Seller Mistakes to Avoid
Originally appeared in Hills Publications, Dec. 8, 2006 and ANG Newspapers, Dec. 9, 2006
A quick, successful sale in a slowing real estate market is rarely accidental. An oversight or miscalculation in today’s environment could cost you. Even if you have sold a home before, one or more wrong moves may put you behind the eight ball.
Many sellers find it difficult to detach emotion from business sense when pricing their home. This is understandable for many reasons, not the least of which is that your house may be your most valuable possession.
Sellers remember what neighbors’ properties sold for and use that to determine value. Commonly, sellers feel their home is “better” than others in the neighborhood and, therefore, should be worth at least as much, if not more.
When doing this, sellers rarely know the specifics about the houses they are using as comparables: upgrading, such as new kitchen and baths; outdoor living and amenities; functionality of the floor plan; exact size and number of rooms; and the desirability of particular styles, e.g., Mediterranean vs.1960s.
Pricing is tricky any time, but especially when the market is getting softer. This means looking at recent sales, even from several months ago, might not actually indicate future prices.
An attractive home in a top location might still generate considerable interest and, possibly, multiple offers. Accurate pricing is an art that requires years of local experience through all types of markets, a systematic, detailed approach, good intuition and common sense.
In this market, overpricing will almost always lead to few, if any, showings and no acceptable offers. When a property has been on the market more than two to three weeks, it can acquire the stigma of either being overpriced or having problems. Sellers often compound their error by waiting too long to adjust the price and then, not making enough of a reduction. Ultimately, overpricing results in a lower selling price.
Testing the market
Veteran Realtors talk about having “good” listings with “motivated” sellers. Fringe salespeople will take a listing just to have their name on a sign and in the newspaper.
Some homeowners are willing to sell only if they receive a certain amount. When that figure is higher than the market will bear, and there is no other reason to sell, we call this “testing the market.”
Aside from price, another telltale sign of an unmotivated seller is that he or she “is in no hurry,” i.e., does not care how long the house is on the market because he believes it is not costing him anything. Meanwhile, the listing agent is making a big investment in time, effort and marketing dollars.
By definition, sellers who test the market price too high. Agents who habitually take these listings tend to eventually leave the business. Testing the market does not work.
Not preparing property for sale
Except for serious “fixer uppers,” most homes benefit from sprucing up prior to marketing. This can include de-cluttering; cleaning; painting, inside and out; remodeling, if appropriate; staging with furniture; making repairs and landscaping.
Number one on the list is removing clutter. With every listing, I always suggest what the seller should remove to make the house show better. Next, I recommend other, inexpensive, changes, such as exposing hardwood floors or changing a light fixture.
The rule of the thumb is to spend as little as possible, but present the house in a positive light. Large expenditures, such as kitchen or bath remodels, for the purpose of selling are usually not the best investment.
If you are planning to sell, it is never too early to start the process. Begin by selecting a Realtor. Even if you intend to sell next summer, your Realtor can give you a timeline and punch list. This will relieve a lot of last minute stress.
Getting a house ready for sale takes time and can cost money. It is worth it.
Failing to understand condition
How much your house will sell for today is more related to its condition than it was in the now departed seller’s market. It is vital to know if there are any serious (expensive) issues related to foundation, drainage, pest control, sewer line, roof, electrical, heating, plumbing or framing.
Pricing your home without understanding its condition is a bad idea, although this is done in our area every day. As a prudent seller, it makes sense for you to obtain a pest control inspection (termite report) and a general home inspection at the very beginning of your process.
The information you receive will then allow you to make intelligent decisions regarding pricing and how much, or little, to spend on the property prior to marketing.
A beautiful home in a great area with a $75,000 foundation problem must be priced accordingly. Marketing it without this knowledge will, most likely, end up in either a renegotiated, lower price or a failed contract. You can avoid this by finding out about your home’s condition at the outset.
Choosing the wrong agent
Today, there are more real estate licensees than ever. This gives you many choices, but also the opportunity to make a huge mistake.
Never underestimate the fact that real estate is a “sales” business. Being a glib talker and good in sales may mean closing numerous escrows, not necessarily doing a fabulous job for you.
Make sure to take the time to evaluate an agent’s credentials before hiring him or her. Use someone who is familiar with the territory. Most importantly, be sure the agent knows and cares enough to do what is right for you.
Despite the daily gloom and doom in the media, this is still a good time to sell. Prices have increased amazingly since the seller’s market began in 1997. If you have owned your home at least three years, you probably have built up equity.
Sell if you have reason to do so. For most sellers, making a killing is not realistic. Once you decide to sell, pick an experienced, local Realtor who will professionally guide you through the process. If you accept current reality, you can expect a positive result.
How to Interview Agents, Part 1
How to Interview Agents, Part 2
How to Interview Agents, Part 3
How to Interview Agents, Part 4