Plus, How to Beat the System & Get More Money, Faster, Without the Stress
Selling your home doesn’t have to be that complicated. You can save a lot, and sell a lot faster, with less drama if you can avoid these ten common pitfalls.
Whether you are in a financial bind, just inherited a home, have to relocate and don’t want to juggle two mortgages, flopped on your first house flip, can’t get those trouble tenants out, or it’s just time to move on, selling your home should be simpler.
Don’t fall for these common mistakes, and you could be financially better off in days, and be enjoying a lot more peace of mind again.
1. Not Pricing it Right the First Time
By far the most common mistake home sellers make is failing to price their homes right from the beginning.
Here’s what happens…
What’s the harm in asking for a little more or pricing a bit more than the neighbors? Many sellers do. Then it becomes a ‘boomerang home’. It’s what real estate agents call a home they use to show their buyers in order to make their other listings that pay them more look like a better deal. You might get showings, but they aren’t from buyers who will actually buy your home. It’s a lot of wasted time and stress for nothing.
Even more likely, potential buyers will think you or your agent just aren’t being realistic or serious about selling. They don’t have the time to try and convince you otherwise, and don’t want to waste time placing bids when they could just make an offer on a more accurately priced property with less hassle.
So, that fresh listing which gets the most eyes and attention in the first few hours starts getting stale. Few buyers see it, because they and their agents are only focusing on brand new listings popping online by the hour. Then it’s an old listing. If no one else wanted it, the assumption is there is something wrong with it, and they don’t want it either. Way down the road, you might get some low ball offers from the vultures.
Some sellers then try to slash their asking prices. By then the market may be down even further, creating a downward spiral, without ever catching up. All while you’ve incurred a lot more expenses, and if you do sell, pocket way less money.
If you do decide to list with an agent, then there is real science and strategy to pricing. You need to be within certain parameters to fall within the right searches. Or you’ll really be invisible to the right buyers.
Right priced properties can sell in any market conditions. Unfortunately, overpricing is often accepted and even encouraged by hungry new agents who just want to sign listing agreements to get their office numbers up, and hope you’ll lower the price later.
2. Investing in the Wrong Repairs & Improvements
All too often home sellers are told they need to be making repairs, upgrades and even staging their homes in order to sell. Of course every agent wants that. It makes their job a whole lot easier, gives them the hope of a bigger commission, and may put you in a tighter financial position with fewer options.
At best, spending on these things is usually a risk. If you are already struggling financially, this can be what finally sinks you.
Here’s the truth. Home makeovers are typically not the big money makers you see on TV at all.
According to the Cost vs. Value Report, all of the most common home remodeling projects are financial losers.
By far the best financial investment of all of them is an upscale garage door replacement, returning 97.5% of your money. Unfortunately, a master suite addition or upscale major bathroom remodel will only return about half of your money. Meaning you are immediately throwing half of it away, just like driving a new car off the lot.
These things might help sell your home. They may get more buyers to look at it. However, if you aren’t adding a dollar to the real appraised value, you are just going to wind up having less money.
3. Not Calculating Your Net Proceeds
The top line price of a home can really be irrelevant. It’s firstly what selling the home does for you, and secondly how much you actually net.
If this home is a financial burden right now, simply getting it off your hands is going to save you a lot of money and stress. Each day you own and hold it, you are spending money. Investors say every day you aren’t selling it, you’re buying it.
Really total it up. Mortgages, insurances, association dues, property taxes, utilities, internet, etc. That isn’t even calculating the risk of damage and devaluation of the property over time.
So, every day it takes to sell it, you have to deduct those costs. For example; even at $200 a day, if you list with a Realtor and it takes 100 days to get a buyer, and another 60 to close, you’ve lost $32,000. Money that would have gone in your pocket if you sold faster. Living in Southern California, your daily rate of loss may easily be 10x that.
So, number one, get rid of the bleed. Two, calculate your net from different scenarios. If you are working with a Realtor, title insurance company or real estate attorney, they should help provide a ‘Net Sheet’ showing your potential net proceeds. Make sure you are comparing apples to apples and all the costs are added in when evaluating your options.
For example; if you list with an agent, you may end up with a host of costs coming out of the sales prices, including 6% of the sales price going to Realtor commissions, taxes based on that higher amount, paying off liens, recording and wire fees, escrows, etc. Depending on the price of your home, that can easily run $100,000.
Compare that to selling direct to a buyer who will pay your closing costs, with no Realtor involved. Even if they offered you 10% less for your home, you might actually pocket a little more money. If the offer was the same price, you’d pocket way more in this second scenario.
Remember to deduct the cost of all the days you expect it to take to get to a closing, and any money you chose to put into repairs or improvements and staging.