Six Critical Success Factors in a Buyer's Market

All indicators point overwhelmingly in favor of the buyer in the Portland residential real estate market: soaring unemployment, rising foreclosure rates, slowing sales and inventories near historic highs.

But with these challenges come a few bright spots: an $8,000 first time buyer's tax credit, historically low interest rates below 5% for 30 year conforming loans and improving weather should all help stimulate activity.

Taking both the good and bad into consideration, there is hope for home sellers. Following are six critical success factors sellers must do to get to sold:

1. Price Aggressively From the Outset
According to the Regional Multiple Listing Service, average sales prices in Portland for February 2009 were down 13% compared to February 2008 ... and the pace of sales declined 38% year-over-year. With foreclosures, short sales and unemployment rising at an alarming rate, sellers will need to get ahead of the falling price curve to attract the attention of qualified buyers. In a seller's market, you could price a home slightly above comps. In this buyer's market, you'll typically need to set your price below comps.

2. Be Move-In Ready AND the Best on the Market
Economic challenges and tighter lending standards often leave little or no cash for buyers to remodel after a purchase... so your home needs to be move-in ready. But perhaps even more important is the need to improve your property's overall appeal. This is an absolute necessity in order to give your property a competitive advantage given the historically high inventory levels. Without eye-catching marketability that surpasses the competition, a property is unlikely to attract the attention of a buyer. So to that end, get all the fix-it projects done; put a fresh coat of paint on the areas that need it; and, professionally stage the house to the nines.

3. Be Flexible - Even After The Deal Is Struck
One other important note to keep in mind about pricing: with tightening lending standards comes more conservative appraisals. If you're not in a position to offer an owner-carried-contract (meaning you need to be cashed out) you'll need to be aware of how the banks new conservative lending practices can impact a deal -- even after mutual acceptance between the buyer and seller. Appraisals can come in lower than the agreed upon sales price, which in turn can impact Loan-To-Value ratios for the buyer.

4. Sell or Rent, But Not Both
No one can blame a homeowner for being tempted to rent a vacant property while its on the market. But to get straight to the point - it's a terrible idea. Typically, renters hurt your property's marketability simply because they will not keep your home in show-ready condition at all times (clean, depersonalized, staged)... and they typically impose restrictions on showings that dramatically reduce the probability of selling. Something else to keep in mind (disclosure: I'm not an expert in the Portland rental market) ... but I've heard the glut of condo projects that have converted to apartments - combined with other new high rise apartments coming online - are keeping rental rates relatively low.

5. Grant Unfettered Access
A buyer's market brings a heighten level of consumerism. With this in mind, buyers can have the expectation that house-hunting is like retail shopping -- it's done on their schedule and has a large emotional component to it. Granting buyers and their agents unfettered access to view your property is vitally important. It's another reason renters and "Listing Agent Accompaniment" are a bad idea. (Listing Agent Accompaniment is a seller imposed requirement where the listing agent must be present when a buyer's agent shows the property ... and more often than not, it is off-putting to the buyer and can impede their ability to connect with a property on an emotional level).

6. Hire a Market Specialist
This final point is self-serving, but that doesn't make it any less valid. We specialize in Portland's waterfront and Mt. Park in Lake Oswego. We've successfully represented dozens of buyers and sellers in both areas. Both require a deep appreciation of Home Owner Associations, special assessments, neighborhood resources, etc.... This type of specialized knowledge gives our clients a competitive advantage both in marketing and keeping a transaction together. Read some of our client testimonials here.

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