Before house goes on the market, get an analysis


January 12, 1992|By ELLEN JAMES MARTIN

You own a snug rancher in Pikesville. For better than a year, you've contemplated moving to a large colonial in Reisterstown with a bedroom for every kid. But you're not sure. All the talk about soft housing prices has you worried about what your rancher would fetch.

Then you get an idea. Why not test the market by putting the rancher up for sale before you've actually committed to letting it go?

Yet what seems like a bright idea is not so bright, realty experts say. Sure, you'll get a notion of what your house might bring if prospective buyers start to nibble. But the market will soon realize you're playing games. And when you're finally ready to sell, the excitement will have dissipated from your listing.

"When you're false fishing, all you do is wear yourself out, exhaust the agent and aggravate buyers who come down the line," says Norman D. Flynn, a realty executive and former president of the National Association of Realtors.

A far better way to gather information for a selling decision is to ask at least three reputable agents to give you a free "market analysis" of your property. By comparing your home to similar properties in your neighborhood, a good agent will come up with a realistic estimate of your home's value.

False fishing is one of the five most common mistakes people make when they're trying to decide whether to sell. Here are the others:

* Mistake No. 2: Waiting until you actually sell before seeking out price information through market analysis.

Only 5 to 10 percent of U.S. home sellers seek such information in advance of marketing a home, according to Monte Helme, vice president of Century 21 International. It's understandable that some homeowners must hurry because of an unexpected job layoff or job transfer. But many sellers have time to decide and could benefit from a market analysis months before putting their home on the market, Mr. Helme says.

"Getting a market analysis is an excellent way to see what real prices are doing out there and there's no obligation on your part," Mr. Helme says. "All you have to do is call the agents and say you don't want to sell right now -- that you just want to know what your property is worth."

* Mistake No. 3: Failing to ask an agent doing a market analysis for a net figure on what your house could bring.

"The net and gross are two totally different figures," says Mr. Helme. Sellers often face various transaction costs in selling their homes. If they hire a full-service agent, as most sellers do, they're likely to pay a hefty commission as well. All these deductions can significantly reduce your bottom line.

Some agents, especially the inexperienced, may be sheepish about writing down a commission figure, Mr. Helme says. They fear it will discourage you from picking them as an agent. And they worry that you might engage a discount broker or try to sell the property on your own.

But unless you demand all the numbers, you won't have a realistic picture of what a selling decision would mean financially and whether your can afford to make the move you have in mind.

* Mistake No. 4: Failing to tell an agent doing a market analysis about defects in your home or the surrounding area.

You may be reluctant to admit that your roof needs replacement or that a new prison is planned in your vicinity. But all such factors could heavily influence the bottom line when you sell. And Maryland legislators are considering a bill that would force home sellers to disclose major defects to realty agents.

"It can be painful for consumers to tell anything negative that could hurt the value of their home. But if you're sitting on some radon gas or a dump site, or if a freeway will be cutting across your back yard, you'll want to tell the agent to get an accurate figure on what the property will bring," Mr. Helme says.

* Mistake No. 5: Failing to make sure your market analysis is professionally done.

A few agents take a less-than-professional approach to preparing a pricing estimate, Mr. Helme says. Some take a casual approach in selecting comparables -- similar properties used to judge a home's worth.

To develop a serious market analysis, you can expect an agent to spend at least an hour doing a preliminary interview at your home, another hour back at the office, and a final half hour explaining his results. You can also expect that comparables will be truly similar properties, located nearby, that have sold within about the last six months.

"Anything less than that is a 'kiss and run' analysis and will do you very little good," Mr. Helme says.

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