Let’s Talk Real Estate – March 2017
According to a 2014 survey by the National Association of Realtors, 83% of people view their home as a good financial investment. Not only is their home the biggest single asset they own, it’s also filled with family memories—the average seller has lived in his house for a decade, according to NAR, so it’s no wonder that when it comes time to sell property, people can get a little emotional.
If people actually want to get a return on their investment in their home, they need to be smart about how they approach selling it. Letting emotions, not logic, drive decisions, means you’re more likely to make mistakes that can make it difficult to find a buyer or possibly force you into accepting a lower offer than you would like.
The good news for sellers is that the market is tight and home prices have increased in Jackson County by over 60% in the last 5 years. Prices are continuing to climb and the number of homes being sold is also increasing. The typical seller receives 97% of his final asking price, unless they are at a price point at the top of the market. For properties under $300,000, we are seeing many multiple offers. A seller will know within the first 30 days if the price they have on their home is attractive to buyers or not; but, those numbers don’t mean that every homeowner sells his property quickly or gets the price he wants. You can increase your chances of a successful real estate transaction if you avoid these five mistakes when listing your home.
- Not being realistic about your home’s value—What you think your home is worth and the price you can actually sell it for are often two very different numbers. We talk to many sellers that tell us what they bought the home for and what they have spent on improvements. The reality is, nobody cares what you paid for your home, and your renovations may or may not have added value in the buyers mind.
Even in markets where inventory is tight, sellers need to be careful not to get too carried away when picking a listing price. Properties that are overpriced at the outset tend to eventually sell at a lower price than they would have if they’d been appropriately-priced in the first place. Choose a reasonable price based on what comparable properties are selling for and how fast they are selling. If you’re not getting any showings, adjust your strategy. We learned a lot from the banks that sold-off all the foreclosures in the last 10 years. They priced homes at what they believed to be a fair market value, but then reduced them every month until they had an offer.
- Not making your home look its best—We once talked about curb appeal and how it helps to sell homes. Now, “web appeal” is the new curb appeal. Your home has to look GREAT online and in print ads. At a minimum, it should look clean, clutter-free and have no major aesthetic issues. In a perfect world, it should be staged which can add value as well as vision for the buyer. More elaborate staging, such as repainting with neutral colors, sprucing-up landscaping, and installing new carpet can allow your home to sell “five to seven times faster than non-staged homes,” according to the Real Estate Staging Association.
- Refusing to negotiate—You should start by setting a fair and reasonable price for your home, and then add for wiggle room. No one wants to pay list price so that wiggle room is so important to allow both buyer and seller to feel happy with the price—we call it a win/win. Many buyers will start with an offer well below your asking price, but sellers should always respond as most buyers will come up faster than you think. We represented one seller of a $720,000 home that got an offer of $350,000. The seller was offended and didn’t even want to respond. After much coaxing, we got them to respond at a price close to list and we sold the home. Buyers often fish for the motivation of the seller and, obviously, want to buy the home at the lowest price. But if they love it, they will come up in their offering price.
- Hiding the truth from the buyer—Sellers who want to be rid of their property quickly may be tempted to try to hide problems with the home from prospective buyers. Trying to cover-up serious flaws like foundation problems, leaky roofs, or mold, could come back to haunt you later. If you aren’t up-front about your home’s issues, the buyer may well discover them during the home inspection. At that point, they’ll probably either back out of the deal or ask you to cover the costs of fixing the problem. If the issues are serious and are discovered after the sale goes through, you could end up in a messy, prolonged legal battle. Buyers are much less concerned with issues they are told about up front than ones they find out in a home inspection.
- Not having a backup plan—In a perfect world, you’re able to smoothly navigate the transition between selling your current home and buying a new one. In reality, things rarely go as planned. It’s best to have a contingency plan, or what we like to call a plan “B” so you don’t get stuck with two mortgages at once or end up homeless and in a hotel.
You can ask that the sale is contingent upon finding a suitable replacement home, or contingent on renting back for a certain number of days after close. We manage 30 furnished rental homes and cottages and we have found them to be extremely valuable as a short-term landing place for both sellers and buyers that are between homes.
Conclusion: The local real estate market is hot and all signs point to it getting hotter. Be smart when selling your home and be one of the millions of homeowners that use their personal residence to help them build wealth.