By Robert Irwin
Question: We live in a small town where most, if not all, of the real-estate agents own properties that they also sell. Since other listed properties must compete with the agent's personal properties, sales are very slow, and most homes remain on the market for a year or two unless the price is reduced far below the appraised value. All too often, an agent will discourage a potential seller from listing a property and buy the property on his or her own -- at a bargain. How can I sell my house under these conditions?
-- Vera, Neosho, Mo.
Vera: Market conditions are generally determined by the health of the surrounding economy and by the supply of homes available, not by whether or not they are owned by agents. It sounds like the real-estate market in your area happens to be particularly slow. If so, prices are probably depressed and agents may be picking up bargains to hold as rentals for the short term, hoping to make big money in the long term.
Selling your house in a down market is particularly challenging. Buyers tend to be highly price sensitive. This means that in order to get a sale, you will have to do a very strict analysis of what comparable homes are selling for (a good agent can help you with this) and then price your home accordingly. Unfortunately, this usually means selling for less than you may feel your home is worth.
An alternative may be to hang onto your property. You can do what the agents are doing and try to rent it out in the short term, hoping for a turnaround in the future when you will be able to sell for a profit. Another alternative is the "lease/option," where you convert a tenant to a buyer over a period of years. Again, check with a good agent who can arrange to handle such a transaction for you.
-- Mr. Irwin has more than 25 years' experience as a Los Angeles-area real-estate broker. He is the author of more than two dozen books about real estate and is recognized as one of the most knowledgeable writers in the real-estate field. Mr. Irwin's most recent books are "How to Get Started in Real Estate Investing" and "How to Buy a Home When You Can't Afford It" (McGraw-Hill, 2002).
