Should Owners Settle for a Lower Price, or Hold on to Their Properties?

When the economic pendulum swings in favor of buyers, it’s swinging against sellers. That makes selling your home doubly difficult. Not only do you have a lot of competition, you’re also unlikely to fetch as high a selling price as you would like.

This leaves you with some tough choices. Should you lower your asking price?  Should you take your house off the market and stay put?  Is it better to hold out for a high selling price, even if that means you have to keep making mortgage payments?

Read on for an updated view on your options as a seller in a buyer’s market and find out how to navigate the tricky steps to selling your home this year.

Housing prices are on the decline (still)

Though the economy in general is showing signs of improvement, housing market prices are still in decline. They’ve been falling for two years straight now. In February 2009, housing prices fell a full 12.2% from the previous year.

Experts expect home prices to continue falling on into 2010. The steady decrease will persist as long as unemployment rises and housing inventories remain high.

Expect a challenge from buyers

Because home buyers currently have plenty of housing options, they’re smarter about their purchases. Many are taking their time to shop so they can find the right house. Several are offering bids below the asking price, driving sellers to negotiate.

If you’re set on selling your home, it may be a fact that you’ll have to swallow a lower price than you hoped for. Despite that, buyers needn’t completely control the negotiation process. Your home is still likely your largest investment and you deserve a fair selling price.

If you’re determined to sell:  Start by finding out your home’s true value

The reality of a buyer’s market makes it tough to aim high on your selling price. Not only are buyers less likely to agree to high asking prices, they’re also less likely to obtain funding.

Remember, credit and mortgage loans are currently more difficult to come by than they were a year ago. Mortgage companies are increasingly hesitant to dole out large loans without substantial proof that the corresponding home value matches the loan amount.

This means it’s virtually essential to get your home appraised before you put it on the market.

While it’s common practice to base your selling price on the asking prices of similar homes in your neighborhood, trends show that sellers are generally starting too high. Even if you’re willing to negotiate the price downward, you have to be sure you go low enough to merit a credible loan for your buyer.

If you don’t want to settle for a lower price:  Evaluate your financial situation

If you have to move for work or family reasons, waiting to sell your house may not be an option. But consider first whether you absolutely need to sell.

When selling your home isn’t essential, it’s not a bad idea to hold out till you can ask a higher selling price. After all, you’ve likely poured a substantial amount of money into your home over the years.

The key factor in whether you should stay or hold depends largely on your personal financial situation. If you can afford to make your mortgage payments for an indefinite period of time, waiting to sell is a viable option. However, if you’re running low on income or you know your income stream will diminish in the near future, unloading a costly mortgage obligation may be the wisest step you can take.

If you ultimately decide to hold out till you can ask a higher selling price, just be cautious. Though it’s virtually guaranteed that the housing market will swing back into the favor of sellers, there’s no way to know when that time will come. It may be in one year, five years, or even ten years.

An alternative selling option

Remember that selling your house the traditional way or waiting to sell till prices rebound are not your only options.

Making a successful sale on a house can be greatly aided by thinking outside the box. If you’re determined to sell in this market, consider offering unique incentives. Fold bonuses into your offer that will make a new home buyer happy.

For example, tell the buyer you’ll have the entire house freshly painted – with the color of the buyer’s choosing and at no additional cost. Or offer a gift certificate for a years’ worth of visits by a housecleaner.

In most cases, such incentives will cost you just a few thousand dollars. Yet the value perceived by the buyer may be much higher.

An alternative holding option

If you simply don’t want to sell your house in a down market but you’re still eager to move, consider renting. Though renting a house can be a challenging, if you do it right you’ll score money for your mortgage payment and you’ll be able to wait for the market to rebound.