Your home: Prepare for a tough sell in 2011

MADISON, Wis. (1/12/11)--If you're planning to sell your house in 2011, it's going to be a tough market.

That's the consensus of a number of analysts predicting that home prices will continue to fall, interest rates will rise in the second half of the year, and the number of sellers will continue to outnumber the number of buyers (seekingalpha.com Jan. 4).

The mortgage market has been so dismal Moody's Analytics suggested last year that in many markets in the U.S. it made more sense to rent than to buy. The cost to rent has gone up a modest 3% the past year and should continue to be moderate.

Some observers, however, say the market may improve by mid-2011 and certainly by the end of 2011. Moody's chief economist Mark Zandi told CNNMoney.com (Jan. 4) that owning a home again will be more advantageous than renting. His reasoning: Home prices will fall more, making ownership more affordable and the oversupply of homes for sale will keep already depressed home prices low. And while mortgage rates will rise in the second half of 2011, they will remain low by historical standards.

While forecasts for the housing market are varied, motivated sellers can succeed with these steps:

First, get your house ready to sell. Often referred to as staging, and the subject of many television shows, this simply means taking an objective look at the sales appeal of your home. Does it need painting, new carpet, or minor fix ups? Get rid of things that make it your home--photos, for example. Make it as neutral and as uncluttered as possible. Sell to buyers' needs, not yours. Be honest with yourself about its curb appeal.

Second, decide whether you'll go it alone (FSBO or for sale by owner) or enlist a broker. FSBO means more work on your part, but potentially more money in your pocket. And you'll likely have to fend off numerous calls from brokers hoping to get your listing. Listing with a broker offers greater marketing potential, but you'll be paying commissions to the selling agent and usually a buying agent.

Third, decide whether you're willing to offer incentives. Even if you go it alone you might want to consider a commission to the successful buyer's agent. Agents are likely to nit pick your house to death if they show it without one. Consider including paying for a home warranty for the first year or two. They typically cover all appliances and the heating and cooling systems, for around $500 or so annually. Or offer to pay a portion of the buyer's closing costs; you can deduct it as a sales cost.

Finally, be patient. Just try to find someone who can give you an accurate picture of how long it will take to sell a home these days. It all depends on local market conditions.

For more ideas, read "You Can Sell Your House--Even in a Down Market," in Home & Family Finance Resource Center.