Avoiding the Top 10 mistakes when selling a Home
As the New Year begins the North Texas real estate market is on fire. Homes are selling yet we find ourselves in a bit of a conundrum. Our area is running low on listings. This is great news for Sellers. Less competition and the law of supply and demand, higher prices, make this a good time to place your house on the market. However there are some pitfalls Sellers need to consider before making that step. I have listed the top ten mistakes for Sellers to avoid when listing a home. Drum roll please:
10. Waiting until spring to list – True that spring is the traditional time to list a home. Many place their home on the market during springtime in anticipation of the summer crowds. Kids are out of school and there is enough in between time before it starts up again. Spring is a very popular time and that is the problem. Your home will have more competition on the market. You may have more showings however you will have the same amount of actual Buyers but an increase of those who are just looking, tire kickers I like to call them. During the off seasons, late summer, fall and winter the serious Buyers are shopping. Showings may be less but those showings are to clients that are truly ready to purchase, business re-locations also more prevalent in the first quarter of the year, increasing your odds of making a sell. Do not discount placing your home on the market during the off-season.
9. Ignoring minor upgrades – Your home was good enough for you why wouldn’t be good enough for someone else? Maybe it will, maybe it won’t. The problem is you are limiting your pool of potential Buyers. Some upgrades are inexpensive to do yet make your home much more marketable. For instance removing wall paper and painting a wall or replacing worn carpeting or repairing that broken water heater, minor upgrades can make all the difference. On the flip side do not overdo it. Make sure your upgrades are cost-effective. Don’t spend thousands to get hundreds in return. Sit down with your Realtor and go over any planned renovations to determine if it will add value to your home.
8. Understanding your offer and know your contract – Since an offer turns into a contract once it is accepted and signed by all parties I combined the two into one. If you understand the offer you will understand your contract. Read over the offer carefully, ask questions, have your Realtor explain all the ins and outs and who is responsible for paying what. Offers can be overwhelming, especially to those who are not in the business. Who pays for closing costs? Who pays for the title insurance? Who pays for the survey? Who buys the home warranty? And what repairs is the Buyer requesting? These are only a few of the questions that will come up with an offer. When you understand the offer you will understand the contract.
7. Do not be insulted by a low ball offer – Your home is your castle, the saying is true. You have done your homework, completed some minor upgrades and placed your home on the market then some low life makes you an offer for $20 grand less than your asking price. The nerve of them! Do not and I repeat, do not! Walk away. The Seller must understand that this is just the first salvo in the negotiation process. Everyone is looking for a bargain. Buyers will throw out the bait in hopes that you will accept it but they generally know that it is a long-shot. Some may not have the funds to purchase your home however that will come out during the back and forth of negotiations. Others have the funds but again are looking for that bargain basement price. If they are serious they will negotiate upward until both parties have reached a fair and equitable agreement. Make sure you have enough cushion in your price to negotiate.
6. Shorting your listing time – The standard listing time for a home on the market is 6 months. We are fortunate in North Texas to have a very healthy real estate market. The first month of a listing is usually spent fixing up the home, taking photos and preparing all of the marketing materials as well as setting up the multiple listing services. If your home is priced correctly it will sell quickly. Unfortunately many are not. Anything under six months is simply too short of a period to expect that your home would be sold. Sometimes it takes a while to convince the Seller that he is priced too high. Sometimes the competition in an area that is very strong and sometimes the marketability of the area is weak. However giving some time, the competition can dwindle and the marketability can increase and when a new wave of Buyers begin to look your home can become very desirable. This takes a spell and anything less than 6 months is too short to expect anything, plus it is unfair to the Realtor who has spent his time and money advertising and preparing for your home to be sold. If the Realtor does not have enough time to sell your home, he won’t get paid.
5. Going it alone without researching – You are a “for sale by owner” type. You want to go it alone but do you know what it takes? Have you realistically priced your home? Have you exhausted all avenues of marketing? Do you know what those avenues are? What about contracts? Do you feel comfortable reviewing them alone? Selling a home is a lot of work. If you want to venture down that path do your homework!
4. Don’t be chincy with your advertising or your Realtor – If you go it alone this lands on your shoulders, if not it falls to the Realtor. Make sure you know how the Realtor will market your home. Make sure he or she has access to the Multiple Listing Services. Make sure you are getting maximum exposure over the internet. The internet is a key element to selling your home. Print advertising in this day is not nearly as effective as the internet. Also do not undercut your Realtor on his/her commission. Many Sellers try but is really a bad deal. The standard listing rate is 6% of the sales price. 3% goes to the Buyer’s agent 3% to the Seller’s agent. Out of the 3% the listing Broker can take as much as 50% of the 3%. Now your Realtor has five homes he/she is listing and you want them to cut 1% from their 1.5% they are taking in. The Broker never takes the cut it is always the Realtor. How far up the totem pole do you thing they are going to place your home? How much time will they spend to advertise your home compared to the others that they are getting full price? Will they be giving you a 100%? If your employee cut your salary by ½, how eager would you be to please them?
3. Don’t ambush your showings – Nothing kills a potential offer then staying at home when a Realtor shows up with a Buyer. To understand you must get into the mind of a typical Buyer. When a Buyer walks through your home they are trying to get a mental picture of the home being their own. If the Seller is there to greet them, automatically the Buyer realizes that this home belongs to someone else thus eliminating that picture in their mind and that is a bad thing. They cannot talk openly about what they like or dislike, the showing is awkward and it is just uncomfortable for all parties. That is not what you want you’re potential Buyer to feel as they leave your home. Get out of the house when a showing is scheduled. Go to the store, drive around or go to your neighbor’s home but you need to get out.
2. Not staging your home to sell – Beyond upgrades, beyond repairs, your home must be ready to show. What do I mean by ready? Back to the mental picture, the Buyers need to imagine the home belongs to them. If you have personal photos hanging on the wall, if you have your well-worn comfy chair sitting in the corner, if your children’s toys are spewed across a room, that picture in the Buyer’s mind is shattered. They realize they are in another’s home and it is a turn off. Other factors are also in play. Is the home sloppy, does it smell bad or are there bugs flying around? All of these are turn offs and can leave a Buyer shaking their heads and wondering why they wasted their time looking. Realtors can help you with this process.
And drum roll please for the number one mistake a Seller can make.
1. Pricing your home above market value – Out of everything mentioned this is the main killer of a potential offer. If your home is priced too high you will not even get a showing, market value rules. Buyer’s searching for a home on the internet will simply pass over yours for one that is within their budget. Those with a higher budget will pass over your home because they can find homes with better amenities for a better price. Thus no showings and no sell. If your home is moderately overpriced then you will get showings however you will not get offers. Both conditions can be rectified. A Realtor can perform a market analysis (comp) on your home comparing similar homes that have sold in your area and what the market price beared. When that price is determined then you add in for negotiations, closing costs and repairs. When you get an offer than you can start negotiations, price is everything.
See ya down the road!