Home sellers: Avoid these 7 mistakes
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On news of a hot housing market with all-cash offers and escalation clauses, you might decide that now’s the time to list your place. After all, if it’s a seller’s market, what can go wrong? A lot. If you’re thinking about selling your home, be aware of these missteps and mistakes that can stand between you and a successful deal.
7 common home seller mistakes and how to avoid them
1. Getting too aggressive with pricing
The headlines about double-digit increases in home values might encourage you to list your home for an eye-popping amount, but the route to the most lucrative offer doesn’t start with a shockingly high sticker price.
“I’m definitely seeing some sellers wanting to push the envelope on pricing,” says Tony Mattar, a real estate broker in Chicago and co-founder of the HomeCo team with Compass. “They see homes selling for well above list price and instinctually think that means they should raise their pricing expectations.”
Instead of starting with a sky-high list price, Mattar says stirring up the competition is a much more effective strategy.
“The best way to encourage multiple offers over list price with waived contingencies, as-is clauses or appraisal gap coverage is to have the most buyers possible fighting for your home,” Mattar says, adding, “I think a lot of sellers conflate the idea of listing at a lower price with a lower end sale price, and that simply isn’t the case in a market with the limited inventory we are seeing now.”
2. Pricing based on your costs
When thinking about how to price your property, it’s tempting to look back on all the money you’ve spent to make it what it is today. Maybe you bought a new furnace, installed new windows, remodeled the kitchen and refreshed the outdoor space.
However, your listing is not about what you spent; it’s about what someone else is willing to spend to move in.
“The biggest mistake made when pricing is to calculate all the costs associated with the purchase and improvements you have made over time, then add in closing costs and a profit to determine the price,” Leonard Steinberg, chief evangelist and corporate broker at Compass, says. “Pricing is determined by market demand, not your costs.”
Review comps in the neighborhood instead of reviewing your historical receipts to get a ballpark of an appropriate price.
3. Failing to do a home inspection first
If the buyer’s home inspection uncovers issues, your sale can hit some serious bumps. Rather than waiting to see someone else’s home inspection report, Steinberg recommends sellers pay for their own pre-listing inspection.
“After an inspection produces issues, it’s likely the costs associated with renegotiating the price or making allowances for repairs will be higher than doing an inspection prior to listing, identifying any issues proactively and making the repairs yourself,” says Steinberg. “Usually, that costs much less.”
4. Listing without giving your home some extra love
While you might be all set to sell, your property might not be ready for prime time. Is that shower in your guest bathroom dripping even when it’s off? What about that cracked tile in the kitchen? Does your outdoor deck need a few boards replaced? Take a look around your property and think about which projects might be worth completing before listing.
While it can be tempting to list your house without investing any more money, finding a contractor to make some upgrades can mean the difference between an as-is sale and a competitive listing that attracts more interest and bigger offers, says Michele Messina, an associate with RE/MAX Villa Realtors in New Jersey.
“You can cheat yourself financially by trying to keep costs so low that you potentially lose out on a tremendous amount of resale,” Messina says.
5. Taking too long to finish those projects — and missing out on the action
On the flip side, though, some projects can add a significant amount of time. Messina points out that waiting too long to finish a long list of projects can wind up backfiring — particularly in today’s rising rate environment.
“You have to capture the right time to make sure you don’t miss the market,” Messina says. “Bankers are warning me about six rate hikes that will happen this year.”
For example, you might think putting in extra time to finish a bathroom remodel will increase your home’s value, but if that remodel finishes when rates have jumped by a full percentage point, there might be fewer prospective buyers.
6. Making improvements without asking for an expert opinion
As you weigh whether to make upgrades before selling, get a real estate agent’s advice.
“Those of us that work with both buyers and sellers have a much better understanding of what types of improvements are actually going to move the needle for a buyer when it comes to either deciding to offer or deciding how much to offer on a given home,” Mattar says, citing sellers who install closet organizers, for example, that most buyers don’t recognize or care about.
7. Failing to show a move-in-ready feel
While your house has served your needs well, prospective buyers will be touring it with a completely different set of preferences for how the space will accommodate their needs. So, do one simple task: Clean it up.
“People buy what they see,” Messina says. “If they can’t envision themselves in your house, most of the time, people won’t be able to think about buying it. So, make sure it is clutter-free.”
It’s not just about getting rid of your extra stuff, though. Consider hiring a home staging service to maximize your home’s appeal.
“In an HGTV, Instagram-filtered world, the consumer is accustomed to seeing homes in peak condition, fully staged to message an aspirational lifestyle,” says Steinberg. “Anything less than this places a seller at a disadvantage. Few people want to do renovation work of any kind. Show your home in a manner that says, ‘Move right in!’”