When it comes to selling a home, there are many things to consider. Selling a home isn’t an easy thing to do and can be very time consuming, frustrating, and full of potential pitfalls that many sellers often find themselves stuck in. In this article, I’ll address a few common misconceptions and mistakes many homeowners make when it comes to selling their home.
They can make more money doing it themselves
Generally speaking, this is a well-known myth. When a homeowner sells “by owner”, or “FSBO” (For Sale By Owner), it means (1) the owner is trying to save money by avoiding an agent’s commission, and (2) any prospective buyer is going to recognize what the seller is doing and try to get in on the good deal too. Many studies have shown that FSBO sales result in prices anywhere between 10 and 20 percent less than average prices negotiated by REALTORS. A few of the main reasons for the lower price are (1) as said above, the buyer is going to try to get a deal too; and (2) when the assistance of a REALTOR is not used, homeowners often find the negotiation process rather difficult and end up caving in due to… again (3) since a REALTOR is not used, the home will have limited advertising and will not be included in the REALTOR MLS (Multiple Listing Service) and will not have the benefit of being exposed to the vast network of REALTORS who study the MLS on a daily basis, many of whom are already working with active buyers, leading directly to (4) when an owner sells FSBO, usually they only end up with one, maybe two, prospective buyers; fewer, nonetheless. When you only have one or two buyers to work with, it’s easy to lose your competitive advantage and lose money at the closing table.
Upgrading the house prior to sale
Often times, a homeowner will pump several thousand dollars into upgrading the home before listing it for sale. While this might seem like a good idea, if the owner chooses upgrades and/or products that don’t appeal to a broad range of buyers, the plan could actually backfire. I recall one seller who upgraded his home for sale by installing new carpet, but he chose the color Royal Blue. I’m not sure what was going through his mind when he was buying it, but it certainly showed on his face every time a buyer walked in the house, looked at the carpet, gave a confused little chuckle, and turned around and walked right back out. I think he spent something like eight thousand dollars on carpet, something that actually prevented his home from selling. If you choose to upgrade prior to sale, it’s a good idea to either consult your trusted REALTOR first, or just lower the home’s sales price accordingly.
Open houses do not sell homes
This one is a frequent point of frustration, for me anyway. Just as using print ads in the local newspaper has gone the way of the wind, the real estate world has also changed dramatically since the popularization of the internet. Back in the old days before the internet, an open house was one of the more common ways to get a look inside the house. Nowadays, buyers pick a list of the homes they want to see on the internet. And since most buyers are smart enough to already be working with a buyer’s REALTOR, the only thing an open house does is make the buyer’s agent’s job easier. Most REALTORS can set up a showing of a home at the convenience of the buyer and seller, but an open house lets the buyer preview the home without their REALTOR having to lift a finger. What makes this a point of contention for the listing agent is that they end up spending almost a whole day showing the home to buyers who are already working with a REALTOR who could have easily scheduled the buyer’s personal showing without requiring the listing agent to sit in the home all day. Open houses only make it harder on the listing agent and easier on the buyer’s agent. Open houses do not sell homes. While some (few) agents still enjoy the practice, there’s no good reason to waste half my weekend (family time) holding an open house. In my entire professional practice as a listing agent, I’ve only sold one home as the result of an open house. If a homeowner insists the house be held open, I’ll find an agent who doesn’t have anything else better to do, but for sure it won’t be me.
When a buyer shows up, don’t stay in the house
This is one of the most well-intended mistakes a homeowner makes when trying to sell their home. Even if a REALTOR is present, many homeowners want to personally take the buyer on a guided tour through every room of the house, many times getting off topic by discussing personal issues or talking about décor and/or other things the buyer isn’t interested in, all the while thinking they’re actually helping. Unfortunately, more times than not, they’re not helping at all. Then, after giving the tour, still not knowing how to excuse him or herself, the owner just stands there hoping for some kind of response. Frequently, buyers look at anywhere between 5 to 12 homes on the average day, and if you’re early on the list, they still have a long way to go before they’re ready to give any feedback at all.
Nagging their REALTOR about showing activity and buyer interest
When a buyer previews the seller’s home, it’s common for the homeowner to want feedback. REALTORS know this and don’t try to keep secrets from the owner, but sometimes the best feedback is no feedback at all. It can be annoying when the owner constantly pushes on the listing agent, demanding follow-up and feedback from each and every showing that took place. The simple solution to this situation is just to be patient and wait to see what happens. I’ve never seen it happen where a buyer was interested in a home and failed to follow up with the seller’s agent. If the listing agent hasn’t received feedback after a day or two, odds are fairly high, that buyer wasn’t interested. There you go, feedback received.
Pricing the home too high
This is probably the most painful mistake a homeowner makes when trying to sell the home. Obviously most homeowners want to get the highest price possible for their home, but by pricing it too high, they frequently hurt their chances of selling altogether. Ironically, and paradoxically, posting a home for sale at a lower price than what the seller wants can actually create high demand and cause buyers to flock in and “bid” the home up. Due to the way internet searches work, when a home is overpriced, it actually reduces the number of people who see it. Buyers plug in very specific “search parameters” in an effort to narrow down and focus on homes they are actually interested in, and at the price they believe they can afford. If a buyer is prequalified for a loan at a certain price, they certainly won’t be looking at homes that are above their price range. Paradoxically, buyers shop the market from the “bottom up”, looking for the best deals first. If a home is priced below market average, odds are high that more buyers will express interest. When your REALTOR gets two or more buyers interested in a home at the same time, there is a chance to create a “bidding war”, driving the price up to or beyond the price the seller originally had in mind. This technique is one of my favorites and something I’ve done repeatedly for years to get my clients the highest price possible. When a REALTOR can increase demand for a home, that makes for a good chance to drive the price up; but when the home is priced too high, the number of buyers who will come see it can be much lower than expected. So when your REALTOR comes back after two or three weeks of inactivity and asks to lower the sales price, they may not just be looking for a way to make their job easier and undercut your price goals; he or she may actually be strategically looking for a way to increase demand for your home and get it sold for the best price possible.
Let our experience work for you
These are just a sample of many things I’ve learned over the years as a top-producing sales agent. I always enjoy sharing my opinions with interested owners, particularly if they’re looking for good solid experienced advice. If you have any questions about good or bad ideas for selling a home, please contact us at Management 1 Tri-Cities Realty & Property Management for more information. We’re always glad to answer your question honestly and keep your financial interests first.