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By Karen McConnaughey

Editor’s Note: So many of our Focus participants who want to move here are feeling stuck trying to sell their homes north of the border. We wanted to see how we could help, so we did some research to come up with some helpful hints; we got more than we bargained for. The following article gives you lots of information and do's and don'ts to help you take positive steps to selling your house.

It’s a tough real estate market out there as we all know.

As economists and analysts sift through the debris of the housing bust, it seems clear that what we were all calling a “housing boom” was really a “lending boom.” With so much credit available to so many buyers, the competition for properties sent home prices soaring.

The price of real estate is a universal challenge and something everyone thinks about…even here in the Lake Chapala area as an article in the Guadalajara Reporter recently stated:

Jalisco housing market showing signs of recovery

Friday, October 02 2009 Daire Coco

As we enter the last quarter of 2009, there are growing reports that suggest the world economic crisis is over. Even here in Mexico, where 2009 will likely go down as the worst year since the Great Depression, there are signs of improvement.

Following years of strong growth, the recent downturn in the real estate market in Puerto Vallarta is leading some developers to delay future projects.

One example is a recent turn around in the housing real estate sector. While activity remains sluggish, Jalisco’s three largest markets — Chapala, Puerto Vallarta and Guadalajara — are all experiencing an increase in sales. Jaime Calderon Esparza, a local broker, is upbeat about the housing outlook in the Chapala area. Although business is still slow, he says the latest results from his office indicate the worst is over: “Sales have begun to pick up. There’s a lot more activity.” Many of the calls his office has been fielding are from Americans and Canadians, who make up 80 percent of the Chapala market.

Lake Chapala didn’t have a ‘lending boom,’ because mortgages are not common in Mexico. But we do experience ‘housing booms!’ and one’s a’comin’… according to almost everyone. Therefore, I have to say it, you MUST come on a Focus on Mexico 8-Day Educational program, find out everything you need to know about establishing yourself in Mexico, look at comparable real estate, and buy now! Beat the boomer rush!

But, you say, I can’t sell my house!

Well, a joint release from the U.S. Census Bureau and Department of Housing & Urban Development had this to say about new residential sales in September 2009:

Sales of new one-family houses in September 2009 were at a seasonally adjusted annual rate of 402,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.

This is 3.6 percent (±10.2%) below the revised August rate of 417,000 and is 7.8 percent (±12.0%)* below the September 2008 estimate of 436,000.

Okay, so it’s 7.8% below last year at this same time. BUT…402,000 houses were SOLD in the month of September. Even in this down-turned real estate market, homes need to be bought and sold. There are always people who need to buy a house: they get married, take a job in a new location, or need more space for a growing family. And let’s not forget the 2009 tax credits for home buyers…both first-time and repeat home buyers! Is there a better time to get your house ready to be on the market?

Also, you know it’s true…If you decide to wait, you will be joining the thousands of other homeowners who have also decided to wait. When the few real estate visionaries still left out there decide it’s time to take the plunge, well, then, you are already too late. If you need/want to sell now, then sell now. There will never be a better time.

So…let’s talk about how to do that:

In today's real estate market the best way to figure out how fast your house will sell is by paying attention to how the houses are selling in your community.

Check out your competition.

If 90% of the homes in your market are not selling, then your home needs to outshine the top 10%. Look online at the homes that are pending sales in your area, because that's your most current indicator. You want to know what is happening right now, and pending sale data will tell you which and what kind of homes are selling. With very little effort I was able to find recent home sales in Kansas City, Mo 64145 (my zip code of six years ago!) and get a good feel for what houses are selling for in that area now. Do your homework.

Don’t overprice your House

It's easy to get caught up in the excitement over figuring out the best sales price for your house. Unfortunately, uninformed sellers often choose the listing agent who suggests the highest list price, which is the worst mistake a seller can make.Houses sell at a price a buyer is willing to pay and a seller is willing to accept. If a house is priced too low, priced under the competition, the seller should receive multiple offers to drive up the price to market value. So there is little danger in pricing a house too low. The danger lies in pricing it too high and selecting your agent solely on opinion of value.

Nothing says desperation more than incremental price drops. The longer a property is on the market, the more cynical your buyer pool becomes. The more times the price is cut, the more unappealing your house appears. Buyers reason that a lot of people have seen it and rejected it. If that‘s the case, then why even bother to look at it at all?

Also, as one web site says,

"Think about it…the financial loss often exceeds your extra mortgage payments, your homeowner’s insurance, and it certainly goes beyond the hassle factor of trying to keep your house spotless during showings. It affects the value that a buyer ultimately chooses to pay because it's not a fresh listing anymore. Your house is now stale, dated and market-worn and overpriced for way too long. Don't let it happen to you. Don't be that seller of an expired listing.”

Some agents suggest you price your house a minimum of 2% less than the last comparable sale. If you can't live with that price, then don't put your house on the market and set yourself up for disappointment. Overpricing is the worst mistake a house seller can make.

Others say “aggressively slash the price.” Price your house 10% below similar properties in your neighborhood. The most enticing houses on the market are the newest and the cheapest. If you can be both, you should be able to sell yours in no time at all. And, again, it might inspire a bidding war.

Maybe somewhere inbetween is where you need to be.

Here was an interesting comparison I found online about pricing in a buyer’s market, seller’s market, etc.:

Market Dependent Pricing

Same house, three different prices.

After you have collected all your data, the next step is to analyze the data based on market conditions. For comparison purposes, let's say the last three comparable sales in your neighborhood were $150,000.

In a buyer's market, your sales price might allow some wiggle room for negotiation but be strong enough (near the last comparable sale) to entice a buyer to tour your house. To sell in this market, you might need to price your house at $149,900, settling for $145,000.

In a seller's market, you might want to add 10% more to the last comparable sale. When there is little inventory and many buyers, you can ask more than the last comparable sale and likely get it. So that $150,000 house might sell at $165,000 or more.

In a balanced or neutral market, you may want to initially set your price at the last comparable sale and then adjust for the market trend. For example, if the last sale closed three months ago, but the median price has edged upwards of 1% per month, pricing at $154,500 would make sense.

 Is your House in Poor Condition? 

Perhaps you need to consider updates or doing repairs before selling.

If the top 10% comparative houses in your market have new carpeting and your carpeting is worn and dated, your house is not going to sell. Replace the carpet.

The following is a list of the 10 minimum improvements to make before selling your house:

1. Patch all holes and cracks in walls and ceilings.
2. Fix all broken appliances and HVAC systems.
3. Repair leaky faucets.
4. Replace worn carpeting.
5. Repaint dark or marred walls with neutral paint (not white).
6. Replace broken windows.
7. Repair the roof.
8. Change out dated light fixtures / ceiling fans.
9. Replace old linens / window coverings.
10. Fix code violations.

So you’ve done your repairs and you’ve gotten a lot of people in the door with the correct pricing…What’s next?

Do your paperwork!

When you get an offer, have all your paperwork ready for a quick sale—the termite report, for example, title insurance, the physical inspection, etc. And don’t forget to document any ‘green’ updates. The tide toward green building has taken hold in recent years and energy-efficient homes outfitted with sustainable materials are definitely coveted by future homebuyers.

That way, all the necessary reports you’re going to have to get anyway are immediately ready for the buyer and the buyer’s agent. No waiting! You give them what they need at the exact moment they're most excited about the property. The longer it takes to receive these documents, the more time your potential buyers have to look at other properties!

We’ll be having more tips in the coming months. But remember…

You are involved in, arguably, the largest, most intimidating transaction you’ll ever complete. Choose your agent carefully. Did you know that the best brokers—the top 10 percent—do 90 percent of all the business? Do your research.

Also, the number one emotion to understand: You must disassociate yourself with your house…not your home, not your memories…it has now become a product. Let go of your emotions and focus on the fact that this house is no longer yours. Picture yourself handing over the keys and appliance warranties to the new homeowners! Don't look backwards—look toward your new future.

With all this in mind, get out there and see if you can buck the trend. If you are willing to do what is necessary, there really is no market you can’t sell your house in.

Join us on a Focus on Mexico 8-Day Educational Program and get all the information you need to find out whether Lake Chapala, Mexico, is the right place for you to spend the ‘best of your life.’ We guarantee at the end of the eight days, you WILL know!

Karen McConnaughey: Operations Manager for FocusOnMexico.

Focus On Mexico offers 8-Day Educational Programs to Ajijic and Lake Chapala, Mexico (2nd Best Climate in the World). Join us on a Focus program and learn why thousands of Americans and Canadians chose to retire in Lake Chapala.

Our programs offer the perfect balance; a wonderful vacation and an insightful, educational experience. Our expert speakers cover all topics: Health Care, Real Estate, Legal System, Immigration, Bringing Pets, Cost of Living, US Taxes for Americans, Non-Residency for Canadians, Living on the Lakeside, Investing in Mexico, Mexican Economy and much more...

You’ll get everything you need to help you decide if Lake Chapala, Mexico is the place for you, plus have a lot of fun doing it. Retiring in Mexico couldn't be better.