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9 Mistakes
You Can Make When Selling Your Home
Mistake #1 - Pricing Incorrectly
Every seller wants to realize as much money as possible when
he sells his home. But a listing price that is too high often
gets the seller less than a price that is at market value. If
your house is not priced competitively, people looking in
your price range will reject your house in favor of other,
larger homes for the same price. At the same time, the people
who should be looking at your house will not see it because
it is priced over their heads! Overpricing usually increases
time on the market, and that adds to the carrying costs.
Ultimately, many overpriced properties sell below market
value.
Mistake #2 - Failing to "Show case" the Home
Buyers look for homes, not houses, and they buy the home in
which they would like to live. Owners who fail to make
necessary repairs, who don't spruce up the house inside and
out, touch up the paint and landscaping, and keep it clean
and neat chase buyers away as rapidly as Realtors can bring
them.
If you were selling a car, you would wash it, or maybe even
detail it to get the highest price. Houses are no different.
Mistake #3 - Using the "Hard Sell" During Showings
Buying a house is an emotional decision. People like to "try
on" a house and see if it is comfortable for them. It's
difficult for them to do that if you follow them around
pointing out every improvement that you made. It may even
have the opposite effect you want, by making them feel they
are intruding on your private space.
Resist the temptation to talk the entire time a buyer is
there, and let them discover things on their own. Try a
tasteful sign to point out some hidden amenity that they
might miss.
Mistake #4 - Mistaking Lookers For Buyers
For Sale By Owners always get more activity than houses
listed with an agent. No question about it. Realtors will
only bring qualified buyers, and these will be fewer than if
you open your front door to every one who walks down the
street.
A qualified buyer is one who is ready, willing, and able to
buy your house. We find that most people who go looking at
For Sale By Owners are just starting to think about moving.
They may be good buyers, but they're just 6-9 months away
from being ready. They don't want to bother an agent yet, so
they call the "By Owner" ads to get a feel for what's
available. They may have a house to sell first, or may need
to save some more, or may have credit that needs fixing. When
everything is in place, that's when they go out looking with
a Realtor.
An agent will ask a buyer how much he can really spend for a
house, how much he has to put down, how good his credit is,
how much he can pay each month, how much he will realize
(realistically!) when he sells his present home - and about a
dozen other questions like that. But unless your Realtor
finds all the facts first, you must ask all these questions
before the buyer crosses your threshold. Otherwise, you may
have a parade of Sunday afternoon shoppers with a dream of
owning a home some day.
Mistake #5 - Not Knowing Your Rights & Obligations
Real estate law is extensive and complex; the contract for
sale and purchase is a legally binding document. An
improperly written contract can cause the sale to fall
through, or cost you thousands for repairs, inspections, and
remedies for title defects. You must be certain which repairs
and closing costs you are responsible for. You must know
whether the property can legally be sold "as is", and how
deed restrictions and local zoning will affect the
transaction. If there are defects in your title, or if your
property is in conflict with local restrictions, you or your
Realtor must remedy them, or you might have to pay plenty.
Mistake #6 - Signing a Listing Contract with No Way Out
Many times an agent will have good intentions about marketing
your house, but circumstances can change. There might be a
death in the agent's family, or the agent may decide to quit
the business. In these cases where the agent couldn't or
wouldn't perform, you should have the right to fire your
agent. In some companies the broker will assign your listing
to someone else in the office, someone new in the business
that you didn't personally select. Always protect yourself by
getting a guarantee of performance with the right to cancel.
Mistake #7 - Limiting the Marketing and Exposure of the
Property
The two most obvious marketing tools (open houses and
classified ads) are only moderately effective. Surprisingly,
less than 1% of homes are sold at an open house. Agents use
them to attract future prospects, not to sell the house!
Advertising studies show that less than 3% of people
purchased their home because they called on an ad. And if a
machine answers, most callers just hang up without leaving a
message.
The right Realtor will employ a broad spectrum of marketing
activities, emphasizing the ones he believes will work best
for you. There are dozens of more effective ways to find
buyers than just open houses and advertising. By the way, he
or a trained member of his staff will be there every time the
phone rings. Did you know that most calls come in during
business hours when sellers are away at work, and most home
showings are between 9:00 and 5:00 Monday through Friday?
Mistake #8 - Believing that a Re-fi Appraisal is the
Market Value of Your Home
An appraisal is an opinion of value for a certain purpose. If
the lender wants to lend you the money, they are motivated to
have the appraisal come in high. The appraiser may ignore
foreclosure or distress sales in order to justify the high
value. But a real buyer in the real world will not ignore
these properties. They are your competitors when you try to
sell.
I can't tell you how many ridiculous re-fi appraisals I've
seen. Don't make the mistake of thinking that the value you
were told 6 months ago when you refinanced is what a real
buyer would pay. Ask your Realtor for ALL the solds in your
area, then decide.
Mistake #9 - Choosing the Wrong Realtor, or Choosing Him
for the Wrong Reasons
It's likely that you don't interview people very often. And
yet in order to find the Realtor who is right for you, you
may interview several. The quality of your home selling
experience is dependent upon your skill at selecting the
person best qualified.
It's interesting that in the real estate business, someone
with many successfully closed transactions usually costs the
same as someone who is inexperienced. Bringing that
experience to bear on your transaction could mean a higher
price at the negotiating table, selling in less time, and
with the minimum amount of hassles.
The world is populated with Realtors who are wrong for you.
For example, the housewife who sells an occasional house
because she needs a little pocket change, or the insurance
salesman who believes he can handle two careers. Or perhaps
your cousin George, who really needs your business.
The sale of your home could well be the most important
financial transaction you have ever been involved with. The
person you select can make it a satisfying and profitable
activity, or a terrible experience. It's your home, and your
money. The choice of your Realtor is up to you. Make that
selection carefully.
How To Beat
Out Other Buyers In A Hot Market
RULE #1 - PRE-APPROVAL
Do you want to get the best house you can for the least
amount of money? Then make sure you are in the strongest
negotiating position possible. You see, price is only one
bargaining chip in the negotiations, and not necessarily the
most important one. Often other terms, such as the strength
of the buyer or the length of escrow, are critical to a
seller.
In years past, I always recommended that buyers get "prequalified"
by a lender. This means that you spend a few minutes on the
phone with a lender who asks you a few questions. Based on
the answers, the lender pronounces you "prequalified" and
issues a certificate that you can show to a seller.
Sellers are now aware that such certificates are WORTHLESS,
and here's why! None of the information has been verified!
Oftentimes unknown problems surface! Some of the problems
I've seen include recorded judgments, child support payments
due, glitches on the credit report due to any number of
reasons both accurately and inaccurately, down payments that
have not been in the clients' bank account long enough, etc.
So the way to make a strong offer today is to get
"pre-approved". This happens AFTER all information has been
checked and verified. You are actually APPROVED for the loan,
the only loose end is the appraisal on the property you want
to buy. This process takes anywhere from a few days to a few
weeks depending on your situation. Now it's like having cash
to take to the seller! In a situation where the sellers have
several offers to choose from, they will choose the offer
from a buyer that's PRE-APPROVED.
RULE #2 - BETTER THAN DAILY SEARCH
When you first start looking, it's possible that there will
be nothing available that you like. So then what? Your agent
should then begin hunting for you and watching for new
listings that match what you're looking for. How often should
your agent check? At the bare minimum once and day, and
preferably more.
I once saw a new listing first thing in the morning, and
called my clients to meet me at the house at 9:00AM. When we
got there, we found out an offer was coming in at 9:30! If
your agent only checks listings at the end of the day, this
one would have been sold already.
That's why we offer our exclusive Preferred Buyer Search
program. This is a computer program that alerts me whenever
there is a new house on the market that meets your
requirements. I'll fax, email, or call you immediately with
the information. You'll be there before other buyers even
know about it!
RULE #3 - SUPER SPEED
As soon as a listing hits the market, it becomes a race. Who
can get there the fastest? In this market, you need to be
prepared to drop everything, leave work, or do whatever it
takes to go see a property. It sounds extreme, but I'm very
serious about this. Time is of the essence. Don't think that
you'll take a look at it this weekend. It could be sold by
tonight.
And be prepared to make an offer on the spot. That means
bring your checkbook and be mentally ready to make a
decision. I have a FAX machine in my car to communicate the
offer immediately. Many times I've sewn up an offer for my
clients, and then another offer comes in ten minutes later.
The race belongs to the swift.
RULE #4 - NO COUNTER OFFER
When we make an offer, we'll make it with the intention that
the seller will accept it. We don't want to get a counter if
at all possible. If the seller counters us, then there's a
very good chance another offer will come in before we can
accept the counter.
For this reason, we try to make the offer as palatable as
possible so the seller can accept it right away. This means
we give the sellers their choice of services, avoid all
contingencies, and steer clear of any terms or conditions out
of the ordinary. I used to think that by trying to get "a
little extra" out of the sellers for my clients, I was doing
a good job for them. And in the past, that idea worked. But
try that now and you lose the house altogether.
At first I struggled with this, and I felt that by giving the
seller everything they were asking for, I wasn't being a very
good negotiator for my buyers. But I got over it. Doing a
great negotiation and losing the house isn't good service.
Telling the truth about what it takes to win in this market
is the kind of service you want.
RULE #5 - THE PRICE
Better sit down for this one. The asking price used to be the
price the seller hoped to get, and the one that offered
closest to that price bought the house. That's no longer
true. Now the asking price is the MINIMUM price, the base
price to begin making offers. It's the minimum bid if you
will, the starting price at the auction. Make no mistake, for
a hot property in a hot location, there will be multiple
offers, and they will be more than the asking price.
RULE #6 - BEST OFFER
I lost a property for a buyer client of mine by offering less
than the asking price. We were the only offer, so why not? As
it turned out, by the time we submitted the offer and were
able to present it to the seller another offer came in. The
seller countered both of us with the same price. We accepted,
and so did the other buyer. The sellers accepted the other
buyer's offer over ours, even though they were both for the
same price. Why, you ask? Because the other buyer's offer was
higher than ours originally.
So the next time I was in a multiple offer situation, we made
a very strong offer right off the bat. The other offer was
lower than ours, but the seller countered us both, and we
both accepted. In other words, the other buyer came up to our
price. So now the seller was looking at two identical offers.
They chose ours. Why? Because our offer was better to begin
with.
Now I know that this makes no sense. The bottom line is the
same, so why does it matter whose offer was better
originally? I have no idea why this works, but it does. So we
don't fight it, we use it to our advantage.
RULE #7 - THE BIG PICTURE
Now I know that all this sounds like we're rolling over and
playing dead for the seller. We're giving them everything
they want, and then more. But we'll have the last laugh.
We'll be laughing because we bought a great house in a rising
market, beating out the other buyers! Is it really a big deal
to pay a couple thousand more when the house will be worth 20
or 30 thousand more next year?
Our market is appreciating at anywhere from 10-20% a year
right now. That means that if you don't buy the house and it
takes you a month to find another one, the price will be a
few thousand higher anyway. So are you really paying too
much? It's all in how you frame it in your mind. Don't think
you're losing when you pay over the asking price, you're
actually winning. Next year you'll look back and say what a
genius you were for making such a smart move.
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