How to avoid selling mistakes
Introduction: On this page we offer some more free home selling tips, house selling tips, residence selling tips, dwelling selling tips, townhouse selling tips and selling tips for property sellers.
1. Know your buyers!
As you know, aside from food and clothing, shelter is a fundamental need. People need a roof over their heads, a place they can call home.
Now, this may seem like obvious information and not important for us to think about, but really, it’s a very important thing to be aware of as you sell your real estate. Why? Because this awareness points to one essential fact that should give you an ENORMOUS amount of confidence; especially if this is going to be your very first (of many!) real estate sales transactions: there will always be people looking for houses, regardless of whether we live in good times or bad. Knowing the types of buyers in the market will help your position as a seller!
The buyer pool: So who are these buyers that are poised to do business with you? They are people in your buyer pool. The phrase “buyer pool” refers to those people who are interested in buying a certain piece of property in a certain location at a certain price. This is the group that you, as a seller, should focus on. The buyer pool is different from the bunch of mere onlookers or “prowlers” who like to spend Sunday afternoons looking into the homes of other people.
As you gain experience in this field, you’ll almost instantly be able to tell the genuine buyers from the speculators (or the people who are just bored and like looking at real estate…and yes, there are some of them out there).
Bill Effros, in his great book How to Sell Your Home in 5 Days, says the profile of a buyer pool will change constantly. Some buyers may decide eventually to purchase a home elsewhere, some get frustrated and leave the pool; still others decide they want to buy and therefore stay in the pool.
The buyer pool is made up of different types of buyers – bear in mind that some buyers are looking for homes NOT to live in, but to invest in. You will typically encounter a mix of the following types of buyers:
End buyers: buyers who will live in the home.
Professional buyers: these include real estate brokers, builders who want to develop real estate in your location, speculators (quick cash wheelers and dealers) and developers looking to buy strictly for the land value. Effros says not to be afraid of professional buyers. If circumstances warrant, they could offer the best price for your house, given their cash reserves.
Cash buyers: this is the group to whom you can consider giving a discount because you do away with the lending and mortgage nitty gritty that could take weeks, even months. Cash is king, so flexibility in negotiating price is not a bad idea.
Mortgage buyers: since majority of people can’t buy homes for cash, they borrow the funds to acquire possession of a piece of property. They fall into two groups:
1. the pre-qualified ones (those who have started the process and have discussed preliminary details with the bank);
2. pre-approved mortgage buyers (the bank has made a commitment to lend them a specific amount of money under certain terms and conditions).
The buyer’s perspective:
Selling your house quickly and successfully requires that you see a piece of property through a “buyer’s eyes”. How do you do this? Well, put yourself in the buyer’s shoes. What does he/she see about your house that you haven’t noticed yourself?
One real estate broker said that a trick she’s learned in getting sellers to think “out of the box” is to take them across the street from their house, and then asks them to give their house a long hard look, and spot things they’ve never noticed before.
When this exercise is done, she then takes them on a detailed tour of their house: front yard, back yard, side alleys, garage, bathrooms, the whole look-see. This way, they come up with a list of repair jobs that need to be done before they can even think of putting their house on the market.
What buyer’s look for:
What do buyers look for in terms of the house itself? Many agree that location is a decisive factor, but so are tangibles like the price and condition of the property (is the price worth the additional huge sums of money to put this house back into mint condition? How much time will I need to renovate the dilapidated portions of this house?). Buyers will be on the alert for the following:
Outside: Start with the outside of the house and ask yourself the following questions – because these are the questions that your potential buyer will be asking!:
Are these garbage cans, discarded wood scraps and building materials strewn about carelessly an indication of the seller’s negligence?
Are the gutters and roof in place? When was the last time the seller changed the roof?
Apart from the human occupants of the house, are there termites and other insects that live here also?
These overgrown bushes and trees are distracting. What is it that the sellers don’t want us to see?
Is the lawn is looking unhealthy? Is the rest of the house like that?
Have the patios and decks been converted into storage areas? Why can’t we see what they actually look like?
The paint is peeling off; is that why the house looks so drab and uninviting?
Why are there no lights outside the house? Is this the owner’s way of saving on utility bills? Is this a safe neighbourhood?
The above questions are just a few of the many questions buyers are likely to ask with respect to the outside of the house. A house’s exterior constitutes the buyer’s first impression. And we all know what they say about first impressions – they are powerful and outweigh other considerations!
Inside: Now let’s look at the inside of the house: what are buyers looking at? Barb Schwarz advises sellers to be guided by the 3 C’s in real estate:
These three are self-explanatory, yet many sellers overlook the fact that buyers have fixed ideas about what makes a house clean, bright and uncluttered. Don’t take clutter for granted. Clutter is a big turnoff. Too many objects lying around the house collect dust, and when you have an open house and the sun is streaking in through those large windows, the dust becomes very conspicuous.
Schwarz explains: “Clutter makes it difficult for a purchaser to mentally move into a home”. This means that purchasers have a hard time imagining where their sofas and entertainment centres will be placed because the clutter is hampering visualization.
This is what Schwarz tells her clients: “the way you live in a home and the way you sell a home are two different things”. This is just her way of saying that some clutter does give a home a lived-in feeling, but too much is too much and makes buyers very, very nervous.
Respect Your Buyers’ Intelligence!
Never underestimate the intelligence of buyers even if they strike you as inexperienced, first time buyers. Since governments have stepped into the domain of real estate, they are now warning home buyers about potential environmental dangers lurking inside houses. So what aspects of home buying are governed by regulations? Ilyce Glink warns that most professional house inspectors are not qualified to do special tests for toxic substances, although more and more individuals are specializing in these types of home testing.
• Radon – the US government reported in 1989 that radon was the cause of 22,000 deaths per year and that it is the second leading cause of lung cancer in the US after cigarette smoking. Radon is an odourless, natural gas that comes from the earth and seeps through cracks in the house or its foundation.
• Asbestos – Glink says that if your home was built after 1980, there is no need to worry about asbestos. This is a microscopic fiber that escapes to the air and is ingested by humans through their noses and mouths. Buyers who have lingering fears about asbestos may demand a written report stating that the house is asbestos-free.
• Lead – Paints and water can contain high levels of lead that are harmful, particularly to children. Their physical and mental development is affected when they are exposed to this substance. Lead paint and lead in water are usually found in older homes (pre 70’s). Pipes in older homes for example that were soldered together with lead can transmit lead particles into the water system.
2. Common selling mistakes:
Here are some very useful advice: don’t treat your real estate agent as Mr. or Ms. Know it All. They are not infallible!
Believe it or not, they don’t know everything there is to know about real estate. They make mistakes, just like everyone. When an agent tells you to wait because your property will probably not sell these days, take her/his word with a grain of salt. Question motives!
Is she/he trying to get you to lower your price so she/he can sell it much quicker, thus pocketing the commission quicker?
Is she/he concentrating on other higher priced homes in the area and hence has no time for you?
Sellers often make the mistake of believing their agents. One such seller was so disgusted because she/he allowed the agent to let her take her house off the listing. The agent kept telling her to wait some more. Three years later, her property was still unsold, and in her frustration, decided to go with another agent.
Once you’ve signed a contract with an agent that the house is exclusively hers to sell, you could be stuck with an inefficient agent for a long time. Before you sign on the dotted line, investigate your agent’s credentials.
Ask for the names of other sellers she’s worked for, and where possible, speak to these past clients and ask them whether or not they were satisfied with her service. Check out qualifications, licence and board certifications. Some sellers make the mistake of engaging the services of an agent in a hurry because they’re eager to sell.
As Gregory Lerch stressed, hire a real estate like you would an attorney or accountant. Try to distinguish the full time professionals from the part-timers – those who occasionally dabble in real estate, who get into the business of selling homes only when they need quick cash.
Have reports in-hand
Another mistake sellers make is not having written inspection reports to show to prospective buyers. The regulations about asbestos, radon and lead are fairly stringent and must follow governmental guidelines. Ensure that professional house inspectors have the capability – and certification – to do these tests.
Know the rules…
Sellers often decide to go solo without enlisting the help of an agent for the sole purpose of being able to save thousands of thousands in agent’s commissions. This is a legitimate reason.
If you do decide to sell your house on your own, make sure you know the rules of the game like the back of your hand. Have it down pat.
The second, even bigger mistake, is that some sellers don’t have the ability and understanding to know when to quit as independent sellers!
If your house is still in the market for a year, even if other homes are selling like hotcakes in the neighbourhood, then it’s time to take a step back and see what you’re doing wrong. A real estate agent may be your alternative.
According to Lerch, “market studies have shown that you can actually lose money when your home sits on the market for an extended period. Knowing that, your goal should be either to learn how to extend your optimum selling period or market your home so it sells within the time limits the market has dictated”.
Be zone conscious
If you don’t keep up with your city hall urban planners and engineers, you could be selling your house just before zoning adjustments are being implemented. These zoning adjustments could considerably increase the value of your property. Haste makes waste, they say. So keep your eyes and ears tuned to municipal changes that could enhance (or affect) your position as a seller.
Pricing too high? Too low?
High and low pricing: sellers who like to make a killing price their property way too high, making it out of reach to buyers who are looking at similar properties in the same location. Don’t be priced out. Going to the other end of the spectrum, you’ll know that you priced your house too low when it’s bought the same or next day after you or your agent advertised it. It was “snatched” by someone else because it was way below market price.
Obviously, you as seller will try to get the highest price you can get for your property so you start with a high price.
The buyer, on the other hand, will offer the lowest possible price he can negotiate. So you start high and he starts low. This creates plenty of room to negotiate – the gray area that lies between the highest and lowest prices.
This is where sellers can make the mistake of not demonstrating sufficient flexibility to the buyer!
This is the reason there are high and low prices in real estate – what Albert Lowry called practising the give-and-take principle. “Such give-and-take is part of the bargaining process…It gives you both room to negotiate…As you and the buyer make proposals and counter proposals, you are inching closer to agreement…Then at some point one of you will yield no further.” Develop the extra sense to know when to stop negotiating.
3. Some more common selling mistakes
Ilyce Glink names a few more mistakes sellers make:
Undefined motivation – are you selling your house because you want to or have to? Honesty in answering this question will affect your negotiation abilities. You might be sending the wrong messages to your agent or buyer. If you and your husband have mixed feelings, be sure you iron out your differences and reasons for selling before putting your house in the market.
Hanging around during open houses – If you have an agent, let her do the work. Don’t make buyers uncomfortable by your presence. They may want to ask the agent certain questions that they don’t necessarily want you to hear.
Pets and odours – some buyers may not exactly be animal lovers; other buyers are turned off by cooking smells. Keep the pets invisible, and the smells at bay with air freshener.
Letting the house go stale – if your house has been on the ads too long, know when to pull it out. Don’t give buyers the chance to “suspect” something is wrong with your house. Take out the for sale sign and come back another time.
Timing: when sellers sell their house in hopes to buy another, they fail to recognize proper timing as an essential component of the real estate process. When their offer on the new house is accepted but there are no firm buyers for their old house, they are forced to apply for a bridge loan which can make them out of pocket for a few years. Wait until your house is sold, or at least wait before a firm offer is in your hands.
Mortgage payments: just because your house is sold does not mean you can skip mortgage payments. Make sure your mortgage payments are up to date until closing. When closing documents are drawn up, the lender will take any unpaid amounts and deduct them from any monies due to you. Check with your lawyer, escrow or title company officer.
Deposit money: there is no fixed standard practice regarding deposit money – sometimes called “earnest” money. Requiring a deposit from the buyer is simply the seller’s need for assurance that the buyer will buy the property and has the financing required to buy the property. When time and money are spent in the showing, negotiation and contract preparation procedures, the seller has to be compensated for lost opportunities to sell to someone else if the original committed buyer suddenly backs out of the deal. Don’t omit discussing this with your agent or settlement agent. It’s added protection for you as seller.
4. Grooming your property to sell
Today a home that stands out among similarly priced comparable properties is the home that sells. Why? BECAUSE FIRST IMPRESSIONS ARE LASTING IMPRESSIONS!
You may not be able to dramatically improve the market value of your home, but you can improve its marketability, and usually this can be done with more elbow grease than hard cash.
Perhaps the most important part of selling your home is properly showcasing your home’s distinct appeal.
Buyers will compare a house with many others before they buy. They particularly weigh up which one will give them the most value and benefits for the asking price. So, if a seller sets the target price too unrealistically high, it is what’s named as a price into the future. In other words it is an indication to the buyer that the seller is not serious to sell. If you try to sell now at a future price over say five years, the joke saying goes: “phone the agent’s son or grandson in five years’ time”.