional photographer for multiple shots on the primary Web listing, your house as the featured "home of the week" in the local newspaper, a decorating segment on a morning chat show, a stop on the local garden club's spring tour.) Demand that you realtor has you positioned in The MLS Store with a home listing video.

Sellers of higher-end properties should be able to negotiate a lower commission percentage, but this is no time to quibble over a couple of percentage points. Also, offer the agent a big bonus if he or she sells the house in 30 days or at your asking price. Offer other agents bonuses if they bring in the ultimate buyer. Paying more than a 3% co-broke commission will usually get the attention of cooperating agents! {consider this before lowing your price}

5. PROMOTE. PROMOTE. PROMOTE.

Don't rely on the agent to do all the work. The agent should pay the usual marketing costs, but you should be prepared to pony up for extras, especially if you insist on more expensive or untraditional promotions.

You want the house listed regularly in local newspaper classifieds and, if it's a special, high-end property in a desirable location, in national publications, too.

Make sure your house is on the leading real-estate Web sites; Trulia, Zillow, Cyberhomes, Eppraisal, MLS-Store.com and Realtor.com are some of the top ones. Be sure to have lots of pictures! Forget virtual tours, this is for amateurs. Be sure to use professional video’s {see www.hometownproductions.tv }

Beyond that, get really creative. Advertise in corporate newsletters and intranet listings. Check in with local relocation firms that help transferring corporate executives find new homes. List the house on eBay. Put it on Craigslist. Put it in your church bulletin.

Trophy house in an upscale neighborhood? Hire a string quartet for the open house. Something a bit more midmarket in a family-friendly subdivision? Put a clown on the corner handing out brochures. If your agent uses info flyers then make sure it stays full! There is nothing more frustrating for a qualified buyer than to drive neighborhoods and not gain access to important information {they will drive right by your house if there is no flyer --- avoid the 1-800 scheme. Buyers don’t like calling 800 numbers to get info on the house just to have a realtor call them and bug them}

6. PLAY THE BANKER.

As bad as things are, there's one big factor in your favor: the tight credit market. If you have no mortgage you have to pay off, your strongest selling point might be your ability to finance all or a substantial part of a buyer's purchase.

You're a lot more flexible than a bank that has the Federal Reserve looking over its shoulders, so you might even be able to charge a higher interest rate than a commercial lender as well as command a higher sale price. (You'll need a real-estate lawyer to make sure everything is done to protect you and an accountant to set up a payment system. Peer-to-peer lenders such as virginmoneyus.com have systems to handle mortgage payments.) Worst case? Your borrower defaults and you take the property back. And sell it again. Learn about land contracts lease option programs.

7. TAKE THE OFFER.

If any qualified buyer comes in with a reasonable offer, be prepared to accept it.

You don't want to lose the deal by digging in your heels over a few dollars. Every real-estate office keeps records that show the percentage difference between asking and selling prices, so it's easy to figure what's an appropriate offer and what's not.

Negotiate, of course, but recognize that the buyer has a lot more clout than you do. Your house, as wonderful as you think it is, is worth only as much as someone is willing to pay for it.

And that, unfortunately, will probably be a lot less than you think. If your terms are rigid and non flexible the buyer WILL go somewhere else. Be prepared to make concessions.

8. LEASE IT

Have a second sign in your yard promoting a lease or lease/option. List your number, not your realtors, on this sign. Leasing allows you the ability to “move on”. Who wants to have their home on the market, making sure it’s in “show condition” every day for the next 12 months??? Be prepared to take a loss. Renters are not motivated to make your full mortgage payment, they are interested in living in a home that they may sometime be able to buy. Remember that you may be able to depreciate the investment and capture some tax benefits with an investment property that may offset some or all of your negative cash flow. Put someone in for 1 or 2 years and let the market rebound. Key point – your realtor will NOT want you to lease the property since they won’t earn a commission. That is why it’s important to market the lease on your own. A simple sign in the yard and an ad in Craigslist will go a long way. If you live in Northern Colorado then you will want to have a presence in the MLS Store.

Face the facts – we are in a recession. Are you making changes to deal with today’s environment or are you doing the exact same thing everyone else is doing and expecting a better result??? I have been told by 8 realtors in the last week that our local economy is great and the real estate market is picking up --- keep in mind people they are sales people!!! Have you ever meet a realtor that tells you it’s not a good time to buy or sell? NEVER. Affirmations won’t help either. Saying to yourself that “there are no weeds in my garden”, “there are no weeds in my garden”, “there are no weeds in my garden”……..guess what???? There ARE weeds in your garden and if you don’t do something about it they will take your garden!!!

My personal experience – I am in the process of leasing a home. Why not buy??? Because the real estate market is continuing to drop, duh! {Why try to catch a falling knife?} I would hate to buy a home for $500k and in a year it’s worth $450k. The truth is that I couldn’t qualify even if I wanted to buy. Lending guidelines have tightened so much that over 70% of homeowners today can’t qualify for purchasing a new home! This is what I have found --- I have driven neighborhoods relentlessly for the last 2 months calling on signs and knocking on doors. Over 24 homes that I called on were bank owned or in the process of becoming bank owned {foreclosure}. Many of the homeowners conveyed to me that they wished I meet them 30 days earlier as they could have avoided foreclosure. Others arrogantly stated that if they don’t get their asking price they will keep in on the market forever {what good does that do?} Others were just plain ignorant of the market – they had no clue they were competing against bank owned properties selling for 60 cents on the dollar. I left over 100 messages to real estate agents, calling off their listing signs. My message was “Hi, I am wondering if your seller would be interested in leasing their home instead of selling. I can take immediate occupancy and put up deposits today, please call me back if your clients would entertain a lease”. Guess how many agents called me back? 13! This is unfathomable considering that statistically many of these home may be headed towards foreclosure later this year! When an agent did answer the phone {less then 30% of the time} their first reaction to my questions was “No my client wouldn’t be interest in that”. I asked them if they wanted to present this option to their clients and most of them said “yeah I’ll check but I know what they are going to say”. My guess is that the clients were never given the option. {keep in mind that the agent works hard to obtain a listing and if their clients lease instead they don’t have any chance to earn a commission}. It’s unfortunate that many agents forgot what the term “fiduciary” means. I did talk to a couple people that would consider a lease but were more interested me making the full mortgage payment for them {not my problem}, the result was that 60 days later their home is still vacant. My point is….be creative. Motion creates emotion. Put your property in transition and good things will happen. Homes sitting there with signs in the front yard is bad for your neighbors, stressful for you, and it hurts the entire market, which effect hurts the local economy.

My advise – work with a really good agent. They are invaluable. However, consider alternative measures in today’s market. Absolutely have your home listed at The MLS Store!

The hard times of the '70s were also a period of reflection and recalibration. The latest downturn is an opportunity to return to the family dinner table or the garden.

Chicken Little and I differ on the coming recession. He hears the R-word and immediately thinks "financial ruin."

I hear "recession" and think "disco!"

If you are old enough to have worn a mood ring, Earth shoes or bell-bottoms the first time around, you probably recall the stagflation days of the 1970s with a bemused mix of humor, national pride and nostalgia.

The forecast was just as dire back then, and for good reason. In 1975, inflation topped 14%, unemployment approached 6% (but doubled that in some locales), and fuel and food prices were headed skyward.

Most of us would be well into the Reagan years before our wallets grew appreciably heavier.

The funny thing is, I don't remember the sacrifice. We drove used cars and lived within our means, since car leasing and credit cards were not yet widespread. We rented and shared apartments, since the average home mortgage rate hovered around 10%. We shouldered none of the financial burden of such modern conveniences as cell phones, high-speed Internet or fitness center memberships. No one wants a recession, of course. It can cause serious economic pain for millions.

However, economists tell us there are some reasons to actually welcome and perhaps even embrace a recession. After all, a recession is the ebb part of the natural ebb and flow of the U.S. economy.

Just as surely as hot markets cool and bulls turn to bears, capitalist economies take a breather every so often to pause and reflect. If they didn't, these corrections would be far crueler.

So, let's smile, lift our half-full cups of regular unleaded and toast these 10 very good things about impending bad times.

Family dinners

Want to start a revolution? Try eating dinner together as a family.

Recessions tend to foster family mealtimes as the pin money that drives fast-food meals and overscheduled lives dries up. Nothing could be better for America, according to the Substance Abuse and Mental Health Services Administration of the U.S. Department of Health and Human Services. (See "Commodifying the family dinner" on MSN Money's Smart Spending blog.)

Research has shown that family meals promote a healthier and more balanced diet, foster better communication and ward off teen suicide, eating disorders and substance abuse. But no, we can't make your little sister stop kicking you under the table.

Shorter lines at the pump

It seems like only yesterday we witnessed the thrilling rush-hour road rage exchanges at every metropolitan gas station across America as gas hogs great and small furiously jockeyed for the pumps. Not anymore.

Ever since gas topped the magical $4 tipping point, you can fill up, wash the windows, check the oil, enjoy a leisurely roller-cooked hot dog and a 32-ounce giant gulp and even grab a power nap before the next customer appears in your rearview mirror. Can curb service of Red Bull and Slim Jims be far behind?

Less junk mail

Thanks to the presumptive recession, many of us have recently glimpsed the back of our mailboxes for the first time in years. According to the Chicago research firm Mintel Comperemedia, credit card direct mail volume has dropped 19% since October. Last year, credit card issuers cut their mailings to current customers by nearly one-third (30%). That will free up delivery space for the junk mail we enjoy receiving: coupons.

More coupons

When the going gets tough, the tough clip coupons to help maintain their lifestyles.

A February survey by ICOM Information and Communications in Toronto found that 67% of Americans are likely to use coupons during a recession, regardless of their income.

Traffic to online coupon sites is growing rapidly, with page views up 38% to 281 million in March compared with the previous year, according to the research firm comScore.

Restaurants in particular typically resort to buy-one, get-one-free offers and other discounts to fill their tables in hard times. Peter Meyers, marketing vice president at ICOM, says coupons can save the average family 25% on their grocery bill, or $2,400 a year based on an $800 monthly outlay. How's that for an economic stimulus?

Free fitness

What's the official vegetable of good times? The couch potato, of course. But as gas prices skyrocket, alternative modes of transportation are once again gaining traction. When you ride a bike, walk to the bus stop or hoof it to the train station to commute to work, you get a free workout along with saving gas money.

You can extend your free workout in other ways. Throw in a little cardio (by skipping rope, jogging or rowing) and add some upper body (with push-ups, sit-ups and free weights) and you can save the $35 to $40 a month that CostHelper.com estimates we spend on average for a single fitness club membership.

Bargain SUVs

Not all prices go up in a recession. Case in point: gas-guzzling trucks and SUVs. Once gas approached the $3.50 mark, prices of new and used SUVs, pickup trucks and minivans plummeted.

Ford and GM recently announced plant closures and production cuts at their truck and SUV facilities in response to the swift public migration to fuel-efficient compacts and hybrids. If you've long coveted an SUV, make your move now. Heck, you may drive away with a year or two of free gas in the deal.

Business startup opportunities

What do Microsoft, Hewlett-Packard and Disney have in common? They all started during economic downturns, as did more than half of the 30 companies that comprise the Dow Jones Industrial Average.

In fact, entrepreneurial startups by laid-off and downsized employees, managers and executives often help get the economy growing again. Recessions are a great time to open your own shop: Wages are down, rents are cheaper, competition is scarce and goods and services can be found at a discount. There's no better time to become your own boss.

Growth in gardening

A recession is the perfect time to get back to nature. Bid your lawn service adieu and put your mind and body to work tending your grounds yourself. The benefits are numerous. Regular gardening provides cardio and strength training, improves flexibility and relieves stress. These health benefits help fight heart attack, Type 2 diabetes, obesity, high blood pressure and osteoporosis. The fruits and vegetables you grow also encourage a healthier diet. And the money you save by doing the mowing, raking, pruning and mulching yourself will more than pay for your equipment, fuel and next year's plantings.

Musical inspiration

Do economic downturns inspire great music? A case can be made that hard times help produce heartfelt anthems that cut through the anesthetic musical drone of the day. This has been true of everyone from Woody Guthrie to Bruce Springsteen to the Clash and even Kurt Cobain.

Given the current state of popular music and its obsession with an affluence that is quickly disappearing, the climate would seem right for the emergence of new artists who can rekindle passion and urgency in American music.

New perspectives

Perhaps the greatest boon of a recession is the time to reflect and reassess the true meaning and goals of our lives. For instance, it's doubtful that today's green movement would be where it is today without the small-is-beautiful mental reset of the '70s.

If history is any indication, we humans are inclined to resume our consumption full speed once the economic engine starts rolling again. But our progress toward a more sustainable future comes in increments during those times when we are forced to do without.

We may not yet be ideal stewards of the planet, but we're making progress. Temporary setbacks like recessions prompt our collective course corrections.

With the recent mortgage debacle and the subsequent tightening of available credit - it's no wonder that more and more lenders, hospitals, and landlords are turning their focus to collections in an effort to recoup some of their losses.

In the past twelve months I've seen a drastic spike in consumer complaints about collection agencies and their strong-arm tactics. Unfortunately, with the current economic downswing and the constant murmurs of a recession looming ahead, it's only going to get worse. You need to know how to help yourself avoid collections before they happen - and how to deal with them if they do.

Collections will have a serious negative impact on your credit report and credit scores. They are never good and should be avoided at all costs because they are next to impossible to get removed.

But before we delve into how to handle collections, let's clarify what a collection is and how the system works. A collection is an action taken by a lender (or service provider) in an attempt to collect an unpaid or delinquent debt. Some lenders will use their own internal collection departments while others will outsource debts to a 3rd party collection agency.

Either way, the collector's primary task is to convince debtors to pay up.

Collection agencies work with lenders and service providers in two different ways. The first way is for the agency to buy the bad debt so that they own it outright. In all cases collection agencies purchase these debts for much less than the amount owed - usually pennies on the dollar. Another option is for the lender to consign the account to the collection agency. With this option, the lender agrees to pay the agency a percentage of whatever amount their collectors are able to recover. This percentage can vary, of course, but I've seen as high as 50% in some cases.

Once the collection agency takes over the account, they give financial incentives to their agents by rewarding them with bonuses if they are able to collect most - or all - of the outstanding debt. The more the agent is able to collect, the more money they get to put in their own pockets. Unfortunately, this can lead to some pretty ruthless and unethical collection practices.

Avoiding collections before they happen:

The easiest way to avoid a collection is for you to pay your bills - and pay them on time. Sometimes this may mean laying aside your pride and paying a bill that they don't necessarily agree with just to avoid it going into collections.

If you don't agree with a charge or feel that they've been treated unfairly by a provider - utility company, cell phone company, doctor, dentist, etc. - withholding payment isn't a wise option. Eventually the service provider will turn the account over to a collector and when they report it in your credit report; it will negatively impact your credit for up to seven years.

I can't tell you how many times I've heard from disgruntled clients that refused to pay a bill 'on principle' and then ended up with a $72 collection on their credit reports. It's just not worth the damage it causes. In the long run it's just better for them if they bite the bullet and pay the bill.

When a collection is unavoidable:

We all know that life can throw you a curve ball when you least expect it - a job loss, death in the family, unforeseen illness, etc. In these cases, it may be impossible to avoid a collection. If they already have a collection, here are some very important things you should know about:

1. Fair Debt Collection Practices Act. Know your rights as outlined in the Fair Debt Collection Practices Act. If they have a collection and have been contacted by a collection agency, they only have 30 days to dispute the debt or to request the collector to validate the debt. They also have rights that protect them from harassing and unethical collectors. To read a summary of their rights, go to http://www.ftc.gov/os/statutes/fdcpajump.shtm.

2. Statute of Limitations. A lot of consumers confuse the credit reporting statute of limitations with the statute of limitations to collect a debt. In many cases the statue of limitations to sue for contract debt can be much longer than the debt can legally be reported to the credit bureaus. The debts are certainly still collectable, just not reportable. If they have a collection that is close to being removed because of the statute of limitations - 7 years - and they are able to pay it or settle it, have them do so. Collectors are suing to collect their funds more than ever and as I mentioned earlier, it's only going to get worse.

3. Don't ignore the collection! Recently I heard a very well known and highly respected consumer advocate celebrity advising people to ignore collectors if they don't have the money to pay. This is probably the worst advice to follow when dealing with collections. Communication is vital. Avoiding collections does not make the collection or the bill collectors go away. In fact, the collection agency will most likely end up suing you if you owe them over $1,500, and possibly garnishing their wages or filing suit against them. Ignoring them won't stop the process; it will only make it much worse and more expensive in the long run.

4. Paying "In Full" vs. Settling. I always advise clients to pay a collection, or at the very least to try settling with the collector. Remember, the collection agencies pay pennies on the dollar for these accounts. Your clients should try to negotiate and settle the debt for as little as possible. They can start by suggesting 20% of what they are asking and go up from there. Keep in mind that your clients are dealing with professional collectors. They're going to push for them to pay it all up front rather than a payment plan because they want to get their commission sooner rather than later. Don't let them push your clients into something they can't do - structure a deal that works for your clients, not for them. When they do come to an agreement, get it in writing before they make the payment. But always remember…they are not lenders. They don't have to set your clients up with a payment plan. Their attitude is "hey, you already had your chance to make payments to the creditor and you screwed that up. So why should I trust you?"

5. Pay for removal. Some shady collectors will tell your clients whatever they want to hear if they think it will help them get them to pay the debt. If they offer to remove the collection from your client's credit reports in exchange for payment, they shouldn't believe it unless they get it in writing first.

The credit bureaus have strict policies regarding collections. The only way a collection will be removed is if it is an error or if the statute of limitations for reporting has expired. Think about it this way, if the credit bureaus removed a collection just because it was paid, how accurate would their reporting system be? Did the collection exist? Absolutely! If they were to remove the collection it would dilute the value of their credit reports. This is why the credit bureaus will not honor those pay for removal deals. Don't let your clients fall for it unless they have it in writing to back it up if the collector tries to renege on the deal.

To Summarize:

Your best option is to avoid collections all together. However, if a collection is unavoidable, the next best thing is to minimize the damage by paying it or settle it as quickly as possible. Be sure to get everything in writing, including a receipt, and make sure that the collection agency updates the account as "paid" on your credit reports.