This list of frequent sellers' mistakes regarding house listing pricing can help you avoid the pitfalls involved in selling your home. If setting a price was simple and straightforward, you would not need assistance in pricing your home correctly. Save yourself time and money by avoiding these costly mistakes.
PRICING MISTAKES
The first several seller mistakes involve the issue of pricing.
Guessing vs Researching
Basing your home price on what the neighbor down the street listed his home for, isn't a reliable method. Nothing loses potential buyers faster than an overpriced home. Subsequent price lowering makes it look like you're getting desperate to sell, which will increase lowball offers. However, you do not want to underprice from the beginning. A lower listing price may decrease the time to sell a bit, but you might leave several thousand dollars on the table. Learn how to price your house the right way, based on research.
The Comparative Market Analysis is your best source for setting an asking price. If a home in your area sells for a low price, don't assume yours is worth the same amount. That home may have had condition issues or a personal issue requiring a very swift sale. Your home might have something to offer that the other one did not. Let the Comparative Market Analysis (CMA) be your guide, along with the advice of a real estate professional.
Hiring a Realtor® from Highest-Price Suggestion
Choosing a real estate agent simply because they suggested, higher price for your home than other agents is not in your best interest. A good Realtor® will know more about the market for your home than you do. Pick an agent who can provide you with real numbers and solid marketing plans. The person you choose to sell your home should be knowledgeable in the local area., trustworthy, and quick to answer questions or concerns regarding the entire selling process. Avoid this mistake by interviewing several agents, and selecting the one who offers sales data and a strategic listing price, not the highest price.
The “leave room for negotiation” approach
In this approach, the market value is “stretched”. The price will not entince a buyer, but may make comparable homes more desirable. The home will most likely not sell quickly, or at that price.
Subjective Pricing
Selling your home is a business transaction between a qualified buyer and yourself. If you have enjoyed living in your home for years but have decided to move on, don't let emotional attachments to the home affect how you price it. The most objective price will come from the CMA provided by your real estate agent. Memorable moments spent in your home are priceless, but they do not add to the selling price. It is also unrealistic to add dollars because of the labor spent making the house into the home you desired. By focusing on the CMA results and maintaining a firm, strictly business attitude, you can keep emotions at bay.
First-Day High-Price Blues
The most crucial time for your home is the first 10 days on the market. Once your home is on the MLS, you will see how much interest is generated. If your price is too high, buyers will pass you by because the home is out of their price range or out of kilter in the market area. By the time you decide to lower the price. they have moved on to other properties. As your home sits on the market, buyers will wonder why the home has not sold and conclude that it’s undesirable in some way.
Price it correctly from the start to generate interest and gain attention from buyers to sell faster. Unrealistic pricing costs money in the long run.
Un-rushed High Pricing
Even if you're not in a hurry to sell, it's not a wise move to test the market by listing your home at a high price to "see how it goes." Serious home shoppers may take months to find a new home. They are continually looking for new listings - not ones that have been languishing on the market. Thinking that the market will turn in your favor may not be reliable, either. If prices in your area are dropping, you may lose money. By pricing your home based on current market values, you can sell your home more quickly and for more money.
Price Dropping
Another pricing trap to avoid is listing your home far above other homes in the area, with the intention of dropping the price if it does not sell after three months. That is potentially workable in a stable or increasing market. However, if the market in your area is declining, you may be forced to reduce the price even more drastically to catch up to the falling market.
Price competitively from the beginning. Do not hesitate to reevaluate your local market. Work with your real estate agent to determine the fair market value of your home.
Other Sellers' Mistakes
Zillow has compiled a list of "Donts" to help people avoid the pitfalls of an otherwise successful sale.
Selling Before Getting Qualified Yourself
Entering a contract to sell your home before you get qualified to buy another home is problematic. Your financial situation may have shifted since your last purchase, and you may not meet the requirements for a loan, or you may not be able to sell at a price that enables you to buy the kind of replacement home you desire. You might have to rent or buy another house that is far from ideal. Before you decide to sell, get pre-approved by a lender you have confidence in, and study the housing market in the area in which you want to live to get a good idea of how much it will realistically cost you to buy. Make plans in case you have to move right away.
Wasting Time on Unqualified Buyers
It is a wasted effort to show your home to someone who cannot buy it. An example is a seller who spent two weeks preparing his home for an acquaintance who wanted to buy his home. The seller spent $1,000 removing an old shed and met with the prospect several times to discuss the price and terms. It was well into the process when the seller found out the prospect could not qualify for a loan. Real estate agents spend considerable effort weeding out showing to non-qualified and unqualified home shoppers.
"Hovering"
Whenever possible, don't be home during a showing. This is impossible or impractical if you are selling the home yourself. If you have a real estate agent, leave when the house is shown. Lurking sellers make buyers nervous. Buyers may feel they are intruding and then rush through. They may be hesitant to talk about changes to the home or features they don't like. Buyers will feel uncomfortable closely inspecting the house in the presence of the owners. It's easier for buyers to visualize the home being theirs when they have a chance to critique and discuss the home among themselves. If you must be home, try to stay out of the way and answer questions only if asked.
Unless there's a real reason for it, don't ask your agent to be present for all showings, either. That will limit your showing activity. Other agents want privacy with their buyers and they do not usually have time to work around your agent's schedule.
Waiting It Out
If you decide to wait, you are joining the thousands of other homeowners who have also decided to wait. When a few decide it's time to take the plunge, you're already too late. If you need/ want to sell now, then sell now. There will never be a better time.
Not Taking the First Quick Bid
This happens often. The seller gets a bite early on and is suddenly filled with confidence that the house will easily sell and maybe even inspire a bidding war. It feels like you're standing over a pond packed with hungry fish. The first offer doesn't seem great, and you naturally assume there must be bigger, juicier fish to be had. So, you throw the not-so-small-after-all fish back in. Big mistake. That "tiddler" is often the "catch of the day."
Becoming Friends with the Buyer
It's appropriate, even important, to be friendly, but don't let the personal nature of someone being in your home allow you to get into too many long discussions with the buyers, because personality conflicts often cloud judgments. Watch what is said in discussing items related to the house and neighborhood. Remember, this could be their new home. You're no doubt excited about moving. But buyers will start second-guessing. A casual statement about the house "really being too small for a growing family," or "the schools are going through some change? might be enough innocent chatter to squash their interest.
Underestimating Closing Costs
Many sellers only consider the money they are selling their home for. They don't appropriately calculate all the costs associated with the sale. Zillow lays out the following list of expenses:
- Real estate commission.
- Advertising costs, signs, other fees, if you plan to sell by owner.
- Attorney, closing agent, and other professional fees.
- Excise/Gains tax for the sale, if applicable.
- Prorated costs for your share of annual expenses, such as property taxes, homeowner association fees, and utilities.
- Any other fees sometimes paid by the seller (appraisals, inspections, buyer's closing costs, etc.).
Spending Earnest Money Given to You
Do not believe that earnest money given at the time an offer is accepted is yours until the deal has closed and been recorded. There are too many stories about sellers who spent the deposit money prior to closing. When the transactions did not occur, for reasons such as financing contingency or failure of inspection or repair issues, the buyers had to fight or sue for a refund. Another advantage to using a real estate agent is that the agent is a neutral party who will hold the deposit for you until closing day.
Forgetting to Cancel/Switch Utilities and Insurance
Many sellers overlook notifying utilities that they are moving or applying for utility service at their new home. Call the utilities and your insurance company as soon as a contract is signed. Find out how many days lead time they need to switch or cancel, then get back to them when you have a firm closing date.
Letting Emotions Take Over
Keep calm throughout the selling process, especially during and after a house inspection. Be practical and presume that issues will arise. It's not uncommon to have to pay for some repairs. Don't let the buyer's request to complete a minor repair kill the deal.
On the other hand, don't commit to fixing anything in advance (e.g., "Sure, we can put on a new roof"), unless you are sure you can manage it emotionally and financially. Determine the kind of repairs you can practically take care of, then commit to that decision. Some repairs can become unmanageable and could cost you big money.
