Ask Money

Selling A Home in a Down Market

Chris Farrell Feb 7, 2008

Question: My family lives in a 107-year-old house. We have dreams about a slightly newer home with more yard and more practical family space. We’ve talked about selling for about two years now, but have watched the market get worse and worse, and our home value drop from near $400,000 to maybe $300,000. And our friends fret as their houses sit on the market for months.

We’re tired of being stuck in limbo, but I’m completely freaked out by the idea of living with two little boys in a house that needs to be market-ready 24-7 for the months it may take to sell.

Still, we’re talking about biting the bullet and placing the house in the market this spring. Should we get a bridge loan and move out of our house before we ready it for the market? If not, what kinds of resources can you recommend as we get ready to sell? And how do you recommend we find out the true market value for our home? Thanks! Maria

Answer: I wouldn’t take out a bridge loan, especially in this market. Bridge loans are expensive, and you could end up holding it for far longer than expected. There’s always the risk that potential buyers don’t bid on your home. Then what?

Now, it can be a pain keeping a home clean and presentable with two young, active children. But that pressure is nothing compared to the pressure of a bridge loan gone awry. It would be far better–and cheaper–to hire a cleaning service for the time your home is on the market. I would also find a realtor who’s used to working with couples with young children, and can work with you on scheduling buyer viewings. You can structure visits by potential buyers to your home. No need for it to be ready for “show” all the time.

The value of your home is a moving target, as everyone wonders “Where is the real estate market bottom?” But you can get a good sense by spending time on websites like zillow.com. Real estate agents will also print you a list of prices for comparable home sales in your neighborhood in recent months.

In the next several years, I expect more families in your situation to opt for remodeling over moving. Homeowners are in a much better bargaining position with contractors. Remodeling prices should be much better than even a few years ago with the downturn in the housing market and the economy. With business falling off, contractors should be more willing to negotiate and strike a reasonable deal. I don’t know if that works in your situation, but it’s an alternative to research.

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