The real estate market is likely to remain sluggish for at least another year in most regions. The usual selling strategy — hire a broker and set an asking price comparable to that of similar homes — might not lead to a sale under these conditions. Some sellers even have resorted to raffling off their homes — a strategy that rarely works and violates gambling laws in many states. Five sales tactics that offer a better chance of success…

  • Offer a “for sale by owner” (FSBO) discount if you have the time and savvy to price, market and present your home to buyers without the help of an agent.

    Price your home 6% below comparable homes on the market. This lets your buyer in effect earn the commission that you would have paid a real estate agent had you hired one. Explain this in your FSBO classified ads.

    Note: If a buyer has his/her own real estate agent, this agent will still expect a 2.5% to 3% commission. FSBO sellers are not required to pay this commission, but the buyer’s contract with the agent might hinder him from purchasing the home if you won’t. See if his broker will accept a reduced “finder’s fee” rather than the full commission, and explain to the buyer that paying this money to his broker means you can’t come down far from your asking price. Explain to buyers who arrive with agents that your asking price was based on an agent-less transaction.

    Use an Internet FSBO service, such as (888-645-6305), to list your home on the Multiple Listing Service (MLS) for $377 to $597. FSBO Web sites, such as or, offer tips on these topics, or consult a book on do-it-yourself home selling, such as my For Sale By Owner (Kaplan).

  • “Future price” your home. Rather than setting your asking price based on what you think your home is worth today, set it based on what your home is likely to be worth in four to six months based on regional price trends during the previous year.

    Example: If real estate prices fell 15% in your region during the past 12 months, extend that trend forward four to six months and subtract 5% to 7.5% from your home’s current value. Make this lower figure your asking price.

    “Future pricing” a home makes it look like a bargain, which draws potential buyers. It also reduces buyers’ fears that the property will soon be worth less than they paid. Brokers will identify the bargain and steer clients to you. You can even explain what you’ve done in your ads: “Priced 7% below the market to protect you from any future real estate declines.”

    In a falling market, most sellers refuse to future price because it means accepting less than current market value — but if homes in your area are sitting on the market for months without selling, then this “current market value” is an illusion. Home owners who demand current market value are likely to discover that their homes are still languishing on the market months later, at which point they will have to slash their asking prices to become competitive. Better to get ahead of the curve, cut your price from the start and find a buyer now.

  • Auction your home. A well-advertised auction might bring more potential buyers to your home than a traditional sale because many home buyers believe that there are bargains to be had at auctions. Several of these buyers could get caught up in the excitement of the auction, bid aggressively against each other and drive up the price.

    A “minimum bid” (the minimum amount to start the bidding) or “reserve” (price below which you are not required to sell your home) auction can eliminate the risk that your home sells for much less than it is worth, but these safety nets also deter bidders in search of bargains.

    If you do decide to auction your home, work with an auction company that specializes in real estate. The National Auctioneers Association ( can help you find one in your region.

    Auction fees and commissions can be as high as or higher than broker commissions (average is 7% to 10%). Make sure you know how much the auction company will take if your home sells… and how much you will owe if it doesn’t.

    An auction is not a good idea if there are many similar homes on the market, since there is no reason for auction bidders to drive up the price.

    An auction is a good idea when the home is custom built — or in an area where similar homes are for sale, if you are willing to have a reserve significantly below the prices asked for those other homes.

  • Offer financing. If you offer private financing, your home will be appealing to buyers who cannot obtain mortgages in this tight credit market. Bonus: You could earn an attractive 6% to 8% interest rate on the amount you loan.

    Downside: If your buyer defaults, you can foreclose, but this is a time-consuming and expensive process. If home values fall by more than the size of the buyer’s down payment, the buyer might walk away and dump the less-valuable property back in your lap.

    Finding the right buyer is crucial. The buyer’s down payment must be substantial (15% to 20%), his income must be stable, other debts must be limited and the credit history must be sound. It is worth accepting a slightly lower sales price if that’s what’s necessary to get an appealing buyer.

    Hire an experienced real estate attorney to draft the loan documents. Make sure the contract includes a late-payment penalty of at least $50 to $100 to encourage on-time mortgage payment. Don’t hire a loan servicing company to handle the money — you’re better off knowing as soon as possible if payments are arriving late so that you can take prompt action.

    Offer financing only if you are willing to accept some financial risk… your mortgage is mostly or completely paid off, so you don’t need a huge amount of cash to pay off a lender… you have the financial resources to live without the big cash influx that you would receive if you sold the home outright… you have the financial skills to evaluate potential buyers’ finances… and you would like to turn your home into a steady source of income without the hassle of renting.

  • Rent out your home until the real estate market rebounds. Rental prices are climbing in many regions even as real estate prices fall. You might be able to rent out your home for enough money to pay the mortgage and taxes, then sell in a few years when buyers are more plentiful.

    Ask would-be tenants for contact information for their three most recent landlords. Don’t bother calling the current landlord — he might say glowing things about terrible tenants just to be rid of them — but do call the prior landlords and ask for an opinion. Favor tenants who have credit scores of at least 620 to 640 (have the tenant obtain his credit score from and show it to you)… steady jobs… and no pets, to avoid damage to the home.

    Contact your insurance agent to make sure that you’re covered if the tenant damages your home or sues you. More information: The Landlord Protection Agency (… National Apartment Association (703-518-6141,

    Renting out your home is a good option if you don’t need to raise cash by selling the home right away and local rental rates are higher than your mortgage payments.

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