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The Busch Team, Local Mortgage Lender in Metro DC, NW DC (Dupont, Logan, Georgetown)


The Best Way to Sell Your Home is to Avoid the 10 Most Costly Mistakes


Mistake #1 - "Testing the market" by pricing too high

Historically, in buyer and seller markets, one factor remains constant ... homes generally fail to sell until they are priced within 2-4% of current market pricing. It is this very reason why you see some homes selling quickly while others seem to languish. Pricing your home just 5% above actual market value limits the number of potential buyers by 50%. Homes priced just 10% over market value (initially, most homes are priced from 7-9% above their final selling price) reduces the number of potential buyers by 70%!

If the initial list pricing is above market expectations, buyer interest is lower than homes priced closer to market. Knowledgeable agents will quickly see the home is overpriced and present more competitively priced homes to their clients. Then, as you find reduced buyer interest, it becomes necessary to make ongoing downward price adjustments until the lower listing price appeals to buyers. (This is known as 'chasing the market'.) The result is that sellers who overprice find that selling time is significantly longer. The result: the final selling price may be less than if their agent had encouraged them to price accurately at the time the home was first presented to the market. Furthermore, during this time, the seller ended up paying additional mortgage interest, property taxes, utilities and maintenance than necessary.

Mistake #2 - Attempting to sell "For Sale by Owner"

At one point or another, most sellers ask themselves, "Can't I sell my own home and save the fees of a Realtor?"

Yes, perhaps. But according to the National Association of Realtors and other studies, homes sold by owners actually sell for up to 16% less than homes represented by brokers. At a fee of 6%, you may see as much as 10% more net proceeds by using a qualified broker. Furthermore, 94% of homes represented by sellers as For Sale by Owner ultimately choose to engage the services of a broker to assist in their sale.

You meet people who say they have previously sold their home without the aid of a Realtor or with one of the "discount" brokers who offer limited services or access to MLS listings. Perhaps true in a buyer's market when the demand far exceeds supply. You may wish to ask yourself a few questions: Are you capable of producing your own flyers? Are you fully understanding of the legal obligations and disclosures you are required to make to the buyer ... knowing that if there has been an oversight the buyer may have 2 years from the close of escrow to seek damages? Do you have the ability to network and market your home to other agents? How will you make your home available to agents and potential buyers?

Mistake #3 - Choosing an agent who promises a higher selling price or lower commission rate.

Broker fees for services are negotiable. They can be a set fee (very rare) or a percentage of the selling price. The most common scale is a percentage of the sales price and on average is 5-6%. (In a buyer's market, that fee is usually higher because there are higher marketing expenses, paid by the agent, to attract the buyer.) The total fee usually is split evenly between the listing agent (representing the seller) and the selling agent (representing the buyer - sounds confusing, I know!), or a variable fee when listing agent receives a different fee than the selling agent.

As a seller, here's what's important for you to know. You've likely heard the sayings, "There's no free lunch." or "You get what you pay for." This is as true in the real estate business as with any other. Factors relevant in your decision include: how your home will be marketed; do you wish to have open houses; is a sign posting important; are you willing to list through the Multiple Listing Service; will your agent expect you to be available when the home is shown rather than that agent represent you; are you comfortable with strangers entering your home when you may not be there; if the situation of litigation were to arise, will you be provided access to legal representation; will you be required to produce your own marketing materials or pay for your own advertising; will your agent be available when you need guidance or advice?

When you choose to reduce the professional fee from 6% to 5%, you're actually reducing the incentive for an agent representing a qualified buyer by 17%. That's because when you reduce your fee from 6% to 5%, the percentage reduction is 17%, not 1% as it appears. (It's a mathematical fact...the fraction of 5 divided by 6.) Here's the analogy: could you walk or run as far if your lungs had 17% less capacity? Could you reach your goals if you reduced your efforts by 17%? In some cases, the promise of an agent's fee discount is something to good to be true when it results in lengthy time on market, acceptance of a lowball selling price or poor and unqualified experience.

Mistake #4 - Choosing a part-time agent to do a full-time job.

All Realtors are not created equal. Choosing an agent unwisely can be costly in time, money, frustration and disappointment.

Make sure you take the time to interview your Realtor and feel they understand your needs, wants and desires. Are they practicing full-time, or only part-time? Do they concentrate on real estate transactions, or attempt to offer loan packaging or other services? Do they clearly demonstrate their skills for marketing, networking, negotiation and transaction management? Do they seem to be advocates for their clients, or merely salespeople? Do they hold special accreditation (not just sales achievement awards)?

Mistake #5 - Mistaking "refinance appraisals" for "market value".

Sellers often believe they have an idea of their home's value. (As a homeowner, I certainly do!) But it is important to know the difference between an "appraised value" and "market value". By definition (and reality), an appraised value is an "opinion" of value. This valuation is based on comparable properties within a close proximity with homes of similar size, condition, amenities that have recently (within the past 90 days). The "Comparative Market Analysis" or CMA offered by licensed agents is NOT an appraisal; it fails to consider amenities or attributes that either add or detract from an opinion of value.

An accurate appraisal is an essential step in the transaction process. Lenders are not willing to provide a loan for the amount desired if they find disparity between the appraised value and the value of the security (real estate) being mortgaged. When this occurs, the buyer and seller must negotiate a settlement. Over the past two years, this has impacted about one-third of all transactions.

Mistake #6 - Neglecting to "showcase" and maintain your home.

The appearance of your home, from the curb to the door and beyond the threshold often makes the difference between purchase or rejection. Ask for your agent's opinion about the condition of your home, how it is staged (is it too cluttered?) and what amenities or improvements may increase its selling price potential. A qualified agent will carefully list all the items that may have an effect on selling your home at the highest possible price. It is often wise to complete a thorough pest inspection or even a home inspection before determining the listing price. This will help you price your home more competitively and avoid a request for repairs by the buyers which could be the difference between a successful sale and a failed escrow because the degree of repairs is simply more than the buyer is willing to consider.

Showcasing your home requires a great deal of effort. Make the beds each morning. Tidy up closets. Maintain the yard, especially during growing seasons and fall. Do not use heavy deodorizers that mask bad smells ... they tend to create questions in the mind of buyer. The odor of pet urine or smoke, as well as some cooking spices (which sellers become immune to over time) is one of the biggest causes for a buyer to reject a property. Presenting your home in the best light takes constant work. But the reward of selling quicker simply means you'll have to spend less time doing house chores!

Mistake #7 - Attempting to "hard sell" while your property is being shown.

Buying a house can be an emotional and difficult decision. As a result, you should try to allow prospective buyers to comfortably examine your property.

NEVER allow your home to be shown without another agent if for no other reason than your own security. If someone knocks at the door asking to see your home without an agent present, insist they call their agent, or, call me if they have no agent. You don't want the possibility of strangers looking through your home, your closets and personal effects without a licensed and bonded representative being with them.

When the buyer's agent calls to set an appointment to see your home, always ask if the buyer would prefer you not to be home. Most always, the response is, "yes".

In the event you are home, be friendly and hospitable and avoid the temptation to describe all the recent work or maintenance which you feel adds to your home's desirability. It's best to only answer questions rather than attempting to point out amenities.

Mistake #8 - Considering "unqualified" offers with a low deposit.

A prospective buyer who shows interest because of a "for sale" sign he saw may not really be interested in your property. Buyers not yet represented by a Realtor are a good 6-9 months away from buying, and they are more interested in seeing what is out there than in actually making a purchase. They may still have to sell their house, or may not be able to afford a house yet.

Your Realtor should be able to distinguish qualified potential buyers from mere lookers. Good agents will be sure to 'pre-approve' their buyer clients even before they begin showing homes.

Mistake #9 - Not knowing your rights and responsibilities.

It is extremely important that you are well-informed of the details in your real estate contract. Real estate contracts are legally binding documents, and they can often be complex and confusing. Not being aware of the terms in your contract could cost you thousands for repairs and inspections. Know your responsibilities before signing the contract. Can the property be sold "as is"? Are there emcubrances, deed restrictions or local zoning laws that may effect land use or boundary disputes? Not knowing the answers to these kinds of questions could end up costing you a considerable amount of money. The right Realtor can guide you through these documents.

Mistake #10 - Poor marketing / lack of networking

To Be Sold, You Must Be Seen.

Today, Buyers have more access to more information than ever before. They prefer anonymity and privacy to learn as much as possible about candidate properties. As many as 90% of prospective home buyers seek out information through the Internet before making contact with an agent.

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The Busch Team, Local Mortgage Lender in Metro DC, NW DC (Dupont, Logan, Georgetown)

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