11 Home Selling Mistakes
1. Thinking your home is the exception:
It’s natural to be emotionally attached to your home, especially if you’ve lived there a long time. But allowing this affection to obscure the realities of today’s real-estate market is a serious mistake. If your local market is declining in value, you’ll need to price your home at a competing level. That will require a painful decision: to price the property at or below comparable homes in the area, even if the price point is less than what you think your home is worth. There are still sellers out there who think that their house is the exception. They think that the other houses that are on the market are really overpriced, yet when you get to their house, they think that it should have a higher price because it is better. Overpricing a home because of an emotional attachment only makes selling it that much more difficult.
2. Not scouting the competition:
Another reason sellers might price a home too high is that they’re simply unaware of the dynamics of their real-estate market. To sell your home, it’s essential to have a firm grasp on the conditions in your area. Sellers should study the pricing trends and sales data in their local market. But the data tell only half of the story. To fully understand the market, sellers should get a first-hand look at the nearby homes that are also up for sale. I would recommend my sellers go look at open houses so they see how their homes really compares.
3. Not checking your agent’s references:
An effective, experienced real-estate agent can be a big help in selling your home in today’s market. But finding such a broker may not be easy. Agencies these days are pinching pennies. A lot of them think you can just put something on Craigslist and it will sell, and that’s not how it works anymore. In today’s market you need to syndicate the information to multiple venues including the international market as the foreign national is a big part of sales in certain U.S. markets.
4. Not prepping the property:
Since buyers have many options these days, home sellers need to ensure that their property is in tip-top condition for showings. That means making any and all home repairs, ensuring that the indoor and outdoor portions of the property are immaculate, and removing clutter. It is a very picky buyer right now, and they are ready to seize on any little thing that they see, that maybe a reason to reject your house as one they would put an offer on. You want your house to look cared for.
5. Being present during open houses:
It’s important for the sellers to be away from the home during open houses or showings, as their presence can be unnerving to would-be buyers. Some sellers have the mistaken idea that they are the best people to sell their house, and that is absolutely not the case. If a seller remains at home during an open house or showing, buyers will have an uneasy feeling, and that is the feeling that they will take away from the house.
6. Taking negotiations personally:
The negotiation process can be tough on sellers, as buyers may demand concessions such as price reductions or help with closing costs. Although such requests might be irksome, it’s important that sellers consider them just another part of a business transaction. It is not meant to be personal; the buyer is looking to buy as carefully as they can and pay as little as they can, it is not about you, it is about them.
7. Sneering at offers:
Even if you aren’t crazy about a buyer’s offer, don’t dismiss it out of hand. You need to be willing to negotiate with anyone and everyone who puts in an offer, even if it is one of those low-ball offers, don’t ignore it, because those people might really want the property. Remember sellers want to get as much for their home and buyers wants to pay the least amount possible. It’s all about negotiating.
8. 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.
9. 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.)
10. 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 over improve your property by making your home substantially larger than that of your neighbors, you probably won’t recoup that money either.
11. 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.