These tips were written by a 16+ year RE/MAX Realtor. Much of his experience was in a depressed market. The writer has successfully sold hundreds of homes and has experience in purchasing & rehabbing foreclosures, listing homes, working as a buyers agent, building homes, etc.
You must first be able to balance your finances and emotions to be successful at selling real estate. Easier said than done. Trust me. I've been through it. Remember, you're not selling some old car you had for 3 months in high school and couldn't care less about it. This is your "HOME." You lived there for years. You have memories there. You might have raised children there. Parties. Laughs. Etc. Maybe you remodeled it yourself. Finished the basement. New windows. Finished it the way you want it to be. This makes people think their home is extra special. It may be special to YOU but to any buyer, it’s just another house. Your emotions will differ from time to time. If you see your emotions starting to alter, just remember it is 100% normal. You are stepping out of your comfort zone.
It is something you're simply not used to. That is it. Don't let it drive you over the edge. If you can control your emotions, you're half way there! Remember that it's business. Not personal.
Preparing Your House For Sale
Preparing the home for sale could be easy depending on what needs to be done. Starting from the outside first.
LANDSCAPING- have you ever driven by a house that is nicely landscaped? You have one chance to make a good first impression so if your yard needs work, get working on it. A friend of mine is in landscaping and told me that 15% of your homes value is in the landscaping. Personally, I think it's less but nonetheless, it does make a difference when selling.
Always keep your lawn mowed during the time that it is listed for sale. A lawn with tall grass and weeds looks very unattractive and is enough to scare off a good potential buyer.
NOTE- The buyers always want to drive by the home first to check out the neighborhood and the curb appeal. This is why landscaping is crucial.
Make sure there aren't any branches or over grown weeds hiding the view of the house. I have seen homes particularly one that I invested in that had tall out-grown bushes in front of it. I simply paid someone $150 to remove them and it was like night and day. The difference was unbelievable! It took them about an hour to cut and take away. That paid for itself 10 times over. Don't be afraid to subcontract some work out. It saves time and the investment is usually worth it. If you don't have any bushes or shrubs consider putting some in. A few bushes, some edging and some stone will do wonders. Trust me!
PAINT- If you're going to paint your home, use a conservative color. White or a cream color are usually good. Homes with bright and odd colors are more difficult to sell. Flat paint is good as it helps to hide imperfections in the wall and it is also very easy to touch up.
CLUTTER-This is bad! Real bad! Make your home look simple. What I mean is this: I once listed a house that was unoccupied. The owners had taken some stuff out. In the living room they had a couch, recliner, 2 end tables and a center table. Nothing on the tables or the couch. It looked simple but showed very well. Much better than stuff everywhere.
Pack unwanted nik-naks neatly in a box and hide them. Clear your counter tops. Magnets, pictures and junk attached to the refrigerator should be to the minimum. Lots of pictures on the wall can give the room a cluttered feeling and make the rooms appear smaller than they really are. Get rid of any furniture you're not using.
The key is to make it look simple and clutter free. If you have to, get an unbiased opinion. Don't be offended by comments anyone makes. They can see things YOU don’t. Just like you can see things in their home that they may not. Remember that this is business. Don't let your emotions control you or they will cost you big bucks!
BEING CLEAN- Have you ever been in a home that is filthy? Mildew all over the bathroom walls, floors so sticky you almost lose your shoes while walking? Hand prints all over the walls? It may only cost a small amount to clean but the impact on your buyers is devastating. Dust the furniture. It’s amazing what can accumulate in time. Vacuum. Clean the counters. Remove cobwebs. Straighten out furniture and nic-naks.
HINT- buyers are always looking for some reason to knock your price down. Don't give them one.
Pricing your home
Now that your home is ready for sale, the first thing to do is to find the value. I cannot stress enough the importance of an appraisal and/or market analysis. You basically have two choices. Call a local reputable Realtor or an actual appraiser.
An appraisal for residential property may cost you around $250-$300. A realtor won't charge you for this and their opinion as far as I'm concerned is just as valuable. Someone who knows what they're doing is bound to give you accurate information.
If you asked 3 different Realtors and had an appraisal, I bet you they would all be pretty close. If one person says, "$150,000" and someone else says,"$200,000", then someone is way off. They should not be that far apart. Maybe 5% at the most.
HINT- if you meet with a Realtor, never tell them what you want for the house. If your house is worth $100,000 and you tell them you want $115,000 you may start to see all their opinions come in around $114,900 just to get the listing. This won't do you any good. It will just cost you big bucks later when your house sits on the market for a year.
Do not think for a minute that they are going to tell you a low price just so they can sell your house fast. This is not common practice. People would always think that. There are a few that may not be the best choice but the same holds true for doctors, police officers and judges. For the most part we Realtors are all good, hard working people that really want to help. Therefore, I wouldn't be concerned about getting a "low-ball" figure just to get the house to sell quickly. If you feel that the agent IS giving you a low-ball figure, then they may either be unqualified OR you are simply sticker shocked. I really doubt that they will deliberately low-ball you. I never did it in all my years and don't know anyone who has. Honestly.
A Realtor doesn't need to under-price your home to sell it. They have 10 times the selling power so under-pricing is not even necessary. Trust me. If anything, they will tell you a higher price just to get the listing. I'm not saying they will do this, however, there is a better chance that they will overprice than under-price.
As far as an appraisal goes, you have something in writing to show the buyers. Something unbiased. The appraisal should be no older than 6 months. I always have people tell me that there house appraised in 1987 for $100,000 more. Uh, we are not in 1987! Warning: An appraisal is an "unbiased opinion." As far as I am concerned, a real estate agent can give you a more accurate opinion because they actually work with the buyers. I have seen homes appraise for a certain amount of money but no one was willing to pay the price. Vice versa, I have seen homes sell for more than they were appraised for. An appraisal can only be deemed reliable. It is the buyers that have to pay for it. If your home is not selling and you have it priced according to your appraisal, then you may have to consider lowering your price. You must determine if the activity and feedback warrants a price reduction.
Remember this: The market price of your home is determined by similar homes that sold in your general area. This means FACTS! If you want $100,000 for your home, you better be able to prove it is worth it by providing recent sales to your buyer.
How do you know if you're priced right? The length of time on the market will determine whether your price is ok or too high. If you're on the market for 3 months and you're getting showings but no contracts or offers, then you must determine if the feedback you're getting from your potential buyers’ warrants a price reduction. Always get feedback! Then make adjustments.
NOTE: If you are selling the house on your own, people will probably not be up front with you because they do not want to offend you. This will not help you make a wise decision. If they thought your home was dated or non-functional, (non-functional meaning chopped up floor plan or one that doesn't have any flow to it) they may tell you something like, "we liked it but found one we liked better". So if all you hear is that or something similar from your buyers, you cannot make proper decisions on a price reduction. If you're listed with a broker, the buyer and their agent will give you honest feedback.
IMPORTANT FACT. It is in my opinion that it is difficult to price your own home, no matter how realistic you think you are. Get an unbiased opinion from an agent. Trust me. I went through it with a house I sold and with all the experience that I have, I had a very difficult time pricing it and was surprised to hear all my fellow agents telling me to "lower" the price 10%. I was thick headed but eventually had to do it to sell the home. I should have listened to them in the beginning. I would have saved myself some money and headaches.
Here are some common questions on price:
QUESTION: Why can't we price our home high in the beginning, then reduce it?
ANSWER: The further you price your home from its actual "value" the longer it will take to sell. In the end you could end up losing money. People always want to pay less for a home that has been sitting on the market for a long period of time. This is why you should be concerned if you start thinking like most sellers. They always say to me, " I don't have to move" or "I have time." Great, so you have time. Does that warrant a higher price? Of course not! Imagine you're looking to buy a home and the house is worth $100,000. The owner is asking $115,000 because they "don't have to move." Are you going to say, "that's right Mr. Seller, I forgot you don't have to move right away so here is an extra $15,000 of my hard-earned money." NO! Your time frame doesn't increase the value of your home. Period!
QUESTION: Isn't it common practice for agents to under price a home so they could sell it fast and make a commission?
ANSWER: O.K. I am going to be truthful. It is uncommon for an agent to deliberately under price homes to sell them quickly. In some cases, homeowners choose to under price their home for their own personal reasons. Perhaps they need to be out quick. (This is rare I must admit) In cases like this, the neighbors see the price and the speed of the sale and sometimes blame the agent for under pricing the home when they knew nothing of the sellers situation. That is how rumors start. In other cases the agent may not be familiar with the area or may simply be inexperienced and conclude a low price. Last but not least. You must understand one thing. Most agents have much more real estate knowledge than you do. (Please don't take this personally). They have much more selling power. Under pricing is not even necessary to sell a home. I have sold homes in a matter of a few days without under pricing them.
How have I accomplished this? Simple. The owners took my advice. The price opinion difference between an owner and an agent is this: You (the owner) are not involved in the Real Estate business all day and night like we are. You go to work everyday. Come home. Have supper and watch TV. You're living your own life. Agents on the other hand are involved in real estate all day long. We eat, sleep, and drink Real Estate everyday. All day! We know more. We see more. If you saw what we see everyday, I am sure you would see things differently. Besides, I have sold my own homes before and I concluded that it is very difficult to price your own property. This is where all the differences lie. Now when we tell you the value, you're sticker shocked. So that is when people will say, "you just want to under price it to sell it fast." But you know what I have found? I have found that people who disagree with my price, have NO evidence (like an appraisal) to back THEIR price. Not once! They simply aren't aware of the market conditions. It's that simple. That is how the under pricing perception is created. One has experience and the other doesn't. Look at how many homes go on the market and never sell. This alone will back my theory.
QUESTION: Isn't it true you need at least $10,000 bargaining room?
ANSWER: NO. Not at all. I have sold many homes for full price and occasionally thousands over the asking price. Even in a down market. Why? Because I was able to prove the house was worth what I was asking. That's it. $10,000 is an easy way to scare a good buyer away depending on your price range. $10,000 on a $100,000 house is too much. However, on a $250,000 house, it is not. It depends on your market area. Ask your realtor for advice. I am sure they will guide you in the right direction. I can say this though. The closer you are to your VALUE, the faster you will sell your home and the less negotiating you will have to do. (Less headaches too).
QUESTION: IS selling faster better for me?
ANSWER: Yes. Much better. In my opinion, the first 30 days is the most important. After that, showings will probably slow down. I have always gotten the best price and results with quicker sales. Why? It creates excitement. Look at the Tickle Me Elmo doll. When it first came out, people were buying them and putting them in the paper for hundreds of dollars. Imagine if those same people waited until after Christmas? How much is it worth now? Not much. The longer it was in the market, the less it was worth. All the excitement was in the beginning. Same goes for homes, cars, etc. What would you think if you were buying a home that has been on the market for a long period of time? You would be thinking, "what's wrong with this house? Why hasn't anyone bought it? Is it junk? Is it haunted? You would be surprised how buyers think. To top it off, they come in with insulting offers because they think that you are desperate. It's your call. Here is a pricing analogy I learned and maybe this will make sense to you. Pretend you are a fisherman. You go to the ocean and find a school of fish. Your radar tells you that the fish are 100 feet below the boat. (The 100 feet is where your home should be prices). If you drop your line at 70 feet ($30,000 overpriced), you don't get any bites. If you drop your line in at 80 feet ($20,000 overpriced), you MAY get a bite (bite means someone telling you that they are interested but no offers). If you drop the line at 90 feet, you start to see a little more action because the bait (bait is the price) is closer to the fish. If you drop the line right at about 100 feet (where your home should be priced) or in the middle of the school of fish (where the buyers are), you get a "feeding frenzy." (feeding frenzy being multiple offers and lot's of interest). Right? You get a solid bite and others who may be willing to fight for the hook. (The hook is your house). See my point? Pricing IS everything! When you overprice, you are doing two things that you'll eventually realize.
1. You are helping others who are priced correctly sell THEIR homes because compared to yours, theirs looks like a bargain!
2. Imagine getting that first call for a showing. You're all excited. You clean up the house nicely. You leave the house and take your family to dinner so the showing can take place. Nothing happens! The next day, the process starts all over again. And again. And again! How long do you think it'll be before you get sick and tired of cleaning your house only to hear people say that they're not interested? Believe me, I see it all of the time. It WILL take its toll on you. The last position you want to be in is having to make a price reduction when you're desperate and the home has been on the market for awhile. It's not worth it and it just doesn't pay! Trust me. Been there, done that!
FOR SALE BY OWNER OR LIST IT?
You obviously have 2 choices when you are ready to sell your home. List it or go for sale by owner. It is very important to analyze your situation before you do this. If you are on a time limit then I would recommend you list the house with a reputable real estate agent as soon as possible.
If you have a high tolerance for patience, have time to answer the calls, be flexible with showing the home and can put up with the numerous problems a sale generates, then TRY it on your own.
You have two choices when selling your home and here is a brief rundown of what you'll encounter in both situations. Do your analyzing and make your own decision. Being in real estate for as long as I have, I have seen a majority of "for sale by owners" eventually list their homes with an agent. Catch my drift? If selling a home was so easy as putting the sign on the lawn and placing an ad, do you think they would be listing it if it were working? I think not! Selling real estate is an art. Why try and reinvent the wheel. Model others and you go places faster. Let me put it to you this way.
I know what sells homes. Every time I bought a property and wanted to go and sell it, the FIRST thing I did was list it for sale. If I thought for a second that I could sell it from an ad, sign or an open house, don't you think I would have done it? OK. So I only have to pay half the commission. But if I knew the ad, sign or open house would do the trick I would still be able to save half the commission. Why would I even want to pay half if a sign, ad or open house did the trick? Are you following me? I am not saying that an open house, sign or ad won't do it, but I am saying that it "more than likely won't do it." I seldom sell homes from an ad or open house.
According to the National Association of Realtors, the statistics show that about 1% of homes sell from an open house and about 3% sell directly from an ad. A vast majority of sales are through brokerage firms. I wish ads and open houses did the trick because I would be well off right about now. Sometimes I will call upon a For Sale By Owner only to hear them say something like, "I am getting a ton of calls and I don't see why I should list it with all this activity.” Well, I get a ton of calls on all my listings everyday.
RESULT: It seldom leads to a sale. In fact, I am so often interrupted by these phone calls that I went and got myself a 1-800# with 100 extensions on it. This way I can leave a description of all my listings on it and the people won't take up all my time asking me questions about the house when I know that it will more than likely lead to nothing.
You have no idea what it is like to sit there and have people calling and leaving messages on your voice mail all day saying, "hi, my name is Betty and I am calling on the house you have for sale in the paper. It says 4 bdrms, 2.1 baths, quiet street, 2 car garage for $159,000. Can you please call me and give me the address so I can do drive by." Imagine getting these all day long from buyers who don't even want to buy. I even get calls from the same buyers on the same ads week after week. If you’re new at it, you'll be overwhelmed with the results. If you’re experienced at it, it's just another phone call. Out of every 20 calls, maybe 1 or 2 may be a serious ready, willing and able buyer. And if they are ready, willing and able, is your home the right one for them? So then why do agents advertise so much? I'll tell you. First, it is a hook to get buyers. Buyers call on these ads all day long and eventually some are going to start working exclusively with the agent that advertised them. Second, if the agent didn't advertise your home, what would you think? You would think you're getting ripped off. Right? You want to see your monies worth.