With the credit crunch and huge amount of competition from distressed properties, “normal sellers” have had a tough time getting their properties sold. If you must sell in this market, it’s absolutely critical that you price your property right.

Pinpointing the best possible price for your home can be a challenge. If you overprice your property in today’s market, it can stay on the market for months. If values in your area are declining, the longer you take to sell, the less money you will net. If you want to net the most from your real estate sale, avoid these common seller pitfalls:

1. Basing the list price for your home on the list price of other properties
This is probably the most common mistake that sellers make. They look at what other properties are listed for in their neighborhood and base their price on those numbers. This is a huge mistake. To correctly price your property, the only accurate “comparable sales” are those properties that have closed either for all cash or where a lender has funded a loan. While properties may be selling, many are not closing due to the credit crunch. Appraisals are a huge issue. The reason is that a property worth $200,000 today may be worth $196,000 when it closes 60 days later. Appraisers are aware of the issue and often set values more conservatively as a result.

You can obtain comparable sales information online from real estate brokerage sites, Realtor.com and multiple listing service (MLS) Web sites. These online resources are a great starting place. The challenge is that they often lack up-to-date sale and/or price-reduction data. The best source for comparable sales information is a competent local broker who has access to the most up-to-date MLS data.

2. Basing your list price on what you paid for the property
Many sellers believe that what they paid for the property influences their current sales price. “We paid $200,000 for the property three years ago. We have to sell it for at least $218,000 to break even.” This reasoning is based upon a very common fallacy. Many people believe that the agents and the sellers determine the price at which a property will sell.

The truth of the matter is that the real estate market is like the stock market. The buyers — not the sellers or agents — determine whether a property is saleable in any given market. For example, if you paid $80 a share for IBM stock and today it’s selling for $50 a share, if you wanted to sell for $80 per share, you wouldn’t be a seller in today’s market. The same is true for your real estate. The price you paid for the property has no bearing on what the buyer will pay (It does make a difference in terms of your tax liability and a host of other issues.).

3. Overestimating the value of your improvements or upgrades
Many sellers have a challenge understanding how the improvements or upgrades that they have made to the property impact value. Some improvements do increase value. Generally these include adding square footage or bringing your property up to the same standards as most other properties in the area. Most improvements, however, make your property more saleable, but they don’t necessarily add to the value.

For example, assume that you have white travertine marble countertops throughout your home and distressed walnut floors. These features make your home more attractive to potential buyers, but normally don’t add much to your sales price. The reason is that those improvements have no value to a buyer who prefers dark granite and plush carpets. Also, if you overimprove your property by making your home substantially larger than that of your neighbors, you probably won’t recoup that money either.

4. Testing the market
Sellers often want to “test” the market. “Let’s list it at a higher price for a few weeks and see what happens.” This is a huge mistake. Real estate professionals know that all listings have a “honeymoon period” where the listing will have the most showings. This normally takes place during the first 30 days the property is on the market. The reason is that buyers who have not yet found a property attempt to see new listings as soon as they come on the market. This initial rush normally drops off after the first 30 days. After that, showings are normally limited to new buyers coming into the market. If you don’t sell during the honeymoon period, there’s a high probability that your property will be on the market for an extended period of time. You can generate additional interest with a price reduction, but it never creates the attention you receive when you first list the property.

To get the most from your real estate sale, avoid these costly mistakes.

We are selling our home to a nice young couple for $192,000. Our loan amount is $179,800. We have just enough money to close the transaction and pay off our existing loans. The buyers have 10 percent down and were applying for a 90 percent first. Our agent just called us and said the appraisal came in $15,000 low. She was quite angry. She said that the appraiser normally worked in an area 60 miles from here and had no experience with our area. The comparable sales he used were from a different school district and in a much less desirable area. We don’t have any more cash to put into the deal and the buyers don’t either. What can we do? Everyone still wants to close. –Tina B.

Tina, although it may not seem like it, you’re lucky that your buyers still want to buy your home. What normally happens when the appraisal comes in low is that the buyers walk away from the deal.

Even in strong markets, getting accurate appraisals can often be difficult. The challenge you are describing may be partially due to recent changes in the law. These new changes are causing tremendous problems for both clients and agents alike.

In the past, a lender might use an in-house appraisal if it planned to keep the loan in its portfolio. If the lender planned to sell the loan, which was usually the case, an independent appraisal was normally required. The lender could call the appraiser directly to place the order.

Because of the financial meltdown and the credit crunch over the last two years, regulators put a new set of rules into play for mortgages slated for purchase or guarantee by Fannie Mae or Freddie Mac.

The new rules, called the Home Valuation Code of Conduct (HVCC), prohibit mortgage brokers originating loans destined for purchase by Fannie and Freddie from ordering appraisals directly. Loan officers working for banks and other lenders must also delegate the process of ordering appraisals to other in-house staff, or go through an appraisal management company.

The code, which went into effect May 1, appears to be creating more problems than it is solving. For example, the appraisal is now tied to the lender rather than the borrower. This is a huge detriment to consumers, because, as in your case, if there is a problem with the appraisal, you may have to start the entire process over with another lender.

The code does not prohibit Realtors and lenders from talking to appraisers — they can still request that appraisers consider additional data or correct errors in their report. But the system is creating other problems as well.

Agents are complaining that they aren’t getting confirmation calls back from appraisers, that the cost of appraisals has increased anywhere from $75 to $100, and the people being assigned to conduct the appraisal are not experienced in the area. Furthermore, under the old system, appraisals could often be done in a matter of days. With the new system, appraisals can take more than a month to complete.

What can you do in your case? There’s certainly no harm in trying to figure out if there is a way to come up with additional money to close the transaction. I had one transaction where my clients had a 2-year-old car that was paid off. They put a new loan on the car to close the transaction. The challenge is that increasing your indebtedness can change your qualifying ratios. This could potentially keep you from qualifying. Sometimes it’s a matter of selling appliances or having the seller and agents carry a small second mortgage — I’ve done this many times and have always been paid on them.

A different alternative is to apply for a loan insured by the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA). The Home Valuation Code of Conduct does not apply to FHA or VA loans — or to “jumbo” mortgages too large for purchase or guarantee by Fannie Mae and Freddie Mac.

The buyers will have to pay for the second appraisal, but there’s a good chance it may come in closer to the price you need. To make sure that this happens, ask your agent to gather together the following information to give to the new appraiser.

1. A list of all comparable sales, preferably where the lot square footage and the improvement square footage are within 10 percent of the size for your home.

2. For each comparable sale, ask the agent to obtain exterior pictures. If possible, also have her contact the listing agents on these properties to see if they have a virtual tour or other interior shots of the property.

3. Have your agent check online data for comparable sales on sites such as Realtor.com, HomeGain, Trulia and Zillow to see whether any additional data is available on those sites. You can also use online valuation tools such as Zillow’s Zestimates, which is an automated system that estimates the value of the property. Although lenders normally don’t accept these, they may be useful in persuading the appraiser.

4. The most important step is for your agent to meet the appraiser at the property and personally give the appraiser this data. Although it may be inconvenient, it’s extremely important that the agent is there to answer any questions the appraiser may have about the comparable sales.

Good luck getting this closed!

Sellers who are lucky and receive more than one offer should carefully consider all aspects of the offers before accepting the one with the highest price. Even if you receive only one offer and it’s lower than your asking price, you might want to consider bending some on your price in exchange for a transaction that is likely to close.

Ideally, you want a committed buyer who has a good credit score and financial resources, and who has been preapproved for a mortgage, as lenders have tightened their qualifying criteria considerably.

HOUSE HUNTING TIP: Your real estate agent should ask the buyer’s agent for permission to contact the buyer’s mortgage person directly to find out if there is any reason the buyer wouldn’t receive credit approval. An offer from a gold-plated buyer at a lower price may be a better deal than a higher-priced offer from a marginally qualified or low-cash-down buyer.

Another issue to consider if you receive more than one offer is the likelihood of the property appraising for the higher price. Appraisals have become a problem recently, particularly in declining markets. Appraisers make downward adjustments for properties that are deemed to be in declining markets.

Are there at least three comparable sales that closed within the last three months that can be used to justify the buyer’s offer price? If not, the appraiser might have difficulty appraising your property for the purchase price.

Buyers usually include an appraisal contingency in their offer. If so, the buyer usually has the option to withdraw from the contract if the property appraises for less than the contract price. Some buyers won’t buy a home that appraises for less than they’ve agreed to pay.

A buyer who is committed to making the deal work is more likely to be able to accept an appraisal that is lower than the purchase price. In this case, the buyers and sellers negotiate a mutually acceptable resolution. For example, the sellers could agree to accept a lower price if the buyers agree to increase their cash down payment.

Many buyers don’t have additional cash. In this case, if the seller wants to keep the deal together and the buyers won’t or can’t complete the purchase at a price higher than the appraised value, the contract price will need to be reduced or the deal will fall apart.

There are a lot of uncontrollable elements in a home-sale transaction. One is that you have no control over who represents the buyer. That is, unless you receive more than one offer. In some cases, it may be worthwhile to accept a lower-priced offer from a buyer who is represented by an agent with a good track record in your area — one who is experienced, trustworthy and diligent.

A clean offer is one that is not loaded up with contingencies. Typical contingencies are for inspections, and loan and appraisal approval. An offer that’s contingent upon the sale of another property is riskier than one that’s not. A noncontingent offer, even at a lower price, might be the best offer because it has more certainty of closing.

An offer that is contingent upon the close of another escrow may be worth the risk, particularly if all contingencies have been removed from the buyer’s contract. Request confirmation from the buyers that contract contingencies have been removed and find out from the closing agent or escrow officer when the closing is likely to occur.

THE CLOSING: The uncertainties in the current market make it important to carefully consider the terms of an offer, not just the price, before you accept it.

Homebuyers are finding tougher guidelines and higher premiums from insurance carriers, and there certainly aren’t any bargains for sellers who need to move or would simply like a change of scenery.

In a recent case, owners decided to sell a three-bedroom, three-bath primary residence and move into a nearby rental property they owned that better fit their needs. The primary residence, on a gorgeous acre with wonderful landscaping and a couple of ponds, demanded more time and maintenance than the owners had to give.

“We put it on the market in February and the place still hasn’t sold,” said Pat Hanrahan, who admits not all families are devoted gardeners with the time and interest to maintain such a place. “We were just going to continue to leave it vacant and try to sell it, until we found out how much it would cost to insure the place.”

The Hanrahans had an excellent relationship with their insurance carrier and had a flawless history with the two homes, two cars and a boat. However, because the primary residence was now unoccupied, vacant and for sale, the insurance premium had jumped to nearly eight times the normal rate.

“The premium for the previous year was $528, and the least expensive insurance that we could (find) once it was vacant was $4,000 a year,” Pat said. “I couldn’t believe it, but a friend told me he had the same experience with a home in his family.”

Insurance companies simply do not want to deal with unoccupied, vacant and for-sale homes. Their history charts show that these places stand a much greater risk of vandalism than an occupied home, and problems occur that are created by neglect. A slow leak in a cold, unoccupied home has a greater chance of resulting in burst pipes and subsequent dry rot than in a home that’s lived in every day.

So, what’s the insurance grace period when selling a home? If an employee is forced to relocate with little notice, put his wife, family and belongings in a moving van and go, how long will the vacant home be covered? Many insurance companies will give 60 days for a transitional “vacant” period as long as the premiums are paid. (Some states require that insurance carriers give 45 days’ notice when coverage is canceled midterm. A 30-day advance is generally given for renewal notices, but companies often allow 60 days to make up for mail time
and weekends.)

According to a cursory survey of insurance agents, coverage on homes, apartments and condominiums has not returned significant profits to the insurance industry for the past 20 years. Claims that have been paid for earthquake, hurricanes, flood and fires in the western United States really have taken their toll.

Some traditional, major carriers have even adopted a moratorium on “substandard” or higher-risk insurance. Unoccupied, vacant and for-sale homes have slid into this category. Special niche companies that continue to write substandard policies often impose a monthly quota on the number of cases they will consider.

Why are insurance premiums so high? Insurance agents and carriers point to the numbers — claims filed involving mold, lead-based paint, asbestos, radon and urea formaldehyde are up significantly. While all of these environmental hazards have caused terrible losses, other industry costs — all passed on to the consumer — involve cases compounded by expensive legal proceedings where neither side receives any real benefit.

For example, a recent case involved a renter who died in a house fire. The fire marshal determined the cause of the fire was the renter’s smoking in bed. The renter’s family filed suit against the seller’s $500,000 liability policy, claiming the smoke alarms were not working properly.

The Hanrahans had heard all the reasons for skyrocketing coverages, but they still couldn’t believe the cost to insure the home they still wanted to sell.

“I even thought of moving some furniture back in and bringing in my sleeping bag,” Hanrahan said. “But we decided to get a renter and give him a greatly reduced price. He’ll have his stuff in there and make sure the real estate agents have access to show it.”

The Hanrahans said that the renters won’t have to pay market rent and they’ll save a ton on the insurance premiums because it’s occupied.

Q: My wife and I are four months into a yearlong lease. My husband has multiple sclerosis, and now uses a wheelchair. The bathroom door is too narrow to let him through, and once in, the chair wouldn’t even be able to turn because the room is so small. We need to find an accessible apartment, but the landlord says we have to find someone to take over the lease in order to avoid being responsible for rent for the rest of the lease term. What can we do? — Mickey M.

A: The first thing to do is educate your landlord on his responsibilities under the federal Fair Housing Amendments Act, which protects the rights of disabled tenants. The Act has two broad rules for landlords: First, when a disabled tenant proposes a change in the landlord’s rules or policies, the landlord must comply unless the change would be unduly burdensome (generally, the landlord pays whatever expense is associated with the request). This is known as an “accommodation.”

For example, a tenant in a wheelchair would be entitled to preference when it comes to parking, which is otherwise often handed out on the basis of seniority. Second, when a tenant proposes modifying his own living space, the landlord must allow the modification — but again, subject to the reasonableness of the request (except in Massachusetts and some federally financed housing, the tenant pays for these modifications).

From the sounds of things, modifying your apartment isn’t feasible. You’re not asking for the relatively easy installation of grab bars or lowering of light switches. To accomplish the goal (to allow your husband to live safely and comfortably, by being able to enter the bathroom and move about in it), you’d have to expand the room, moving walls, fixtures and plumbing. This is major work, and few tenants are able to pay for it. Nor would most landlords want their building modified to this extent. Just as a landlord can refuse, say, to install an elevator in an old building because the cost would be unduly burdensome, you too can decide that major interior reconstruction is not a reasonable response to the problem.

Looking for a new place makes sense. In most situations, lease-breaking tenants would indeed be on the hook for the balance of the rent unless they come up with an acceptable substitute (or the landlord finds one, using reasonable efforts to re-rent). But we’re not talking about a normal situation here.

Discrimination against a disabled person includes “a refusal to make reasonable accommodations in rules, policies, practices or services, when such accommodations may be necessary to afford (a handicapped) person equal opportunity to use and enjoy a dwelling.” (42 U.S.C. § 3604(f)(3)(B))

In practical terms, you are asking the landlord to vary a “rule or policy” — namely, the ending date of the lease — so that your husband can live in a place that is safe and accessible. At least one court has recognized the validity of a request like this (see, for example, the case of Samuelson v. Mid-Atlantic Realty Co., Inc. 947 F.Supp. 756 (D.Del., 1996)).

Have a talk with your landlord, and point out that early termination of your lease is the legally required response to your request for an accommodation based on your husband’s disability. If you don’t get anywhere, consider contacting HUD, where you can file a housing complaint online. Meanwhile, find a safe place and move. If your landlord keeps your deposit to cover unpaid rent, you’ll have to sue in small claims court to get it back. It’s hard to imagine a judge ruling against you and your wife.

Contingent sales are always difficult. If you elect to take your property off the market and prices in your area are declining, you run the risk of your house being worth even less than it is currently.

If you agree to a contingent sale, the first step is to set up the contract where you can cancel within a specified amount of time. Typically the buyers have 60 to 90 days to place their property under contract and to close on both their current property and your property. Alternatively, you could give the buyers a specific number of days to remove the contingency regarding the sale of their home.

Here’s where it gets tricky. If the buyers have not sold their house and they remove their sale contingency, will they still be able to close on your property? To protect yourself, ask the buyers to demonstrate that they have their down payment from a source other than their present property. They must also be able to qualify for payments on two houses. Ask for a “preapproval” letter from the lender, not just a “prequalification.” Given today’s current lending environment, it’s extremely difficult to qualify for payments on two houses.

This situation becomes even more complex if you receive a backup offer. You could be at risk to sell your house twice. For example, assume that you accepted the original offer contingent upon the first buyers selling their house. The buyers have not yet sold their home when you receive a second offer without a contingency. You decide to cancel the first offer and take the second offer. The challenge is that unless the cancellation is handled properly, you could still be obligated to sell to the first buyers, even though you have a binding contract with the second buyers. Needless to say, this is the type of situation that could easily end up in court.

Be cautious. Protect yourself by hiring an agent who understands what is required to handle backup offers. If your agent seems unsure, consult with his or her office manager and/or broker. Alternatively you can check with an attorney. In many cases, the local or state board of Realtors has special forms for handling contingent sales. Since contingent sales are so complex, please carefully weigh whether it’s better to agree to the contingent sale or wait for a buyer who doesn’t need a contingent sale.