The 10 Most Costly Mistakes Home Sellers Make
1. Buying Another Home First
Buying a new home before you sell the old one is a real financial gamble. Buying first can be risky because once you sign a contract with a seller, you are locked into paying a certain price no matter what you end up selling your home for. If your home sells for less than you anticipate (a real possibility), do you have the additional cash you'll need to close the sale on the new house? And what if your current home doesn't sell before you close escrow on the new house? If your down payment is coming from the equity in your present home, you might have to borrow in order to close escrow on the new home. Having more than one house payment can make it difficult to qualify for the loan on your new home.
2. Overpricing Your Home
The value of your home is not determined by what you would like to get for it, what you paid for it, what you owe on it, or how much money you put into it. And it is not determined by your real estate agent or the appraiser. The value of your home is determined only by what a buyer is willing to pay for it in today's market by comparing your home to others that have recently sold or are for sale.
Overpricing your home drastically reduces the chances of a fast sale, keeps other agents from showing the home, and helps to sell the competition. Buyers are just like all customers - they want the best available product at the best price. Buyers will compare your property to others currently on the market and they won't knowingly pay too much. Your real estate agent can prepare a competitive market analysis (CMA) for you to help you price your home realistically. And, if your home doesn't sell after a predetermined period of time, consider reducing the price.
3. Failing To Prepare The Home For Sale
Presentation is everything and never more so than when you're going to put your home on the market. Giving your home "curb appeal" usually requires a small investment of time and money. Painting the front door, planting some flowers in the yard, decluttering tables and countertops, washing windows, fixing leaky faucets, painting the inside and making sure the whole house is sparkling clean are things that don't cost much but have a big payoff. Keep in mind that buyers often can't imagine what the property will look like when it's spruced up so it's up to you to put your home in mint condition. The payoff? You'll be able to sell it for top dollar.
4. Neglecting To Obtain Necessary Reports Upfront
Obtaining some of the required inspections before you have a contract is a good idea. By working with your agent, you can have a home warranty, preliminary title report, home inspection, and most importantly, a termite inspection done on your property before your home goes on the market. When prospective buyers look at your home, they can see exactly what work needs to be completed. This helps you get the best price for your home with far less hassle later in the transaction since everything is known and negotiated upfront.
5. Making It Difficult To Show Your Home
The more flexible you are in allowing agents to bring their buyers over, the more your home will be shown and the faster it will sell. Provide ready access to your home and whenever possible, try to avoid being home for showings. Potential buyers often feel uncomfortable with the seller present and will tend to hurry through your home. They will also be hesitant to ask questions or to open closets, etc. which they need to do when making a decision about whether a house is right for them or not.
6. Failing To Consider Offering Special Terms
Offering special incentives can make your home attractive to potential buyers. Paying for an interest rate buydown, carrying back a second mortgage, or paying for a portion of the buyer's closing costs all assist buyers financially. You might even want to consider paying a higher-than-customary commission to the agent who sells your home. Any of these things can increase interest in your home and may be cheaper in the long run than a price reduction.
7. Not Requiring The Buyer To Be Prequalified
One of the most common reasons real estate transactions fall apart is finding out 30 days into the deal that the buyer can't qualify for a mortgage loan. When you get an offer on your property, the only way to control the situation is to stipulate in the contract that the buyer be prequalified by a lender that your agent knows and trusts. This is your best insurance that your transaction will close.
8. Making The Sale Of Your Home Contingent On Finding Another House
Sellers don't like contingent offers (where a clause is included in the contract stating that the purchase of one home is subject to the sale of another) and neither do buyers. One sure way to keep buyers away is to insist that it be sold contingent on you finding a new home. Instead, include a clause in the contract that allows you to live in the property until your find your next house. You rent the property back from the buyers and pay them a prorated, per diem cost. This way, you eliminate your risk and the buyers know the deal is firm.
9. Refusing To Consider All Offers
Buyers want the best house at the lowest price and sellers want to net as much as they can. Remember that everything is negotiable and even a "lowball" offer is worth countering if the buyers are qualified.
10. Not Getting Preapproved For Your Next Home
If you want to ensure a fast, easy closing on your new house, talk to a lender as soon as you list your current home and ask to be preapproved. This can be done whether you have found a house already or not. Not only will preapproval give you greater negotiating power when you make an offer on a home, you'll also cut a tremendous amount of time and anxiety out of the process.