21 Critical Mistakes that Can Cost You Money When Selling Your House

21 Critial Mistakes that Can Cost
You Money When Selling Your House!

by Brian Bagnall

Being aware of these common mistakes to avoid the common mistakes that cost sellers valuable time and money:

1. Basing your asking price on needs or emotion, rather than market value.
This is probably the most important thing to deal with when it comes to selling your house…pricing. If you price it too low, you could end up losing money. If you price it too high, you could end up sitting on the house for a long time and having a negative stigmata associated with the property. Having a negative stigmata attached to a property because of a high starting price some time ago will even prevent the property from being sold when the property is priced reasonably.

Many times sellers base their pricing on how much they paid for or invested in their home. This can be an expensive mistake. The only important fact to look at is what buyers and willing to pay for the property at that time. Remember…you shouldn’t determine price on personal factors or the money that you may have put into the house recently and expect to get back. If your home is not priced competitively, buyers will reject it in favor of other larger homes for the same price. At the same time, the buyers who should be looking at your house will not see it because it is priced above their search limits. The result is increased market time, and even when the price is eventually lowered, the buyers are wary because “nobody wants to buy a house that nobody else wants”. The result is low offers and an unwillingness to negotiate. Every seller wants to realize as much money as possible from the sale, but a listing priced too high eventually sells for less than market value!

Take pricing research seriously. Buyers and their agents are typically quite knowledgeable about the market and will have a good idea when a house is overpriced. The financial loss often exceeds the extra mortgage payments paid and goes beyond the uncompensated hassle factor of trying to keep a home spotless during showings. Don’t let it happen to you.

The real estate market fluctuates based on supply and demand. Markets can also vary from neighborhood to neighborhood within the same community. The more your learn the better prepared you will be to make the necessary decisions.

2. Using a Refinance Appraisal to Determine the Market Value
If you refinanced your home, most likely an appraisal was required. Sometimes lenders will overestimate your home’s value in order to encourage refinancing. The actual market value could be lower. Do your own research to set an accurate listing price based on current market conditions.

3. Failing to “Showcase” the home.
This is so important. A bad first impression is impossible to correct. Wouldn’t it be terrible to lose an interested buyer because of a dirty bathroom, cluttered kitchen, unkempt lawn or unpleasant odors? Poor housekeeping can overshadow even the most competitively priced house. Not only is it important to do a thorough cleaning before the house is placed on the market, you must maintain it in this condition until it sells. Make your home as presentable as possible. It may require a few weekends of work but will pay off in the end. A property that is not clean or well maintained is a red flag for the buyer. It is an indication that there may be hidden defects that will result in increased cost of ownership. Sellers who fail to make necessary repairs, who don’t spruce up the house inside and out, and fail to keep it clean and neat, chase away buyers as fast as you can bring them. Even if they love the home, Buyers are poor judges of the cost of repairs, and always build in a large margin for error when making an offer on such a property. Sellers are always better off doing the work themselves ahead of time!

Buyers don’t expect your house to be spotless, but it should look presentable. Buyers understand that you actually live in your house so there is some leeway. Try and keep the kitchens and bathrooms in better shape than the rest of the house. Kitchens and bathrooms sell a house. Keep clutter off of the floors and open the drapes and let the light in.

4. Failing to Complete All Necessary Repairs
Buyers are picky. Plain and simple…and whether we like it or not, we need to try our best to deal with it and make them happy.

A home in need of minor repairs and refreshing will be sure to garner a lower price. Complete those outstanding repairs, repaint any walls that show wear or are not a neutral color, replace old carpeting and burnt out light bulbs, do a thorough cleaning and be very diligent about keeping up with it while it is on the market. This work will go a long way to making your home enticing.

You may see things like outdated appliances, an out-dated kitchen, and an ugly bathroom as practical and efficient. A new buyer might see it differently. Try and look at things from a prospective buyer’s view. How can you make improvements? Ask buyers for feedback about your property. Do something about the criticisms that keep coming up and do something about them even if you don’t agree with the criticism. Also keep cost recovery in mind as well. You don’t want to be ripping out the carpet or tearing out a bathroom if the money isn’t going to come back to you at closing. CHECK OUT MY

Before you put your home on the market, thoroughly inspect it for any necessary repairs and have them completed. It can make the difference between a sale and a home that remains on the market for months on end. Just like a clean house, a property with no obvious repair needs will be more attractive to buyers. Repairs that are made as a condition of the sale can also cost as much as three to five times what they normally would. Under such tight time constraints, you can’t always search for the best price and you may have to pay rush fees when hiring a contractor.

5. Neglecting Curb Appeal
Potential buyers like to do drive by a property before making an appointment to see it. It’s understandable that the inside of the house isn’t always in tip top condition (when buyers aren’t walking through of course) but you always need to keep the outside looking great. Make sure that the yard is manicured, the windows are clean, and the flower beds and gardens are in order.

If the curb appeal of a house in horrible, most buyers won’t even make an appointment to go inside. Make your curb appeal all it can be before your first potential buyer has a chance to view it.

6. Over-improving the home prior to selling
Sellers often unwittingly spend thousands of dollars doing the wrong upgrades to their home prior to attempting to sell in the mistaken belief that they will recoup this cost. If you are upgrading your home for you personal enjoyment – fine. But if you are thinking of selling, you should be aware that only certain upgrades are cost effective. Always consult with your Realtor BEFORE committing to upgrading your home.

7. Choosing a Realtor for the wrong reasons
Not all real estate agents are the same. Be sure to interview multiple agents (at least three) to find the one best suited to you and your situation. Look at their experience and approach to home selling. What is their selling record: number of homes sold in the last year, average number of days their listings are one the market, etc.? During the interview, a good agent should provide a Comparable Market Analysis (CMA) detailing the properties currently for sale in your area and those that have recently sold. This will help you to set your price.

Many homeowners list with the agent who tells them the highest price. You need to choose an experienced agent with the best marketing plan to sell your home. In the real estate business, having an Experienced agent with many successfully closed transactions representing you, can mean a higher price at the negotiating table, selling in less time, and a smooth and seamless transaction..

8. Using the “Hard Sell” during showings
Buying a home is an emotional decision. No one likes to feel pressure, especially when considering such a substantial purchase as buying a home. Buyers like to “try on” a house and see if it is comfortable for them.

It is difficult for them to do so if you follow them around pointing out every improvement that you made. You should let the buyers discover the home on their own, pointing out only features they are sure are important to the Buyer! Help prospective buyers feel comfortable when looking at your home. Be receptive to their questions and don’t become defensive when answering. Give them the space they need to really experience the house. If you can, it is best to leave altogether. Many sales are lost by overselling. If buyers think they are paying for features that are not particularly important to them personally, they will reject the home in favor of a less expensive home without those features.

Be Professional–Always act courteous and friendly. You want to appear approachable so buyers will feel comfortable asking you questions. However, you don’t want to hover. That can make them feel uncomfortable or rushed. Give them as much time and space as they need to scrutinize your home. Leaving the house altogether is usually the best solution.
During the home selling process it is best to remain as logical as possible. If a buyer criticizes your house, remember not to take it personally. They are not criticizing you but simply trying to consider all aspects in order to make the most informed decision. Homeownership is one of the biggest financial transactions most people experience. This is bound to cause some anxiety. Don’t be pressured by these emotions.

9. Failing to take the first offer seriously
Often sellers believe that the first offer received will be one of many to come. There is a tendency to not take it seriously, and to hold out for a higher price. This is especially true if the offer comes in soon after the home is placed on the market. Experienced Realtors know that more often than not the first buyer ends up being the best buyer, and many, many sellers have had to accept far less money than the initial offer later in the selling process. The home is at it’s most saleable early in the marketing period, and the amount buyers are willing to pay diminishes with the length of time a property has been on the market. Many sellers would give anything to find that prospective buyer who made that first, and ONLY offer!

10. Failure to effectively market the property (being frugal)
Good marketing opens the door that exposes the property to the marketplace. It means distinguishing your home from hundreds of others on the market. It also means selling the benefits, as well as the features. The two most obvious marketing tools (Open Houses and Print Advertising) are the least effective. Just 1% of homes are sold at open houses, and advertising studies show that less than 3% of people purchased their home because they called on a print ad! Agents use these tools to attract future prospects, not to sell the house.

No one technique is guaranteed to work. It is best if you play the law of averages and try as many different avenues as possible.

11. Contracts-Not knowing your rights and obligations
The contract you sign to sell your property is a complex and legally binding document. An improperly written contract can allow the purchaser to void the sale, or cost you thousands of unnecessary dollars. Your transaction is only as strong as your contracts. Sometimes the buyer will provide the contracts but sometimes the seller will be expected to. We offer the most common types of contract for free if you sign up for our CONTRACTS COURSE. Wherever you get your contracts from, you should always have them reviewed by an attorney to make sure that they are state specific and that they cover all issues that are important for your location and situation. Don’t cut corners here. Neglecting to get advice from an attorney or other knowledgeable person will cost you money, not save it. For most people, selling a house is the most expensive thing you will ever sell. You would hate to have it fall apart or even worse to get involved in a civil or criminal legal battle because you used weak contracts.

Real estate contracts are legally binding. Before signing anything you should understand the terms, or it could cost you a considerable amount of money.

12. Not Keeping Up to Date on Property Disclosure Requirements
Check your state law about property disclosures. Some states require them and some states don’t. A property disclosure deals with the condition of the property or facts about its location, including:

  • The age of the house and its components
  • Whether problems exist with any components

• Whether you (or a neighbor) have built something (fence, shed, road, pool) that extends past property boundaries

  • If the house is in a flood zone
  • If the house is on an earthquake fault
  • Changes in zoning or potential changes in zoning

• Other issues important to your specific location that might affect the value

13. Not Keeping Up to Date on Lead Paint Disclosure Requirements
Federal law requires that you disclose that the house could contain lead based paint if your house was built prior to 1978. The law also requires that you give buyers details about past tests conducted for lead paints. Buyers must also be offered the opportunity to do their own lead paint testing. You must also provide your buyers with a lead paint pamphlet, which is available free when you sign up for our CONTRACTS COURSE.

14. Fair Housing Laws
The Fair Housing Act prohibits discrimination on the basis of race, color, religion, sex, disability, familial status, and national origin. A summary of the Act is included with my CONTRACTS COURSE.

15. Pre-Qualified or Pre-Approved?
Typically, real estate agents verify a buyer’s financial status before he shows them property. When you sell by owner you’ll deal with many people, including those are qualified to buy your house and those who couldn’t but a 99 cent pack of gum on credit.

People who know they cannot buy sometimes think that for sale by owner houses offer a better opportunity because they’re hoping to find a seller that is desperate in some way. They are usually hoping for a seller who will finance the transaction.

Ask these questions to get a feel for the level of seriousness:
* Have you been pre-approved or pre-qualified by a lender for an amount in this range?
* Can you provide proof?
* Can you buy a house now, or do you have to sell your current home first?

It’s a good idea to have anyone that puts in a purchase offer submit a letter or pre-approval (or pre-qualification). If your buyer can’t purchase until he sells his house, you’ll have to decide whether or not you want to wait for that to happen. If you do decide to wait until the buyer sells his house, be sure to insert a kick out clause in your contract with the buyer.

It is best to work with buyers that are pre-approved. Pre-approval is a lender’s guarantee of how much they will loan an applicant. So before you being negotiations, you can be assured of their ability to secure financing. This will prevent you from having your home tied up in fruitless negotiations. Your real estate agent will also be helpful in determining if the buyer is serious or if they are just casually looking to see what is available.

16. Earnest Money (Buyer’s Deposit)
A purchase contract is not valid without some type of consideration and this is usually offered in terms of a deposit. This deposit is also called earnest money. Your contract should address what happens to the earnest money if the deal falls through:
* Under what conditions would the buyer get it back? (unable to secure financing, unfavorable inspection, etc.)
* Under what conditions would you expect to keep it? (buyer backs out without cause)

Please remember that the earnest money does not belong to you until the house is actually sold or the buyer defaults. The earnest money will be credited to the buyer’s funds at closing. Usually earnest money is held in an escrow account. In some cases, the funds might need to be held in an interest-bearing account. Check your local real estate law to be sure you are in compliance.

17. A Picture is Worth a 1000 Words
Make sure that the pictures that are advertising your property are good ones. Bad pictures (on FSBO websites, brochures, flyers around the neighborhood) could be preventing people from even making the visit to see how great your house really is. If at all possible, avoid using pictures of the outside of the house that were taken in the winter.

18. Signage
Make sure actually let people know that your house is for sale! Put a prominent sign in the front yard. Make sure that it can be seen when driving from both directions on the street. Put out directional signs at busy intersections surrounding your house to direct potential buyers to your house. These signs can be obtained at your local hardware store.

19. Have the Information
You would be surprised how much people just don’t know about their property. Make sure you know answers to common buyer questions, as well as the not-so-common questions. Know when the things were replaced like the roof, refrigerator, furnace, air condition, etc. Know how much the taxes are per year and have recent utility bills ready for inspection. Provide potential buyers with all of the tools that they will need to purchase your house instead of the one next door.

20. Assuming Every Looker Is a Buyer
You can’t assume that everyone that comes to see your house is a potential buyer. Some people may be six or more months away from buying and are just trying to get an idea of what is out there. They may not have put their house on the market yet or are still saving for their down payment. You real estate agent should be able to distinguish which lookers are serious buyers.

21. Cater to the Convenience of the Buyer
People are accustomed to convenience. This is just as true for home buyers. One of the simplest things you can do is to make your home as accessible as possible. If buyers are too restricted when making an appointment, they will look elsewhere. This is especially true if someone is relocating and only has a short time in which to find a house. This is definitely the type of buyer you want to court.