Half the battle of selling a home is anticipating problems before they come up. Selling a home is a major life milestone, and it can be complex when you consider all of the steps involved: preparing and listing; making repairs; finding a buyer; navigating the closing process; and finally moving into your next place.
Here are some of the most common mistakes that occur when selling a home; be informed so you avoid making them.
1. Underestimating the costs of selling
The total cost to sell a home can amount to much more than the 5-6% in agent commissions most people expect to pay. When you account for closing costs, repairs, and other concessions to the buyer, the costs of preparing your home for selling, can be closer to 10% of the sale price. For example, you’ll have to do some staging, cleaning, and painting.
If you move into your new home before selling your old one, you may have to rent a temporary place or pay for both mortgages as well as other carrying costs, such as utilities, HOA dues, taxes, and storage. Learn more about trading-in your home to avoid these costs.
A real estate agent can guide you through this and make recommendations for service providers. Many brokerages now offer concierge programs that pay for these costs upfront and get paid at closing.
2. Setting an unrealistic price
The price you want and what the market will pay can be two very different things. You might hear the terms Fair Market Value, or transparent pricing, which refer to how a home is valued.
Your agent will provide you comparisons and data based on homes with similar sizes and features that have sold near you. These comparable sales, also referred to as “comps”, are what many real estate agents use to suggest a listing price and what appraisers use to appraise a home. Please note, buyers ultimately decide what they are willing to pay for a home and what it will sell for and if they will remove the appraisal contingency or not.
3. Only considering the highest offer
The highest offer, while exciting, isn’t always the best offer given your needs. It’s common in many traditional sales to have contingencies. These are conditions that must be satisfied for the sale to close. You may have contingencies that protect the buyer’s interests like a financing contingency or an inspection contingency.
Depending on the market, buyers lately have been removing all their contingencies in very competitive markets because they can impact the timeline and sometimes the certainty of the sale.
You’d have to consider how the added timing and uncertainty compares to a slightly lower offer without that contingency. In another scenario, you may have a buyer who is willing to be more flexible on repairs versus another who is offering a higher price but may ask for repair credits.
4. Ignoring major repairs and making costly renovations
A long list of maintenance issues can turn buyers off and potentially decrease the value of your home. More importantly, buyers expect the condition of your home to match the description. Consider prioritizing the most glaring issues, particularly those that are likely to turn up during a home inspection.
Many sellers also consider making renovations or improvements to increase their home’s value. Be sure to carefully consider any renovations as your goal is to get the most bang for your dollars spent, ultimately selling for more than if you had not done the improvements.
5. Not preparing your home for sale
One of the challenges of listing your home on the market is showing your home to prospective buyers. Generally speaking, the cleaner, less cluttered, and more well-decorated your home is, the more appeal it can have. Moving.com suggests that clutter can make your home appear smaller and make it more difficult for buyers to picture themselves living in your home. In fact, staged homes sell 88% faster and for 20% more than those that aren’t staged, according to Realtor.com.
Don’t forget about curb appeal. As Moving.com puts it, “Your home’s exterior is like the cover of a book, setting the stage for what’s inside.”
6. Choosing the wrong agent or the wrong way to sell
Make sure you select an agent who has your best interests at heart. According to Realtor.com, some agents charge a flat fee, while others charge a percentage of the sales price, usually 5-6 percent. Sellers can negotiate the commission.
To help ensure you’re getting the most bang for your buck, take the time to interview potential real estate agents. Check their licensing and credentials, read their reviews and understand their experience.
7. Showings, especially in a COVID environment
Once you’ve put your home on the market, prospective buyers will want to see it. In COVID times, appointments have to be set. There are no Open Houses and the buyers who are looking are serious about buying. Thus, a virtual tour is the first step in showing off your home.
8. Not considering your broader financial situation
Many sellers don’t have a clear picture of their financial situation before selling. This can lead to painful surprises. Before you make the decision to sell, it may be helpful to assess your income, debt, and any upcoming expenses during your move. An agent can also provide an estimated net sheet.
If you’re selling your current home in order to buy a new one, you’ll want to calculate how much you can afford. Getting in touch with a mortgage broger and getting underwritten will eliminate any surpluses and give you a clear picture on what you will be able to afford.