Selling your home can be surprisingly time-consuming and emotionally challenging especially if you've never done it before. At times, it may feel like an invasion of privacy because strangers will come into your home and poke around your closets and cabinets. They will criticize a place that has probably become more than just four walls and a roof to you, and, to top it all off, they will offer you less money than you think your home is worth.
With no experience and a complex, emotional transaction on your hands, it's easy for first-time home sellers to make lots of mistakes. But with a little know-how, you can avoid many of these pitfalls altogether. Read on to find out how you can get the highest possible price for your home within a reasonable timeframe—without losing your mind.
- Keep your emotions in check and stay focused on the business aspect of selling your home.
- Hiring an agent may cost more in commission, but it can take a lot of the guesswork out of selling.
- If you decide to sell on your own, set a reasonable sale price and keep the time of year in mind.
- Prepare for the sale, don't skimp on the visuals in your listing, and disclose any issues with the property.
It's easy to get emotional about selling your home, especially your first one. You spent a great deal of time and effort to find the right one, saved up your down payment and for your furniture, not to mention creating all the memories. Many people have trouble keeping their emotions in check when it comes time to say goodbye.
Think it's impossible? It's actually not. Once you decide to sell your home, start thinking of yourself as a businessperson and salesperson rather than just the homeowner. In fact, forget that you're the homeowner altogether. By looking at the transaction from a purely financial perspective, you'll distance yourself from the emotional aspects of selling the property.
Also, try to remember how you felt when you were shopping for that home. Most buyers will also be in an emotional state. If you can remember that you are selling a piece of property as well as an image, the American Dream, and a lifestyle, you'll be more likely to put in the extra effort of staging and perhaps doing some minor remodeling to get top dollar for your home. These changes in appearance will help the sales price as well as help you create that emotional distance because the home will look less familiar.
To Hire or Not to Hire an Agent?
Although real estate agents command a hefty commission—usually 5 to 6% of the sale price of your home—it's probably not a great idea to try to sell your home on your own, especially if you haven't done it before. It can be tempting, especially if you've seen all those "for sale by owner" signs on people's front lawns or on the internet. So does it pay to hire an agent?
A good agent generally has your best interests at heart. They will help you set a fair and competitive selling price for your home that will increase your odds of a quick sale. An agent can also help tone down the emotion of the process by interacting with potential buyers and by eliminating tire-kickers who only want to look at your property but have no intention of writing an offer.
Your agent will also have more experience negotiating home sales, helping you get more money than you could on your own. And if any problems crop up during the process—and they commonly do—an experienced professional will be there to handle them for you. Finally, agents are familiar with all the paperwork and pitfalls involved in real estate transactions and can help make sure the process goes smoothly. This means there won't be any delays or glitches in the deal.
After reading all this, should you really hire an agent? Only you can decide.
Forgoing the Agent
So you've decided not to hire an agent. That's fine because it's not like it can't be done. There are, after all, people who sell their own homes successfully. But remember, you'll need to do your research first—on recently sold properties in your area and properties currently on the market to determine an attractive selling price, Keep in mind that most home prices have an agent's commission factored in, so you may have to discount your price as a result.
You'll be responsible for your own marketing, so you'll want to make sure to get your home on the Multiple Listing Service (MLS) in your geographic area to reach the widest number of buyers. Since you have no agent, you'll be the one showing the house and negotiating the sale with the buyer's agent, which can be time-consuming, stressful, and emotional for some people.
If you're forgoing an agent, consider hiring a real estate attorney to help you with the finer points of the transaction and the escrow process. Even with attorney's fees, selling a home yourself can save you thousands. If the buyer has an agent, they'll expect to be compensated. This cost is typically covered by the seller, so you'll still need to pay 1 to 3% of the home's sale price to the buyer's agent.
Setting an Unrealistic Price
Whether you're working with an agent or going it alone, setting the right asking price is key. Remember the comparable market analysis you or your agent did when you bought your home to determine a fair offering price? Buyers will do this for your home, too, so as a seller, you should be one step ahead of them.
You may think your home is worth more, but remember to set a realistic price based on comparable homes in the area.
Absent a housing bubble, overpriced homes generally don't sell. Don't worry too much about setting a price that's on the low side because, in theory, this will generate multiple offers and bid the price up to the home's true market value. In fact, underpricing your home can be a strategy to generate extra interest in your listing and you can always refuse an offer that's too low.
Expecting the Asking Price
Any smart buyer will negotiate, and if you want to complete the sale, you may have to play ball. Most people want to list their homes at a price that will attract buyers while still leaving some breathing room for negotiations—the opposite of the underpricing strategy described above. This may work, allowing the buyer to feel like he or she is getting good value while allowing you to get the amount of money you need from the sale.
Of course, whether you end up with more or less than your asking price will likely depend not just on your pricing strategy but also on whether you're in a buyer's market or a seller's market and on how well you have staged and modernized your home.
Selling During Winter Months
Believe it or not, there really is a right time to sell during the year. Winter, especially around the holidays, is typically a slow time of year for home sales. People are busy with social engagements and the cold weather makes it more appealing just to stay home. Because fewer buyers are likely to be looking, it may take longer to sell your home, and you may not get as much money. However, you can take some consolation in knowing that while there may not be as many active buyers, there also won't be as many competing sellers, which can sometimes work to your advantage.
You may be better off waiting. Barring any mitigating circumstances that may force you to sell during the winter or holidays, consider listing when the weather begins to warm up. People are usually ready and willing to purchase a home when it's warmer.
Skimping on Listing Photos
So many buyers look for homes online these days, and so many of those homes have photos that you'll be doing yourself a real disservice if you don't have any visuals of your home. At the same time, there are so many poor photos of homes for sale that if you do a good job, it will set your listing apart and help generate extra interest.
Good photos should be crisp and clear and should be taken during the day when there is plenty of natural light available. They should showcase your home's best assets. Consider using a wide-angle lens if possible—this allows you to give potential buyers a better idea of what entire rooms look like. Ideally, hire a professional real estate photographer to get top quality results instead of just letting your agent take snapshots on a phone.
And don't just stop at photos. Consider adding a video tour or 360-degree view to further enhance your listing. This can be easily done with any smartphone. You can certainly entice more potential buyers into walking through your doors for showings. You may even get more offers if you give them an introductory walk-through of your property.
Not Carrying Proper Insurance
Your lender may have required you to acquire a homeowner's insurance policy. If not, you'll want to make sure you're insured in case a viewer has an accident on the premises and tries to sue you for damages. You also want to make sure there are not any obvious hazards at the property or that you take steps to mitigate them (keeping the children of potential buyers away from your pool and getting your dogs out of the house during showings, for example).
Hiding Major Problems
Think you can get away with hiding major problems with your property? Any problem will be uncovered during the buyer's inspection. You have two options to deal with any issues. Either fix the problem ahead of time and price the property below market value to account for it. Alternatively, you can list the property at a normal price and offer the buyer a credit to fix the problem.
Remember: If you don't fix the problem in advance, you may eliminate a fair number of buyers who want a turnkey home. Having your home inspected before listing is a good idea if you want to avoid costly surprises once the home is under contract. Further, many states have disclosure rules. Many require sellers to disclose known problems about their homes if buyers ask directly, while others decree that sellers must voluntarily disclose certain issues.
Not Preparing for the Sale
Sellers who do not clean and stage their homes throw money down the drain. Don't worry if you can't afford to hire a professional. There are many things you can do on your own. Failing to do these things will reduce your sale price and may also prevent you from getting a sale at all. For example, if you haven't attended to minor issues like a broken doorknob, a potential buyer may wonder whether the house has larger, costlier issues that haven't been addressed either.
Have a friend or agent, someone with a fresh pair of eyes, point out areas of your home that need work. Because of your familiarity with the home, you may be immune to its trouble spots. Decluttering, cleaning thoroughly, putting a fresh coat of paint on the walls, and getting rid of any odors will also help you make a good impression on buyers.
Not Accommodating Buyers
If someone wants to view your house, you need to accommodate them, even if it inconveniences you. And yes, you have to clean and tidy the house before every single visit. A buyer won't know and care if your house was clean last week. It's a lot of work, but stay focused on the prize.
Selling to Unqualified Buyers
It's more than reasonable to expect a buyer to bring a pre-approval letter from a mortgage lender or proof of funds for cash purchases to show they have the money to buy the home. Signing a contract with a buyer is contingent on the sale of their own property, which may put you in a serious bind if you need to close by a particular date.
The Bottom Line
Make sure you prepare mentally and financially for less-than-ideal scenarios even if you make don't make any of these mistakes. The house may sit on the market for far longer than you expect, especially in a declining market. If you can't find a buyer in time, you may end up trying to pay two mortgages, having to rent your home out until you can find a buyer, or in dire situations, in foreclosure. However, if you avoid the costly mistakes listed here, you'll be a long way toward putting your best foot forward and achieving that seamless, lucrative sale every home seller hopes for.