Formula for listing – good for sellers?
Originally appeared in Bay Area News Group publications on August 10, 2012
Sellers often ask my advice on what work needs to be done to prepare a house for sale. In certain cases, they had spoken with other agents and were uncomfortable with suggestions which seemed to benefit the agent more than the seller.
Some agents fall into a pattern of how they approach sellers and what they recommend to get the home sold. The agent’s advice tends to be similar for all sellers, despite differences in the properties and/or the sellers’ needs. This one-size-fits-all approach is often not best for the seller. Sadly, the average seller rarely takes the time to investigate what a listing agent should be doing for him.
Understanding seller’s situation
Before proposing any changes that entail considerable costs, the agent must listen to why the seller is selling and what his plans are. Some sellers simply have no available funds to make improvements of any kind, even if warranted.
For others, every nickel counts and asking them to spend on fix-up items should be done only if not doing so would be a detriment. To illustrate, painting the front steps and entry area and replacing a torn screen on a door is well worth it, even if it means hiring a handy- man. This is an inexpensive way to make a better first impression. The antithesis is the “major fixer,” for which small cosmetic changes are usually a waste of time and money.
Pricing and pre-sale inspections
Knowledgeable, caring real estate professionals consistently advise their sellers to have a general home inspection before pricing and marketing. Despite that, a majority of homes in our area come on for sale without this crucial step.
Pricing a home without knowing its current condition, and possible need for expensive corrections, may damage a seller in later negotiations. Unfortunately, the agents who use the same system on every house also tend to promote money-eating ideas to sellers without having the foggiest notion of condition.
The worst case scenario is where the seller, without a pre-sale home inspection, invested to improve the house and now is in contract. When the buyer presents a demand for substantially lowering the accepted price because of problems previously unknown, the seller is justifiably upset.
It is unlikely that the seller would have agreed to lay out serious money on preparing the property for sale had he known he would later have to take a huge reduction. When this happens, don’t count on the seller’s agent taking responsibility.
Tired homes and fixers
Older homes that have not been remodeled, and those with extensive deferred maintenance, are rarely good candidates for heavy, pre-sale spending to improve their salability. These are the ones I tend to hear about after other agents have made costly recommendations.
Experience has shown that, all other things being equal, an updated, immaculate house will sell faster and for a higher price than one less sharply presented. Nevertheless, spending sizable money and time updating an older, tired home or major fixer solely for selling usually ends up netting the seller less. The exception is if the seller is a contractor who can do the work himself.
The reason why these do not warrant the expense is the finger-in-the-dike analogy, i.e., there are too many holes to fill. Shelling out dollars to improve some will still leave many other areas that will actually look worse when compared to those that have been “prettified.”
Same system despite different houses
One clue of the “formulaic” agent is that all his/her listings look similar. Same color paint job, same type furniture, etc. An easy way to check this is to look at photos of past listings. If the agent does not have past listings on a web site, that would also be a concern.
My advice to a seller
My recent counsel to a seller who asked me what to do and not do with his property was to simply clean and de-clutter. In my opinion, spending the kind of money previously suggested to him would have somewhat improved the house’s appearance, but would not have put any additional funds in his pocket.
My reasoning was that improving just a few things, like repainting the interior and staging, at a combined cost of many thousands of dollars, would not markedly change its appeal. In addition, of course, I recommended he schedule a general home inspection and pest control inspection well before putting the property on the market.
Final Thoughts
Creating a sensible pre-sale, to-do list is a function of a Realtor’s common sense and experience. This should always be used in the seller’s best interests. Remember that before you sign a listing agreement.
Related Articles:
Pre-sale Inspections