How to sell your home in a difficult market. The meltdown in the sub-prime lending market has created an earthquake in the residential property market. Real estate has always experienced cycles, but the current cycle is turning out to be far more severe than anything in recent memory. This time, not only are prices collapsing as the bubble bursts, but due to regulatory intervention and a drastic tightening of underwriting criteria, many qualified buyers are experiencing difficulty getting loans for property they can easily afford. Read on to learn how to sell your home effectively or jump to my story of How I sold my home in one week.

Home Staging...

What is Home Staging?

    A keen understanding of "Home Staging" is critical if you intend to sell your home for a halfway decent price in today's bitterly competitive and difficult market.

   Part marketing, part decorating, part psychology - home staging will make your property more desirable to prospective purchasers. Simply calling a realtor will not do.


My story

Why won't my condo sell?

   A few years ago, I had an opportunity to relocate overseas. I owned a few properties that I managed to sell, but my favorite one - a condominium on the beach - would not sell.

   Fortunately, my younger brother and his wife thought that living on the beach suited them, so they rented the condominium from me at a price that just covered the mortgage.

   After a few years, they decided to move out, and then I was in a mad scramble to sell and not pay nearly $1000.00 per month in mortgage, common fees, taxes, etc.

   The place would not sell. Months went by, costs added up. Finally, I had to come back to the US for a week to prepare it for sale. When I finished, it sold in a week. What did I do?


Which realtor?

My brother-in-law's sister has a real estate license...

   As much as you would like to help your family and friends, this is not the time to do it. Every hour, every minute, every second your home does not sell costs you money.

  Find the realtor with the biggest flashiest ads in the newspaper and hire their best agent. They charge the same as a rank amateur. Those ads are called "marketing muscle".



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Sold in a Week

I was under the gun and really had to sell my house - fast! I had relocated to Europe and the market was terrible. Then my tenant moved out and the mortgage, taxes and common fees were eating me alive. I spent exactly one week remodeling and painting myself, then the following week the home hit the market and sold!


Historical P/E Ratio

    There have been a lot of articles in the real estate press lately about the historical P/E Ratio for homes.

    Just like other investments, home prices also can be evaluated upon the basis of a P/E Ratio.

    A P/E (or Price/Earnings) ratio is the ratio of the price of an investment divided by its potential earnings. Just as for stocks and other investments, there are 'equilibrium' PE Ratios for homes - the magic number is around 15. A PE Ratio of 15 is about the historically correct price for real estate in a normal market. When the bubble bursts, the ratios will go below this for a time and eventually come back to equilibrium.


So if your home would rent for say, $2000 per month, that is $24,000 per year. Multiply that times 15 and you get $360,000.00 - the equilibrium value of your home. That is a very simplified way of looking at it. A real investor would deduct costs, such as taxes, maintenance 5% for vacancies and other, but in a nutshell, these ratios have stood the test of time.    

Sell Cheap or Rent?

  Some people have chosen to rent their homes instead of selling at a huge loss. This may make sense if your rental costs can cover your mortgage, taxes and expenses. On the other hand, if you are hoping to stem the losses until prices rebound - you may have a very long wait. If your costs are very low - this may be a very good option.

   If you are losing money on the property by the bucketload - even after it is rented, then unfortunately, you may be only delaying the pain and eventual day of reckoning.