Page Two: Sellers get creative: Desperate to unload their homes, sellers are trying everything from auctions to essay contests

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Auctions: This house is going once, going twice

Images Courtesy of Realtybid.com List price: $399,000 Starting bid: $273,000 Size: 3,000 square feet Details: This five-bedroom, three-bath house -- custom built in 1992 -- has a stately brick exterior and hipped roof. The heart of the home is the kitchen, with a center island and French doors to the sunken sunroom and the family room with gas fireplace. The home features nine-foot ceilings on the first floor, a grand entry foyer with oak flooring, tray ceiling in the dining room, first-floor laundry and first-floor den. The three-car, heated garage offers a second entry to the basement. Listing agent is Kelle Cohol with Coldwell Banker, First Place Real Estate.

Auctions have long been a popular route for selling luxury property and, on the opposite end of the spectrum, foreclosed homes. But recently, owners of mainstream homes have been taking their property to the bidding block. A growing number of real estate agents and auction companies specialize in this niche -- online auction site RealtyBid.com, for instance, had record business in 2007, though auctions represent a mere 1 percent of all real estate transactions, according to the National Association of Realtors.

Advice to sellers: Auctions can be especially useful if your house is unusual or difficult to price. “Done well it can be an excellent way to market property, NAR spokesman Walter Molony says. “But, a lot of people who try an auction end up having to go the traditional route anyway because they can’t get their minimum price.” (Bottom Line: Still catching on with buyers. Worth trying if you understand the risks.)

Advice to buyers: This can be a good opportunity for investors, says Jon Boyd, past president of the National Association of Exclusive Buyers Agents. Still, for someone looking for a home to actually live in, the likelihood that the house up for auction is a good match may be slim. In any case, make sure you inspect the property and set a limit on how much you pay. “What you don’t want is to get caught up in the auction mentality,” says Boyd. (Bottom Line: Worth a shot, if the price right.)

Incentives: Take everything, and the kitchen sink

Over the past year, builders have been enticing buyers with the promise of upgraded appliances, trips to Europe and luxury car leases. Why? They’d rather hand out freebies than drop the recorded price—thereby affecting the value of all the other houses they have on the market. Now individual sellers have started wooing buyers with free stuff. The most effective incentive, say experts, is good old-fashioned cash—to go toward a buyer's down payment, mortgage points or closing costs.

Advice to sellers: Cash incentives are a great way to distinguish yourself. “For a lot of buyers, this can mean the difference between being able to buy the house or not,” says Jay Papasan, coauthor of Your First home: The Proven Path to Home Ownership. (Bottom Line: A great low-risk way to get buyers’ attention.)

Advice to buyers: Don’t let the free plasma television distract you from what really matters: the right house at the right price. (Bottom Line: Worth considering, if you think of the freebie as icing on the cake.)

Seller financing: No down payment? No problem!

Images Courtesy of Realtybid.com List price: $160,000 Starting bid: $112,000 Size: 2,000 square feet (total) Details: Each side of the duplex features three bedrooms and two full baths. The lawns have been professionally manicured for the past three years, and the tenants signed their annual leases in January. The duplex is located in the sought-after Kings Bay/Kingsland/St. Mary’s area, near the Kings Bay Naval Submarine Base and 30 minutes from Jacksonville, Fla. Represented by Jeanette Brandon of Solid Source Realty.

Seller financing fell out of vogue during the real estate bubble, when many lenders thought nothing of giving buyers 100 percent financing. Now that banks are tightening their belts, some brave sellers are offering to help finance the purchase of their own house. In a typical deal, the seller will lend the buyer 20 percent of the home’s purchase price, which the seller can then apply toward the down payment. (Buyers will need to disclose this loan when they shop for a first mortgage.) The arrangement is similar to a traditional second mortgage in that the buyer agrees to make monthly payments of principal and interest over, say, a five-year period. If the buyer goes bust, however, the seller gets in line behind the bank holding the first mortgage.

Advice to sellers: This tactic is worth trying, especially if you’re hoping to appeal to first-time buyers, says Irwin. “The tricky part is making sure you have a buyer who is going to pay you back.” Scrutinize the buyer’s credit and income, and make sure terms of your agreement are all spelled out in writing. (Bottom Line: A good option if you have equity to spare.)

Advice to buyers: Assuming you can afford the extra monthly payment and can’t get a better deal from a bank, this can work out quite well, says Boyd. “We rarely see cases of seller financing where the buyer is taken advantage of.” (Bottom Line: If the terms make sense, go for it!)

Lease options: Take this house for a test drive

A lease option is another route for sellers to appeal to buyers who might not otherwise be able to get their foot in the door. In a typical arrangement, the would-be buyer pays the seller a non-refundable option deposit worth anywhere from first and last months’ rent to 2 percent of the home’s value. That deposit gives the buyer the option to buy the house within a specified period of time for a specified price or one that’s tied to market value. Then, for the duration of that period, the buyer pays rent plus an additional amount to be put toward the purchase price. When the time is up, the renter/buyer can either buy the house or walk away, usually sans option deposit.

Advice to sellers: If you can afford to keep your equity locked up in the house, this is one way to cover your expenses and entice buyers or renters who otherwise wouldn’t give the house a second glance. “It can be a win, win,” says Papasan. In some states, these transactions are highly regulated. So be sure you know the rules. (Bottom Line: An appealing option if you don’t mind playing landlord.)

Advice to buyers: If you’re not ready to buy but don’t want to miss out on this buyer’s market, a lease option can be a great deal—provided you have a legitimate seller. Plan to work with a real estate expert who can negotiate on your behalf, says Boyd. (Bottom Line: If you work with the right seller, this can work very well.)

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