Reader Question: We are going to put our home on the market in March. We want to maximize our equity and ensure a smooth experience. In preparing for this event what are the big mistakes home sellers make?
Monty’s Answer: Most home sellers want to ensure their success and maximize their equity, but many of us so rarely sell our homes we do not have the best information and experience to take advantage of the market.
The six big listing mistakes
1. Not checking your emotions at the door. Oh, the fun we have enjoyed here. And, the memories of the kid’s birthday parties, the first day of school, graduation and off to college. It is not easy to separate all the events that bind us to our homes from the realities of the marketplace. Instead of being upset with what you perceive to be a low estimate of value seek to understand the rationale behind it.
2. Not getting three opinions of value. According to a survey the National Association of Realtors conducts from time to time, the majority of home sellers only ask one agent for a judgment of value. Consider that multiple appraisers, who have extensive training to evaluate homes, will vary in their opinions on the value of a home. Why would real estate agents, who have far less education and training in appraisal methodology be any different? You will witness that three good agents, just like appraisers, vary in their opinions. Those differences can vary up to 25%, or more, depending on neighborhood market conditions and the skill of the preparer.
Choosing a friend may very well turn out to be the best recommendation, but how would one know without comparing their work to others? Without taking the time to validate the single agent’s judgment, you will never know if your friend (or the agent someone referred to you) would have been the one on the bottom of the best estimates.
3. Not setting a realistic price The interesting component of proper pricing is that there is no magic formula for deciding what number represents a sensible price for a home. Many variables influence the asking price of every home; location, condition, seller motivation, quality of construction, the marketplace and more.
For example: An area home builder tracked the resales in a subdivision they developed. They built a popular model numerous times one year. The homes were identical in all respects, except the color of the brick and siding, and they all sold initially for the same price. In the tenth year after construction, three of those models became resales. There was a seventy-five thousand dollar spread between the resale prices. How could that happen? One homeowner beat their house up, one kept theirs in pristine condition, and one kept their home up and added a four season room.
4. Not disclosing or repairing problems you know exist While it will cost money and take time to handle the repair or replacement, even when they are expensive, experience shows that non-disclosure will come back to bit you. When the new buyer moves in and discovers the termite nest between the walls, and the neighbor mentions something like, “ They used to have the exterminator there all the time, I thought they got rid of them.” You will likely have a lot of distress, and attorney fees, on top of the exterminator bill facing you. If you are lucky, an inspector will kill your offer before you even get to closing, when the buyer learns this condition existed for a long time, but was not on the seller condition report. What else did they hide?
5. Not hiring an agent While most home sellers engage an agent from the beginning, the temptation to sell directly can be hard to overcome for some homeowners. The multiple listing services that agents offer is a powerful marketing tool for finding the best buyer. The fascinating part of a real estate transaction is learning that finding the buyer is the easiest part; the hardest work may be navigating through all the contingencies and financing to get to the final closing.
6. Not remembering curb appeal When we work hard to get the house ready, it is easy to focus on the inside. Well trimmed shrubs, freshly painted shutters, sidewalk grass edging, and more - envision the impression the prospective buyer will establish when they pull up to the curb, walk to the front door, and ring the bell.
— Richard Montgomery is the author of “House Money - An Insider’s Secrets to Saving Thousands When You Buy or Sell a Home.” He is a real estate industry veteran who advocates industry reform and offers readers unbiased real estate advice. Ask him questions at DearMonty.com.