Avi Urban
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Specializing in servicing residential buyers and sellers in the San Francisco South Bay area, Palo Alto, Sunnyvale, Cupertino, Mountain View, Los Altos, Santa Clara, Menlo Park, San Carlos, Campbell, Milpitas, San Jose, and real estate investors nationwide

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This article was published on: 6/2008

Selling strategies from the 5 toughest markets
The top real-estate professionals in the nation's hardest-hit cities say their business is booming. What do they know about selling homes in a down market that you don't?
By Melinda Fulmer
MSN Real Estate

Selling a house in today's weak market can be tough, but in the nation's five worst major markets, it's survival of the fittest. 
In Phoenix, Las Vegas and Miami, vacant condos and foreclosure properties have flooded the market, depressing prices.
In San Diego, new construction has saturated the market, adding to the problems caused by the mortgage meltdown.
And in Detroit, a stumbling economy and one of the nation's top foreclosure rates have made some houses as cheap as luxury cars.

"To anyone selling a house in this market, I tell them to fasten their seat belt, it's going to be a bumpy ride, " says Michelle Calisi, with Century 21 Town & Country in Detroit.  

According to Standard & Poor's Case-Shiller Home Price Index, these five of the major markets it tracks saw the biggest price drops from the peak of the U.S. housing market in July 2006 to December 2007. And agents in these markets are contending with some of the largest inventories of for-sale homes.

Yet, the top real-estate professionals in these areas say that business is booming and that they are selling more houses than ever.

How do they give their properties an edge in a crowded market? We talked to brokers and agents in each of these markets to see what they are doing to make the sale.

San Diego: Smart Internet marketing

Nowhere was there a more exaggerated boom-and-bust cycle than in this coastal Southern California city. As the economy flourished, builders from around the country rushed in to build new single-family homes and convert downtown buildings into condos.

Speculators bid up these properties, hoping to flip them, but many found themselves upside-down in value as the market turned, says Gregg Neuman, a Prudential California Realty agent. "There were a lot of loans made to speculators and people who couldn't afford them."

Of the 20 major markets surveyed by Case-Shiller, houses in San Diego posted the biggest price drop, with the same house selling for 19% less than it did a year and a half earlier. "For buyers it's a great opportunity, because they can buy at 2003 prices," Neuman says. But for those who have to sell their home, it can be a long, hard road to a sale.

To get the traffic to his listings, Neuman says he works the Internet harder than many of his competitors. He has 84 Web sites; one for every high-rise condo building he has a listing in, and several promoting the city itself.

He hires Web marketers to post articles on these Web sites with key words for his properties such as "downtown San Diego condos" mentioned many times. As these articles are refreshed, his sites move up near the top of Google's search list for potential buyers to click on. "I probably get 250 hits a day to my (main) Web site," Neuman says, in addition to the clients his print ads bring in. The Web "helps me get maximum exposure."

While you may be unlikely to hire an Internet marketing firm, you can use the Web to more effectively sell your home.

First, Neuman says, you can put the property up on your local section of Craigslist, with links to a Web site or self-created blog that contains detailed information and photos or a virtual tour.

And make sure your agent is putting photos of your home on his company Web site, as well as the local multiple-listing service site and any other Web sites that promote your market. "You have to find out what (site) is the biggest draw in your area," he says. "People do most of their pre-screening online." Instead of touring 18 to 20 properties, as they did in the past, buyers are now going out to about five.

The more information you can give prospective buyers before they go out and look, the better off you are, agrees Frank Dickens, the immediate past president of the Arizona Association of Realtors. "You really have to pull out all the stops at this point," he says.

Phoenix: Competitive pricing

In Dickens' market, nobody is selling his home unless he needs to. Prices in Phoenix have dropped 17% since the peak, according to Case-Shiller, and many homes are selling for much less.

New construction and a slew of foreclosures have flooded the market, leaving the area with a 12-month supply of unsold homes, many of them vacant.

But, Dickens says, it is still possible to sell a house as long as you are willing to be realistic about the price. Last October, he helped sell his girlfriend Michelle's home in only 65 days. To move the remodeled Spanish-style home that quickly, the couple had to make it move-in ready and price it just below the competition.

Dickens recommends taking a 2% to 5% discount to the nearest comparable house (with comparable amenities) to get buyers' attention.

The agent that Dickens hired set up a Web site and advertised the property and the site in print and on television. She held the house open most weekends and dropped the price a little bit every week or two until they thought they were getting enough showings.

They also held broker luncheons at the property, as a way of drawing more people in. Agents, Dickens says, don't turn down a free lunch. "The more activity you get around a property, the more likely you will have a sale," he says.

And, just as important, he says, Michelle made sure she was ready to close escrow in 20 days, instead of 30 or 45. That way, he says, they wouldn't lose buyers who were relocating from another city.

Detroit: Staging and incentives

In Detroit, real-estate agents have endured the toughest market for the longest time, with a 16% drop in value in the past year and a half alone, according to Case-Shiller. Here, there are a lot of distressed properties to contend with, including many vacant and neglected bank-owned properties.

That's made staging a home to sell that much more important, says Calisi of Century 21 Town & Country. She advises her clients to take off the wallpaper, put on a fresh coat of neutral paint, freshen up the landscaping, expose and polish any hardwood floors and put much of the family photos, extra furniture and clutter out of sight.

"You want people to imagine their own furnishings in the house." Moreover, she says, it has to be move-in ready, with all the repairs done. "People don't want all that work. They want it done already."

Many successful sellers in her market are offering concessions, such as help with closing costs and home warranties. Moreover, many homeowners are offering agents higher commissions to get them to more aggressively market their property. In some markets, agents say, they get more traffic to their properties by offering a larger split: 3% or more to the buyer's agent. It ensures that agents with buyers in that price range will at least show the home to their clients.

She counsels her clients not to get offended by lowball offers. It pays to keep your emotions out of the deal, and try to negotiate with these lowballers or make a counter-offer. "Otherwise it could be silence for another 40 days," Calisi says. "They need to understand that they could have a buyer tomorrow or six months from now."

Miami: Wait if you can; pick the right agent

In Miami, where the market is littered with bank-owned properties and sellers looking to do short sales, it's hard to move a regular listing, says agent Carlos Garcia with the Keyes Co.

Homes here are down 17% in value from the national peak in July 2006, tying with Phoenix for second behind San Diego. (And for the past year, Miami had the largest drop of all cities in the Case-Shiller index.)

With some sellers slashing prices as much as 25% to move their home, Garcia is advising many of his clients to wait to list it if they can. Many, he says, are choosing to rent out their current property to take advantage of the still-strong rents, while waiting out the bottom of the market. "There's an excess amount of inventory. It's going to take awhile for that to all be absorbed," he says.

For those who must sell, it's more important than ever to list with an experienced agent who has a wealth of broker contacts and a detailed marketing plan, including an Internet strategy, Garcia says.

Home sellers, he says, need to choose someone who is easily accessible to them and anyone else who calls about their house. Garcia is always available by e-mail, voice or text. And he markets his properties in English and Spanish on the Web, in print and on television so he doesn't miss any potential buyers. "What's the secret to selling a property? You have to work 180 hours a week."

Las Vegas: Know your buyers

In Las Vegas, overbuilding and shady lending have left 21,000 homes on the market -- 40% of them vacant foreclosures. There are so many that Re/Max Central owner Ruth Ahlbrand has started leading daily bus tours so buyers and brokers can eyeball as many of them as they can at once. (Read more about similar tours here.)

With so many distressed homes on the market, sellers here have lost 16% of their home's value in the past year and a half, according to Case-Shiller. And many sellers are slashing list prices as much as 20% from what they paid several years ago to get a property to move.

There's no question it's a buyers market, she says. And that's bad for people who have to move. But, she says, these sellers can often score big on their move-up. "There's never been a better time to buy," she says. And buyers are starting to realize it. There are more pending sales now in Las Vegas than at the market's peak in 2006. And a new group of investors is rushing in to scoop up deals.

Ahlbrand's colleague, Noah Herrera, recently sold a client's two-bedroom house for $250,000 -- or about $100,000 less than he paid for it. A tough break, to be sure, but that same owner was then able to snap up a luxury four-bedroom home bought for $685,000 a few years ago for a mere $413,000. "He lost money on his house, but the upside (of his purchase) far outgained that," Herrera says.

Still, he says, there are things that sellers can do to get more people interested in bidding on their home. In Las Vegas, where many casino workers are looking for their first home, Herrera advertises government down-payment and closing-cost assistance programs with his listings.

Like Garcia in Miami, Herrera targets his pitch to Spanish speakers as well, putting ads in Hispanic newspapers and connecting with Hispanic business associations.

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