Sellers: Don’t Dispair…You Can Sell Your Home in This Market Too!

Westcoe Realtors, Riverside California…With all the attention and conversation that bank owned properties are currently getting in our real estate marketplace, one can understand why a singular, individual seller may be feeling a little like the red-headed stepchild.  All anyone ever hears anymore is repo, repo, repo.  Well, what about a “normal” seller? Is there room in our market for just an average seller who simply wants to sell their home at a reasonable price?

The answer is resounding “you bet…absolutely.”  In fact, many buyers and agents are searching for you…so don’t despair, and let me explain why you, the normal, non-foreclosure, not-behind-in-your-payments seller has a better chance than many banks to find your perfect buyer.

If you glance back at the last month or so of writings on this blog, you will notice two things:  1)  that there is a lot of focus on bank owned properties, and 2) that there are more hassles and frustrations associated with trying to purchase a repo than there are jellybeans in a jar.  We have chronicled here the numerous challenges in working with a repo…and all of these challenges come from overworked people all the way down the line in the process.  In the end, for every sale, there are multiple buyers and agents who are massively frustrated at the process….frustrated enough to jump at the chance to avoid this “meat-market’ of repos and find a normal seller with which to do business.

As a home owner, there is no doubt that your equity has taken a large hit the past 18 months or so…but that water has been spilled, and there is nothing anyone can do about it at this point.  However, if you are willing to understand the issues that will affect your home, you can take control of your real estate destiny and get your home sold if that is what you desire.  Yes, you will need to compete with the banks, but you still have opportunities that they do not.  Please read on.

First, understand that while all the repos on the market will affect your asking price, YOU DO NOT HAVE TO COMPETE WITH THEM DOLLAR FOR DOLLAR.  Yes, buyers are looking for a “good deal/value” in their purchasing decision, and naturally the discounted price the banks ask for their homes will influence what you can do.  You can’t blame the buyer…they want the most bang for their buck.  You do the same thing when you shop as well…we all do.    However, understand that not all buyers want what the banks are offering.

Second, as a general rule, my guess is that approximately 70-75% of all bank repos need some type of repair.  Some of the properties, at best, simply need carpet, paint, and general cleaning…but many of them require massive repairs, construction, new kitchens, baths, etc.  Understand that these properties are generally priced accordingly, but they only have appeal to those individuals who can do these repairs…and whether the repairs are done yourself or hired out, they take money and time.  That’s fine, but not all buyers have the money or time to spare.

Also, when the home is in such a state of disrepair, appraisals can be tough to get…it is a real Catch-22.  The new bank will require the work to be done prior to making a loan on this “money-pit”, but the work cannot be done by the buyer until they own the home. This dilemma is faced by agents every day, with no easy way around this stalemate…and all of the above helps you, the individual seller.

SO…you now want to sell your home…which may be the identical floor plan (or similar enough) to the “repo, money pit” down the street, but you are concerned that you will need to sell at the same price.  Well, do not despair, because you have some advantages that the bank does not.

Understand that while the price the bank sets on the similar repo home will affect you to a degree, YOU HAVE EVERY RIGHT TO EXPECT A HIGHER SALES PRICE FOR THE CONDITION OF YOUR HOME.  Assuming your home is in good shape, you will get more for it for a variety of reasons.

First, the only cash the buyer will need is what they need to obtain the new loan…they will not need a boatload of extra cash to make the home habitable.  This is huge, since most people do not have a lot of extra cash just laying around for a major rehab project.

Second, the buyer you are trying to attract will PREFER your home to the repo needing all the work.  All of us are handy to some degree, but there is a big difference between repairing a sprinkler line and having to basically rebuild an entire home.  Everyone knows a home improvement project usually takes more time and money than originally thought.

Third, you are a live human being that can give the prospective buyer an answer to any question in a reasonable time frame.  Your transaction can get negotiated in hours instead of days, and escrow can get opened in days instead of weeks…not to mention that you can actually close when you are supposed to, and not weeks late.  In short, you represent to both the buyer and their agent a simplicity and lack if frustration that is absolutely not available in the repo sale.  Do not underestimate how important this has now become in our marketplace. 

In the past 6 months, the repo world has become such a nightmare that many agents and their clients would much rather prefer to do business with a normal seller….and while this preference does not necessarily add dollars to the value of the sellers home, it does mean that given a relative equal valuement of the homes (remember, equal valuement, not necessarily equal price), the buyer will choose the individual seller almost every time.

 In the end, no one can escape the affect the repos have had on the declining pricing of real estate.  However, this does not mean that non-bank owned sellers cannot sell.  On the contrary, the normal seller has a wonderful chance to sell if they are simply reasonable about the value of their home…so hang-in-there all you normal sellers…there is a light at the end of the tunnel.