February 5th, 2010 by Michael Oliver

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Want or need to sell your home in an area or neighborhood with a lot of foreclosures? Unfortunately for many people this is just a reality; job transfers, family changes, and different housing needs don’t wait only for good selling markets. In today’s challenging selling market more then likely if you are selling a home in Tucson regardless of price range or area your main competition will be foreclosure or bank owned property in competition with your home.

I have sold many listings in Tucson where the sellers had direct serious competition from foreclosure homes of the same size and type with many of the same features for 10’s of thousands less in price. So how do you get a good price for your home with so much competition from distress real estate? It takes a few things to get a “retail” price for your home in todays “distress” market where buyers are simply looking for the best deal. Here is a case study of a home that I personally sold last year where the odds of selling it for a high dollar price was not great, yet I was still able to sell for more then the appraised value (almost an impossible thing to accomplish in today’s market).

This home was located in Oro Valley and was in great shape, and showed really well with minimal changes needed. Re finished kitchen, professionally landscaped front and rear yards as well as a pool and many higher end features made the home very appealing for buyers in the market. The main issue was there were many homes for sale in the neighborhood and in the general area just like it. As an example of the foreclosure competition; directly across the street from my listing was a foreclosure home on the market that was basically the same size home, same number of beds and baths, same builder, it had a pool also, decent floor plan, extremely comparable home to say the least. The issue was it was in need of some fix-up the amount of that would depend upon the future buyer’s taste but it was in the $10,000-$50,000 range again just depending. That really wasn’t so much the issue as this home was literally priced $75,000 LESS THEN the listing I had opposite of it. Furthermore this home had been on the market for a while and still wasn’t selling at that price.

So what did I do to get my clients home sold and what should you do to help yourself do the same in a tough selling market?

-First things first the home needs to be in the absolute best showing condition possible, carpets cleaned, have the home professionally cleaned to be honest foreclosed or bank owned homes are dirty and you need to be able to distance your home from them. Making your home super clean and inviting will make buyers feel more comfortable in your home. Simple and easy to do yet many people and Realtors never push this as far as they should.

-The home must be priced realistically, this is not the time to “test the market” doing so will kill any momentum you have going. Being priced even 1%-2% over market will kill your chances of selling and invite the buyers that do want to buy to low ball you and force you to accept a lower price then you would otherwise get if you were priced right from the start. This is something that is hard to do in your mind you want to do: “well I will price at $315k and accept $300k mean while the market doesn’t respond to $315k and if offers come in they come in at $275k. Where-as if you had priced at the market price of $300k (or even better $297k-$299k) the market would respond in force and buyers would feel the absolute need to pay full price vs. lose the home they want to someone else willing to do the same. I have personally sold homes both ways and with-out a doubt you must be priced at or just below the market. If you wont many other sellers will and thats just the way this real estate market is currently.

-After this you or your Realtor must put together a 1st class marketing plan and execute the plan to bring in the buyers. Not just “MLS”! I am talking about a real almost “corporate” marketing plan to get your home out ahead of the others and bring in the buyers! Newspaper, Internet, Video (which I personally prefer), Realtor to Realtor Marketing, the word has to be spread otherwise your home will sit. It needs the push of high quality and focused marketing. Just like Coca-Cola still spends billions and billions of dollars on advertising every year regardless that everyone on Earth knows what a Coke is, they still do it because they know marketing pays off. It’s the exact same thing for your home sale good marketing will make (in my mind anyway) a 10% difference in what sale price your home actually receives.

Now to do this focused and serious marketing of your home you need a committed and serious Realtor know can pull the job off. Furthermore I don’t believe a “discount agency” could pull off the marketing needed to get your home sold. They simply don’t charge enough to be able to afford it. Go with a full service and 1st class agent with a top agency and pay them what generally works out to a 6% or 7% commission for both sides (buyer’s agent and your listing agent). For me if i take a $200k listing and put the marketing required to get it sold that marketing can easily result in $2000-$2500 of costs. When you figure that my half of the commission is 3% (on a 6% listing fee the buyer’s agent and listing agent split it) this 3% of 200k results in a $6,000 gross commission to me subtract the $2000 in marketing it cost me to sell your home and my broker’s cut of the commission minus taxes and on that $6,000 gross commission it may result in a $1500-$2500 pay check! So once again unless your agent is charging you a fee to cover all his/ her costs don’t be surprised if your basically getting very little. Realtors like everyone else do not want to just go spend money on a listing unless they think they can actually sell it and make a profit for themselves.

Ok so after a 1st class marketing plan is unveiled the buyers should start coming through the door. If they don’t either your agent’s marketing is off, (or they didn’t do it) or your price is off. If the price is off drop it, don’t wait just get it drooped because after all the banks will also keep dropping prices on their homes and  this will only hurt you more. Banks will normally drop a foreclosure homes price every month it doesn’t sell almost automatically. The bank will drop every month until their home sells because they have no choice otherwise. On average they will drop close to 3%-5% PER MONTH! You simply don’t want to have to keep dropping your price every time the bank drops it’s foreclosure home’s price!

This is basically the sales strategy that should be employed to sell your home in todays market specifically when you have foreclosed homes in direct competition with your home. This is going to be the situation in 99% of the time for the next 2 years in Tucson as foreclosure real estate is going to stick around and regardless of area or home price foreclosures will compete for the same buyers as your home.

For those interested in the outcome of the case study mentioned above. I sold my listing in 5 days for initially over full asking price! (The home later didn’t appraise for the sale price and had to be reduced a couple thousand dollars. It seems no appraiser as I have found out by continuing to sell listings for over full asking will appraise a regular home sale for selling over full listed price in today’s market.) The foreclosure home kept having to be reduced eventually selling for almost $100k less then my sale several months after being initially listed…..

Home Selling Tips, Selling Your Home In Today's Market