Mistakes to Avoid When Selling Your Home
Homeowners, first-timers or seasoned sellers alike, often find the mere prospect of selling a home ignites feelings of stress, anxiety, and yes, sometimes even dread. And, while there are legitimate reasons for a seller’s angst, there is good news for those getting ready to sell their home who want to manage the process with as little anxiety as possible.
Home sellers generally achieve the best results when they have the insight (and the courage) to admit that their minimal experience is no match against a seasoned real estate professional’s expertise.
As a result, smart home sellers often choose to be represented by licensed and/or experienced real estate and mortgage professionals to help ensure they get the best real estate and financing deal available at the time of purchase. One does not need to be a real estate aficionado to know that not every real estate transaction will run smoothly.
However, be sure to stay clear of these home selling blunders.
An Overpriced House
One of the first issues to consider when selling real estate is determining how and where to set the initial list price of the home. Real estate professionals work closely with sellers to determine the right price for each unique situation. The right price varies but should –
- Cover the outstanding mortgage and bring a profit that works for the seller, if any, is available.
- Attract a sufficient number of buyers to ensure a reasonable amount of potential buyers sees the home.
- Be attractive enough to sell the home in a reasonable (or a seller-defined required) amount of time.
- Meet any other seller needs.
There are several ways for sellers to determine the right listing price for their home.
Determining the Right Listing Price
Get a Comparative Market Analysis (CMA) for your Home
A licensed and experienced real estate professional can prepare a Comparative Market Analysis (CMA) presentation for any home seller, upon request. The CMA suggests a list price based on relevant and timely market data of similar type homes in similar neighborhoods.
A Comparative Market Analysis is generally offered by real estate professionals pro bono as it acts as a pathway to a potential listing or sale.
Research Your Own Market Data
Sellers can research recent sales and open listings online that can help the owners develop a well-defined price range for their home.
When researching comparable sales (comps) be sure the comp you use in your analysis has sold within the last 3 to 6 months and meets these essential requirements –
- A home located in a similar or the same neighborhood.
- A similar-sized home and acreage.
- A similar type of home – i.e., condo, one-family, townhouse, etc.
- A home with similar upgrades and condition, if possible.
Hire an Appraiser?
While a professional appraisal can cost more than $500, many home sellers find an expert opinion from a disinterested party is worth the peace of mind it brings. This decision is personal and not a typical course of action, and it is still an opinion, albeit, a licensed professional’s opinion of value.
Why Overpricing your Home can be a Poor Decision?
There are several reasons to avoid overpricing a home for sale.
- An overpriced home can discourage what might otherwise be qualified buyers, especially those whose maximum purchase price falls short of your home’s price.
- An overpriced home generally keeps a home listed on the market longer. Longer marketing times essentially kills any sense of urgency on the buyer’s part.
- If the overpriced home needs a price reduction, potential buyers will likely feel like there might additional negotiating power and pricing wiggle room.
- If the overpriced listing goes stale, the home might sell for less than an appropriately priced home.
What about Underpricing?
In a hot market, sellers have been known to use underpricing as a selling strategy to ignite a bidding war with multiple buyers. Bidding wars often lead to sales prices that exceed list prices. Bidding wars are not typical of a market in balance; bidding wars are one of the ways to define a seller’s market.
Underpricing is generally less of a concern than overpricing.
Next to Location, Timing is Everything
Real estate professionals understand the true cyclical nature of the real estate market. For most real estate markets, the early part of May is generally considered the most effective time to sell a home; however, this may not always be the greatest advice for homes in specific locations. The reality is that weather will still influence a selling season, so be sure to consider this issue – in your part of the world – in the early stages of planning your home sale.
Historical statistics reveal that homes generally sell faster, and for slightly more, during the first two weeks in May. In addition to the beautiful weather, early May brings, buying a home in Spring gives families enough time to ready their kids for the upcoming school year.
Other factors that impact the best time to put your house on the market include the nature of the market – i.e., is it a seller’s market? – the cost of financing and the seller’s readiness.
Never Skimp on Repairs
In 2018, the Zillow Group issued a report regarding current trends in consumer housing. Many interesting insights were revealed in this report. For example, sellers make an average of 2.2 renovations or repairs before putting the house on the market. Nearly 80% of homeowners with an intent to sell make at least one improvement before selling.
When selling a home, small but apparent defects can be a huge turnoff to buyers. What might have been a simple oversight on the seller’s part can be reframed in the buyer’s mind to mistrust everything else about the house – especially those areas with no access.
Consider a Pre-inspection Before Listing the Property
Sellers can opt for an inspection done by a trained professional. A trained inspector can identify potential issues prior to listing a home for sale – before a buyer notices.
A pre-inspection provides the seller an opportunity to make repairs, or to price the home, accordingly, given the identified issues.
There are a few ways to help ensure that the buyer is never the person who notices the skimpy repairs first.
Offer a Repair Credit
There are ways to manage the closing process with a home needing minor repairs. If a seller does not want to make the repair before listing their home, offer potential buyers a credit at closing for a reasonable amount to correct the problem, after closing.
Reduce the Property’s Listing Price
Another option to facilitate a real estate sales transaction closing is for the seller and the listing agent to reduce the initial listing price to reflect the necessary repairs. It is important to clarify that the reduced list price is due to the needed repairs. This clarification is needed because it is likely that buyers will still want to negotiate the list price lower.
A seller who repairs all outstanding issues – small or large – creates a turnkey property (a move-in ready property), which is often highly desirable.
Average Costs for Common Home repairs
Before deciding on either course of action that works best for you, remember that certain property repairs can be relatively expensive. Here are a few repair estimate examples for a typical home –
- Plumbing Repairs – $2,500 – 7,500
- Roof Repairs $2,200 – $10,000
- Driveway Repaving – $4,000 – depends on size and length of driveway
- Exterior Painting – $3,500 to $7,500 – depends on the size and height of structure(s)
- Windows – price varies based on quality functionality and number of windows needed
- New furnace: $2,300 to $5,000
- Electrical Work $1,000 to $7,000
- Carpet of Flooring – $2,000 to $7,000 – depends on materials used and size of home
- Decking – $2,000 to $10,000
Leave Your Emotions Outside Your Decisions
A real estate professional can be quite valuable when selling a home as they approach the sales transaction with one primary objective as a fiduciary agent – to negotiate the best deal for their client. A professional real estate licensee negotiates from a business perspective because, unlike their seller clients, they have no emotional attachment to the home begin offered for sale. Removing emotions from any decision helps improve the decision maker’s chances of making the best decision at that time.
Seller Mistake – Do not Take Real Estate Negotiations Personally
Although it can be challenging, the best approach during the process of selling your home is to stay levelheaded and remain realistic as the negotiations unfold. Most homes need minor repairs, so avoid letting a buyer’s repair request derail the entire sale because the request was somehow insulting.
Seller Mistake – Being Inflexible Regarding Home Showings
Putting a home on the market can often be disruptive to a family’s everyday daily routine, and at times, yes, inconvenient. Home showings and open houses are a necessary part of the home selling process because most buyers would find it nearly impossible to buy a home sight unseen, although it has happened.
And while real estate agents coordinate and show homes, they must show the house at times and days that work for the seller, with the seller’s consent. Most sellers prefer to vacate the premises – bringing the pets and kids along – when buyers are taking a tour of the home. The reality is it is difficult for buyers to envision living in the home if the current owners are milling about during the showing.
Do Not Forget to Prep & Stage the House for Sale
There are simple and cost-effective ways to prepare a home for sale is to take the time and effort to clean, brighten, and unclutter your home. This idea, which is often known as staging, can be quite valuable. This is because staging helps potential buyers envision how the home may feel if it were their own, rather than staying stuck in the fact that the sellers could not even bother to clean up space before a showing.
Staging 101 – Declutter & Depersonalize
As previously noted, buyers need to envision their families living in the home they are viewing. Here are a few helpful hints to declutter and depersonalize your home.
- Declutter each room in your home by renting a storage unit or using a friend’s house that has extra space. Remember, a room looks spacious when there are few items in it.
- Donate items and things that you and your family no longer want or need. This helps others and reduces moving and storage costs.
- Stage rooms that have will appeal to many buyers. For instance, an extra bedroom would be better staged as a guest bedroom than a home gymnasium. There are professional stagers that can be hired for those sellers who want to appeal to the largest group of buyers.
- Consider interior painting in neutral colors that will appeal to most homebuyers.
The Zillow Group Consumer Housing Trends Report 2018, previously mentioned, revealed nearly half of recent buyers reported that a staged home (in varying levels of staging) had some impact on their ultimate buying decision. Consider these suggestions for preparing a home for sale –
- The home for sale must be cleaned thoroughly – this includes sweeping, mopping, and vacuuming.
- Appliances and countertops should be polished and clean.
- Eliminate malodors using products designed for this purpose or, better yet, bake an apple pie during an open house. Nothing smells more like home than apple pie.
- Bathrooms should be spotless.
- Closets should be organized as this helps buyers understand the available closet space.
- Laundry should be put away.
Not Hiring a Professional Photographer
Professional photographs are critical, especially in the modern real estate market, where many home buyers form their first impression online. Think about it, the pictures uploaded must present your home in its best possible light, and this can only be accomplished with a trained photographer’s eye.
According to Zillow’s 2018 homebuying trend reports notes that nearly 80 percent of buyers search for homes to buy online – where the only first impression a buyer will ever get will be the photographs represented digitally online. Professional photographers are trained to present your home in its best possible way, using natural light and expert insight. Use their talents to your advantage.
Overlooking the Importance of Curb Appeal
As they say, one never gets a second chance at a first impression. This adage applies to real estate in a significant way. When a potential purchaser drives up to your home for a showing, their first impression – at least in person – is the home’s exterior and outdoor living spaces.
As such, it is essential to spend sufficient time on the home’s exterior, in addition to the home’s interior. The following list are examples of suggested curb appeal ideas –
- Keep the lawn manicured and welcoming.
- Paint the home’s exterior, if it is needed.
- Maintain safe, clear walkways.
- Keep up with seasonal maintenance tasks.
- Plant flowers and colorful plants.
Remember to Consider Closing Costs
Many sellers forget to consider the costs and expenses of selling a home when deciding upon the home’s listing price. By overlooking the costs to close, sellers erroneously anticipate profits that will eventually be needed to cover the costs of selling a home.
Closing costs vary widely depending on the location of the property. In fact, some areas may require sellers to pay upwards of 10% of the home’s selling price broken down as follows –
- Real Estate Commissions – while these can be negotiable, real estate commissions are typically 6% – split between the selling and buying agencies
- Real Estate Transfer Tax – State governments levy this tax, and the tax rates vary from state to state. The actual amount paid depends upon the sales price of the home.
- Pro-rated Property Taxes – homeowners are responsible for the taxes on the property up to the date of closing. Because taxes are generally paid only once or twice per year in most taxing jurisdictions, this pro-rated adjustment is required to ensure each party to the transaction pays their allotted portion.
- Attorney Expenses – Many states, including Washington, DC, require sellers to hire a lawyer to represent them in the sale of their home.
Not Hiring an Agent (if you’re not willing to do the work)
The actual process of selling a home is quite complex, with many players who must act with coordinated efforts if the transaction is to close smoothly and as planned. Sellers who choose to sell their home with the help and guidance of a licensed real estate agent will find they receive many benefits.
A licensed real estate agent takes charge of the paperwork and process, which eliminates a great deal of stress for the seller. Minimal stress gives sellers a chance to make better-informed and less emotional decisions.
A licensed real estate agent possesses knowledge and experience in the local real estate market, which is valuable during negotiations.