Selling a home may seem like a simple process. You clean it up, show it to a few people and one of them buys it. The trouble is that the process is actually much more complicated, with legal and practical considerations you may not know much about. Sometimes, sellers make simple mistakes that could cost them big, even after the sale is complete.
When selling your home, avoid these common seller mistakes.
Setting the Listing Price on Subjective Terms
Some homeowners think that the most objective term to use for the price is the amount they paid for the property, plus the cost of improvements, in addition to the real estate agent’s fees. That list pricing rationale is not objective from a buyer’s perspective – and has little to do with actual market value.
Testing the market by pricing high, is potentially the most costly seller mistake. Avoid playing games with pricing. Set it right from day one!
The listing price for a home must be based on a consideration of the present market value, which is typically estimated by a comparison of recent home sales & current listings for similar homes. While this may not mesh well with your expectations for the home, if you overprice your home based on sentimentality or a wish to “test the market,” you run the real risk of having the home sit on the market for months.
Pricing a home to sell quickly is not just efficient, but common sense. The fact is, the longer a home waits with an active listing, the more buyers start to wonder what is wrong with it. Overpriced homes don’t do sellers any favors, except the savvy sellers of nearby homes who will use the overpriced listings as leverage (making their home look like a bargain).
Ordering Expensive Upgrades Shortly Before Selling
There is a big difference between getting a home ready for sale and making a bunch of upgrades to it to inflate the sale price. The former is practical and can generate a better sale price, while the latter rarely results in an equal return on investment.
No matter how much money you could throw into your home, target improvements that are most likely to increase your return on investment. For example, updating attic insulation might get you more in value than you paid. In comparison, if you gut the kitchen and rebuild it from scratch, you will pay several thousand dollars more than you will receive in increased home value.
Answering Incorrectly on Seller Disclosure
Questions about filling-out a Seller’s Disclosure? Check with an attorney about your specific circumstance.
During the selling process, you will complete and sign a lot of paperwork. Consider all of it legal documentation, and treat it with the utmost respect.
On the seller disclosure, homeowners are asked to indicate their knowledge about certain aspects of the home. Typically, they are directed to check “yes,” “no” or “do not know.”
Some sellers think that they can bypass some of the delays involved with the inspection process by marking “no” on things of which they are unsure. This act can backfire and cost a lot of money long-term.
If a seller confirms the good condition of a particular structure or system in the home and they are knowingly answering incorrectly, not only could it kill the deal, but even in a successful sale, the buyer may have grounds to seek remedies against the seller after closing. To avoid such a scenario, home sellers should strive to be forthcoming about the information requested on the seller’s disclosure.
Selling Without a Real Estate Agent
There are homeowners who sell their homes without the services a real estate agent. However, these sellers take on a lot more responsibility for the sale of the home. Whatever you choose to do, you should not take the decision lightly.
It is true that real estate agents charge a commission on the sale price as their fee. However, with this fee comes a significant amount of expertise and support for you as the seller. (And also consider that in most cases, the agent earns nothing if the home doesn’t sell – so they are assuming “risk” as well.)
In general, selling your home without an agent also makes other real estate agents (and many buyers) hesitant to engage with you on a sale, because they know that they are probably not working with a professional or an expert. Furthermore, it’s also unfortunately common for a FSBO (For Sale by Owner) listing to either be significantly overpriced, or underpriced — either way, costing the seller a lot of money in the long run.
Ignoring Expert Real Estate Advice
Sellers pay a real estate agent to be an expert on-hand to help them sell their homes with the least amount of stress. It is a service that is designed to make your life easier, and to net you more money at closing. You should be an active participant in the discussion about how best to sell your home, but all advice should be taken seriously.
Hiring a local agent has major benefits in that this person knows all about your local market, right down to your neighbourhood. They can tell you precisely what buyers look for in homes like yours, which makes their expertise invaluable.
If you do not feel comfortable following your agent’s counsel for whatever reason, you are better off finding a different agent whose advice you will accept.
Selling a home calls for amazing attention to detail. Homeowners who set reasonable prices, minimize major upgrades, follow their agents’ advice and maintain honesty in the selling process are more likely to sell their homes without hassle.