Case Study: How to (and why) Sell Your Home in a Buyer's Market

I’m not just the owner of this business – I’m also a client!

I recently closed the sale of my personal home. It was an exciting accomplishment, given that the current market conditions aren’t as good as they were a couple of years ago. We were motivated to sell because of another addition to the family. Our East Hill 2 story was a great home, but we just felt it was time for more space both inside and outside. It was hard work selling By Owner, but well worth the reward.

Preparing the Home for Sale
We did a lot of staging to get our home ready to be put on the market. I will devote an entire article to that process soon, but for now just suffice to say that we spent many weekends moving clutter into storage, de-weeding the yard, touching up paint, and waiting for just the right light for the all-important pictures.

Pricing
Our initial price was based on the amount we had into the house, plus some room for profit. We bought the house for $85,000 4 years earlier. We then promptly spent $10,000 on a new roof and about $20,000 building the new garage, which the property desperately needed. So we had about $115,000 into the house. We had an appraisal performed in 2006 (after the garage was built), and the value came in at $115,000. We priced the home at $129,900 initially. I didn’t want to be too high with the price because I knew a high list price could lead to little or no interest from buyers. I knew a similar home in the neighborhood had recently sold for $129,900, but I also knew that the comparable was about 50 years newer, lower maintenance, and more efficient than ours, which was built in 1881. But I reasoned that it was better to start high and lower the price over time.

Open Houses
We listed the house in mid-August. I know, not exactly the ideal time to start the process of selling your home…oh well. I held five open houses in the first two months. We had good turnout (4-5 parties) at most of them. I got names and phone numbers of people who stopped by if they seemed interested. I followed up with the best leads.

Price Drop #1
After 30 days on the market, we reassessed our asking price. Aside from the open houses, we were not getting any activity at all. I knew the slow season was rapidly approaching, so we dropped the price by $5,000, to $124,900. That helped. After the price drop we had a few Realtor showings. One buyer had it narrowed down to our house and one other, but in the end they chose the other house. Back to the drawing board.

Make a Needed Repair
One of the leads we were talking with seemed to be scared off by something I disclosed in the condition report. I had noted that there was some visible water damage on a false front along a roofline. My wife and I had never liked the false front and had considered having it removed for several years. Possibly losing a sale over it was the last straw. We called our roofing contractor and had the false front removed. Since the damaged section was removed, and there were no leaks afterward, I amended the condition report. We spent about $1800 on that repair.

Price Drop #2
After 120 days on the market, we decided to make what would (hopefully) be the last price drop. We did another aggressive $5,000 drop to make the new price $119,900. We made this price drop over Christmas and had a showing within 2 days. After January 1, things started to pick up even more. We had more Realtor showings and some phone calls from unrepresented sellers. The last week in January, we showed the house to the gentleman who eventually bought it.

The Buyer
The buyer fell in love with our home over the internet. It was everything he was looking for and was just on the edge of what he could afford. He called one evening, and we set up a showing for the next night. The showing, apparently, was just to make sure what he saw in the pictures and descriptions was accurate. His mind was already made up. After the showing, he announced to us that he wanted the house and that he would go to the bank the next day. He did. After the usual pre-approval, loan-shopping, and offer processes, we agreed on a full-price offer of $119,900. We (the sellers) agreed to cover some of his closing costs. We didn’t mind because we weren’t paying any Realtor commissions.

The Outcome
Our final outlay for the house (after the roof repair) was about $117,000. We sold it for $119,900 but paid about $3,500 in closing costs and fees. So we received about $116,500. All things considered, with prices dropping nationwide, my wife and I were very happy to basically break even. Just think: If we would have paid a full-service Realtor 6% commission, we would have lost an additional $7,000. Clearly, the sale of our home would not have been economically feasible with a full service real estate agent.

The Next House
The next challenge was to find a good enough bargain on the next house to offset our $1,000 loss. After countless hours on the internet and touring about a dozen homes, we made an offer on the best of the bunch. After the usual offer and counteroffer process, we ended up getting our next house for about $20,000 less than the appraised value. So by taking a $1,000 hit on the sale of our old home, we were able to negotiate a deal where we will instantly gain $20,000 in equity at closing. A buyer’s market indeed!