Mistakes to Avoid When Putting Your Home on the Market
If you are thinking of putting your home on the market, then this guide will show you all the mistakes to avoid in this important endeavor.
Putting your home on the market can be challenging due to the practical considerations and the emotional investment many homeowners have in their homes. The Zillow Group Consumer Housing Trends Report 2021 found that the typical seller had lived in their home for 14 years before selling. While no two real estate transactions will be the same, there are some common mistakes people make when selling their homes that can be avoided to make the experience go more smoothly and be less emotionally charged for everyone involved. It makes a huge difference if you know what to look for, whether you're a first-time seller or a seasoned pro. This article will discuss the most common mistakes you can make when putting your home on the market.
Don't underestimate the costs of selling
Most buyers expect to pay between 6 percent of the sale price to the real estate agent. This number could be much higher, though. Selling costs could be closer to 9% or more of the sale price once you factor in other closing costs, potential repairs, and any buyer concessions. Plus, you may incur carrying costs like mortgages, utilities, HOA dues, taxes, and storage space if you move into your new home before selling your previous one. I provide my clients with a net sheet at our initial meeting so they can see roughly how much they will walk away with based on the price the home sells for, but unexpected circumstances may arise that make that number change. That's why it's always a good idea to discuss with your real estate agent what your financial goals are as it relates to the sale so they can make sure they are keeping you on track throughout the process.
Selling your property at the wrong time
How well you can negotiate a good price may depend on when you do list your home for sale. In the Tampa, FL real estate market, between February and May is the ideal time to sell based on past years' statistics. Nationally, the median sale price of a U.S. home listed during the month of April was $9,300 higher than the average sale price of a home listed at any other time of year. While researching the ideal time to sell in your area, remember that the weather could make a difference as well. In Northern states that means trying to avoid the cold and snow, but in Florida that often means trying to avoid listing during hurricane season. Also, avoiding the holiday season at the end of the year will also help you get a higher sales price and more interested buyers viewing your property. While you can sell your home successfully at any time of year if you have the right real estate agent, timing is everything so make sure you take that into account.
The time of year isn't the only consideration when making plans; the time you've owned the property is also essential. There are capital gains tax considerations that you may need to take into account (consult with your CPA), but there is also the concept of "breaking even" that may be important to you. With the costs to buy and the costs to sell, plus what you put down, most people (in an average market) don't "break even" until around their fourth year of owning a home. But that can vary wildly based on your specific situation, so it's important to consult with a great realtor who knows the market and can help review the numbers with you.
Don't skimp on repairs
You can lose customer interest due to even the smallest of problems. If they take a tour of your home and notice things like loose doorknobs, dripping faucets, or dented walls, they may wonder if you've been ignoring more severe issues. These are some things homebuyers pay the most attention to. It is easier to make a repair before you list your home than to try and hire a licensed professional at the last minute once you're already under contract and the buyer's home inspector has found the issue. Sometimes, a pre-listing inspection can also be helpful, and you should discuss that option with your real estate agent.
Selling it on your own
Selling a home without using a real estate agent can be a massive mistake. While you may be able to save 2% - 3% by not paying an agent to represent you, the commission that the buyer's agent expects to receive will still likely fall on you to pay. If you don't pay it, their client will have to, and more often than not that will be reflected in a request for a buyer's closing cost (to cover the commission fee) or a reduction in price, so one way or another you're paying that fee.
In addition, putting your home on the market on your own is a huge bother, and you could lose a lot more money. If you are not available to show the home, the perfect buyer may slip through your fingers. If you don't know how to negotiate when it comes time to discuss repairs or appraisal values, you could also lose money. Additionally, you will have a licensed professional negotiating against you who understands the market, the contract, and more. Whereas you will have no one to negotiate for you and have your best interests in mind.
Data from 2021 shows that the average price for a For Sale By Owner (FSBO) sale was $260,000, compared to more than $318,000 when using an agent. That's a $58,000 disparity! Which is much more than what you would have paid your real estate agent. Most sellers already know that doing it alone is a losing strategy, which is why the percentage of homeowners who handled the sale of their own property independently dropped to 7% in 2017.
While we're on the subject of doing things alone, don't make a residential relocation to Florida by yourself either! A helpful crew can jump in when it's time to move and spare you a lot of time and the risk of injury.
Working with a bad agent
That is the worst possible oversight that you can make. The agent you work with is the essential factor in determining how well (or not) your home selling process will go. The agent who helped you buy your home may be tempting to call, but putting your home on the market is very different from buying one. They might be a great buyer's agent but won't be able to properly represent you while you're the seller. I work frequently on both sides of the transaction, representing buyers and seller, so I know what the market is doing and can help guide you accordingly. Make sure you confirm how many homes the agent you're hiring has listed (not just sold), so you know they are well-equipped to help you.
May people also feel obligated to hire a friend or family member who has their license, but doing so can lead to strained relations if things go wrong. The sale of your home is a big financial commitment. Because of this, you should treat the process like a business deal and take your time to choose a top-tier agent who knows the local market.
Pricing your home incorrectly
If you list your home at a price that is too high, it could end up in "seller's limbo," where it sits on the market for a long time with no offers. You can look around and see the prices of other homes in your area, but without having a knowledgeable real estate agent interpret what that means for you, it can be hard to know what to price at. I am a certified Pricing Strategy Advisor and have a lot of experience helping clients sell their home for more money by pricing strategically from the start. Having a discussion about pricing should always be specific to your home and based on its features, not what an online pricing estimate said it might be (as they can frequently be as far off as 20%).
Knowing the ins and outs of selling a home is essential. Do your best to avoid making these mistakes and you can ensure you're mentally and financially prepared for the process. If you steer clear of the costly mistakes discussed here, you'll be well on your way to making a good impression on buyers and getting your home closed in no time.