Selling a home is often seen as one of the most stressful financial decisions in one’s life. Committing to such a long-term decision regarding this type of investment, with so many variables to consider may lead to poor or ill-thought out decisions, if a seller is not careful. Trulia recently published an article detailing the 5 mistakes sellers often make when putting a home on the market. With this list in mind, sellers can keep an eye on these common pitfalls during the process of selling their home.
1. Price reduction paralysis. Wikipedia defines panic as “a sudden sensation of fear which is so strong as to dominate or prevent reason and logical thinking, replacing it with overwhelming feelings of anxiety and frantic agitation consistent with an animalistic fight-or-flight reaction.” But there’s a real estate-specific reaction to panic that the infinitely wise Wiki editors left out: freezing up entirely.
In cases of overpricing, the seller has most often started out as overconfident in their home’s prospects on the current market. But as the days on the market turn into weeks, or even months, that overconfidence morphs into panic: panic that the place will only get a lowball offer, panic that the place won’t ever sell, panic that the seller will be stuck in the property, panic that the seller’s future life or career plans will be ruined. This is a panic that snowballs into increasingly disastrous hypothetical scenarios, and fast.
2. Excessive attachment. Yes, this is the place your kid took her first steps, the place you carried your bride over the threshold, maybe even the place your parents built with their bare hands. But at the time you make a decision to sell it, it also becomes a property, an asset, that like any other good you would sell in the course of business, must be marketed and priced and transacted for.
Sellers who are excessively attached to a home are likely to:
- Overprice it
- Ignore market data, like the recent sales prices of comparable homes nearby
- Disregard their agent’s staging advice
- Improperly prepare their home for the market, failing to update or neutralize the decor
- Be irrational in negotiations around price or repairs
- refuse to respond appropriately to market feedback, like no showings or offers even after it’s been on the market for weeks or months
3. Ignoring the needs of your target audience. Again, by virtue of putting your home on the market for sale, you have become a de facto marketer. And every marketer knows that it’s essential to understand your target buyer’s wants, needs and lifestyle in order to get top dollar for your product (that’s your home). It’s up to you – working with your agent, of course – to figure out who the target market for your home is and to market it accordingly.
4. Celebrating too soon. An old friend of mine who happened to be a former pro athlete would often shake his head when a team went wild over a mid-game rally. His mantra: “Don’t celebrate too soon.” In sports, some say that celebrating too soon can cause you to relax and play less aggressively or less defensively for the rest of the game, giving your opponent a chance to make a last minute comeback.
And the same is true in real estate. Multiple offers and above-asking sales prices happen frequently on today’s market, but it’s critical not to assume your home will be in that number until a deal is actually closed. Sellers who “celebrate too soon,” so to speak, can put themselves at a disadvantage in a number of ways, like:
- Cheaping out on staging, failing to do all the items on their property prep list
- Overpricing their homes, assuming the demand-supply imbalance will automatically swing in their favor
- Getting sloppy in how they maintain their homes on a daily basis, while they are still on the market, and
- Making large purchases or spending their house proceeds “in advance,” while the buyer’s loan and inspections are still pending
5. Price confusion. Some sellers have a confused understanding of the mechanics of determining the fair market value of a home and setting a list price. This leaves them vulnerable to the trap of letting their financial self-interest and fantasies for the future get in the way of setting a smart list price.
See, a home’s fair market value is defined by what a qualified buyer will pay for it at a given moment in time. The best way to estimate or approximate that for a home before it is actually sold is to look at what qualified buyers have actually paid for very similar nearby homes, as recently as possible. This is what agents call looking at the comparables or “comps” – most listing agents will do a formal version of this process called a Comparative Market Analysis, and present that to a seller to consider in setting the list price for their own home.