Since, I’ve been in the real estate business. I’ve been contacted by thousands of home sellers and after a while, I’m able to notice predictable patterns of behavior.
The process of selling can be extremely stressful, and stress has a tendency to bring out the worst in us. I’ve come up with 12 of the most common, and costly, mistakes made by home owners during the process of selling their home.
12 Mistakes Home Sellers Make
Not knowing why are you selling
This sounds trivial but it is actually a crucial element in your overall plan. Are you looking to buy another house? Moving out of state? Are you getting divorced? Is this an inherited property that you need to get rid of? Will you be in financial trouble if you don’t sell the house? The answers to these questions will help you decide how quickly you want to sell and what your plans will be for moving.
Not knowing the cost of sale
Not planning can lead to a nasty surprise at closing time. I’ve seen sales fall apart at the last minute because the seller wasn’t going to receive as much money as they thought. Whenever I sell a house I always assume 10% for cost of sale. It’s best to do a more thorough analysis by calculating each line item. The biggest expense is usually the loan payoff.
Overpricing The Property
This is where most sellers go wrong. They price their property based on emotional attachment or by the amount of money they think they’re entitled to after all expenses. Going by the tax-value is another mistake. We all want to sell our properties for the most money possible but how many of us are willing to overpay when we go to buy another house?
Adding the agent commissions on top of the purchase price
There is a common misconception among For Sale By Owners that if an agent is brought into the transaction then the cost of the agent should be added on to the purchase price. Remember, no one will buy a home for more than it is worth, and a bank will not loan on a property for more than appraised value.
Not being on the same page with your partner or spouse
I remember asking the sellers of a particular property about price and they each quoted me a different amount! Be on the same page with regard to price, condition, and when you are planning on moving. Clear communication is key, especially when it comes time to negotiate.
Not discounting for repairs
This is a commonly overlooked detail when selling an older home. Have you done an inspection recently? What kind of repairs does the home need? Why would a buyer do all of that repair instead of just buying a brand new home? Homes that need repairs need to be discounted properly to provide enough incentive for a buyer. I think most sellers have difficulty putting themselves in the shoes of the buyer–even in a sellers market!
Waiting, stalling, indecisiveness…
This is especially damaging when a property is in distress. Many sellers wait till the last minute to call someone and discuss their options. Situations like pre-foreclosure, delinquent taxes, and major repair only get worse with time.
Accepting an offer solely on price
I recently sold a property in Raleigh NC where I received multiple offers. I did not take the offer with the highest price! I accepted the offer from the most credible buyer who offered a fair price. It’s easy to get greedy during a home sale and you start mentally spending the money before you get it.
Not making the mortgage payment
I was doing business with the seller of a nice ranch in Knightdale NC. It would have made a great rental property and I still lament not being able to add it to my portfolio. The seller had already stopped paying the mortgage despite having a paying tenant in the house and neglected to tell me as well. I had to follow up with him so many times after sending the agreement. The property eventually went into foreclosure.
Not disclosing important details
Remember that things like major repairs, title defects, or liens and judgement will be discovered during the due-diligence period. Attempting to hide this in the beginning will only lead to problems later.
How will you sell the house?
Will you be selling it yourself (FSBO), or will you be hiring a Realtor? Do you need to sell right away and can’t wait the normal 45 days to find a buyer and wait another 60 days to close the loan? If you need to sell right away you should call an investor. This is why it’s so important to have a clear understanding of why you are selling in the first place.
Seller presence during showings
It’s better that the owner not be present during showings. Many sellers make the mistake of being too aggressive during showings. Following the buyer around creates an uncomfortable feeling and doesn’t allow them the opportunity to envision themselves in the home.