A lot of work goes into selling a home. You’d like to cash the largest check you can at the end of the transaction, wouldn’t you?
In Austin’s real estate market, chances are good that you’ll be able to sell quickly to a qualified buyer, and get to the closing table with a nice sized check. After all, it’s a seller’s market, and homes are appreciating.
But that doesn’t mean you can’t screw it up.
This market is forgiving to sellers, but it’s not all-forgiving.
Even in a hot seller’s market, even with prices appreciating, even with tight inventory, there are things sellers do that really hurt their chances of making the most out of their sale, or getting to the closing table at all.
Here’s a few common ones, and what to do about them.
- Not using professional real estate photographers. Whether you’re listing with an agent or going the For Sale by Owner route, I don’t really care. I see this mistake all the time, and it drives me bonkers.When you decide to sell your home, your home becomes a product. In this market, a very high-priced product. And the first place buyers see this product is online, in photographs. Those photographs online can either excite and intrigue buyers, causing them to say “Yes, I want to set aside time in my busy schedule to go see this home!” Or, “Eh, not that interesting. I think I’ll do brunch instead.”Just like people have good and bad angles, so do houses. Real estate photographers specialize in shooting just real estate, and they have the experience and the equipment to shoot your home in the best light and from the best angles possible.
The coolest thing I think real estate photographers do is shoot your home at different exposures, and they layer them on top of each other. Have you ever tried to take a photo of your home, and either the inside is dark and the sunny window looks perfect, or the inside is lit but the window is over-exposed? Real estate photographers have figured out how to solve this issue, by layering different exposures over each other, so you can have a perfectly lit home AND perfectly lit windows. Yes, you can have it all.
So if you’re a FSBO, do yourself a favor and spend the $200 or $300 on a professional real estate photographer. I recommend a few on my contractor board, here.
And if you’re hiring an agent, make sure they use professional photography as part of their standard listing practice. No, the fact that they took a photography class once and think they’re pretty good themselves… that’s not good enough. And their iPhone DEFINITELY isn’t good enough. With the commissions we get paid for selling a home, a few hundred dollars for professional photography is simply not optional, in my opinion, especially when it makes such a huge difference to your success as a seller. To not do so is a disservice to you as a client.
I don’t care if I’m listing a $70,000 condo, a tear-down, or a multi-million dollar mansion. All those, and everything in between get professional photos shot by a professional real estate photographer.
Bottom line: professional real estate photography. It’s a must.
- Listing a home when you aren’t serious about selling it. Listing a home involves a lot of work. Why would you do it if you aren’t really ready to sell?Sometimes sellers want to just test the market, or they’d be willing to sell for a really high (unrealistic) price. That would all be fine, if it weren’t for the two big ways this can hurt you.First, with the massive amount of data on the internet, the history of your home being for sale and not selling will hang around long after you pull your home from the market. When you are serious about selling in a year or two, Zillow and other data providers just might add those old days on market to your new listing, making your home look less desirable than it truly is.
Second, lots of agents track data on “withdrawn” and “expired” listings. So if you list your home for a few weeks, and then pull it off, expect a deluge of calls, and I mean hundreds of calls, from real estate agents hoping to re-list your home. I’ve talked to people who said they had to turn their phone off for an entire week because of the volume of phone calls.
Bottom line: Save yourself the headache. Don’t list if you aren’t really ready to sell.
- Pricing the home too high. Your home will sell for the most money to the most qualified buyer if you price it reasonably for the market. That is, if you price it to sell.The longer your home sits on the market, the more buyers start to think there must be something wrong with it, or someone else would have bought it. This is particularly true in Austin’s hot seller’s market, where homes that are priced well frequently sell in the first two weeks. If yours sits around for even a month, buyers start to ask “What does every other buyer know that I don’t know, that has stopped them all from buying this one?”Sellers often want to price the home high to leave room to negotiate. I get why this sounds like a good idea, and if I didn’t have strong evidence to the contrary, I would probably do the same thing in your shoes. But the fact is that Austin homes regularly sell for 98% of asking price or more.
Buyers who want to make low offers quickly learn this by watching homes they’re interested in sell to other buyers for more. Eventually, buyers get trained to expect a small discount, if any, off of asking price. So if you’re asking $500,000 for your home, for example, a buyer might reasonably think that maybe they can get it for $490,000. If the $490,000-$500,000 range seems about right for your home, and they like it, then they’ll come see it and maybe make an offer.
But if your home probably should be priced at $500,000 based on sales around you, and you decide to list at $550,000, just to leave some room to negotiate, buyers will often decline to come see it at all. Or if they do, they’ll decide “$550,000 feels like too much to me, and I doubt they’d take an offer at $500,000… so let’s move on.” Over and over again, I watch buyers decline to even try to negotiate much off of asking price, because the market has trained them not to. They think it’s a waste of time, and that they’ll miss a “great deal” while they’re distracted negotiating with you.
The buyer mentality on low-ball offers does change once you accumulate, say, 100+ days on market, though. At that point, if buyers can get over the fear that “everyone else knows something I don’t, which is why this house is still available” then they are likely to throw you lower offers.
Take the reverse of all this. Imagine you price your home well for your neighborhood. Serious buyers come over in droves in the first few weeks on the market, and any of them who like it are terrified that if they don’t make a strong offer now, someone else will snatch it out from under them. Doesn’t that sound more fun?
Bottom line: Price your home reasonably and competitively for your neighborhood. That’s how you get the most value back.
- Trying to sell with renters in your home. I just got off the phone yesterday with an agent. My buyers wanted to see a home. She said they couldn’t accommodate the showing, because the renters wouldn’t allow it that day. She confided in me, “I think they’re sabotaging our sale. The tenant made a very low offer on the home, and when we rejected it, they started denying showings, and leaving the house a pit.”Sounds delightful, no? Simply put, tenants don’t have any vested interest in your sale being successful. In fact, if you’ve been generous enough to charge them a lower-than-market rent and to be a great landlord, they might have an interest in your sale being UN-successful.
If you were living in the home, you would probably accommodate every showing you could, keep the floors so clean you could eat off of them, and put on a lavender oil diffuser before you left the house each day, just in case a showing came through. Can you expect your renters to do the same? No. They don’t have a check with lots of zeros floating through their daydreams. You can’t expect them to have the same motivations as you do to get the home sold.Even if you have the most delightful renters in the world, and you think they’ll be super wonderful for showings, there’s still a downside. Your potential buyers cannot occupy the home until the renters are out. And if the lease is for a few more months, that might mean that only cash investors can purchase your home. If, because of the lease in place, you exclude the huge pool of buyers who need financing and want to occupy immediately, what do you think that does to the value of your home?
It’s simple supply and demand economics at that point. You’ve decrease the demand (the number of potential buyers) and as a result, your sales price must go DOWN to get the home sold.
So while the idea of a vacant month or two with no rental income while you’re selling might sound like a bummer, the fact is you’ll very likely make that “lost” rental income back, and then some, by selling the home clean and vacant.
Bottom line: If you must sell with renters in your home, expect to discount your house to offset the difficulties of working around renters. If you can avoid selling during the lease, that’s ideal.
- Confusing lookers with buyers. This is one is particularly hard for FSBOs because they don’t have the guidance of an agent to temper their expectations, but it’s a challenge for any sellers, FSBO or not.Did you know that the majority of the people who come into your home for showings and open houses are lookers not buyers? What’s the difference? A “buyer” is ready, willing and able. A “looker” fails at least one of those criteria, and perhaps all three. And unfortunately, lookers don’t even know they’re lookers. They think they’re buyers, and they’ll tell you they’re buyers. But they aren’t.If you’re having trouble telling the difference, don’t worry. I am a full time real estate agent and have been for years, and it took me at least a year in the business, probably longer, to get good at telling lookers from buyers. I’ve taken trainings, and seminars, and read books on how to separate the two. I had to invest the time and energy to learn that because if I didn’t, I would spend months driving lookers all over creation showing them houses over and over and over again, only to find out way too late that they were never buyers. And if I hadn’t learned the lesson early, I don’t think I’d still be here selling real estate. The lookers would have sent me packing for a salaried job a long time ago.
I don’t expect you to go invest a bunch of time, money and energy learning the subtle art of separating lookers from buyers. That’s my job. But I do want you to know this.
When a buyer tells you they love your house and they’re going to make an offer, it doesn’t mean diddly.
Don’t get too excited. Don’t start making plans. Don’t celebrate because your house is sold. It’s not. An offer means nothing until you have the actually paper in hand (or digital copy), and you can see what the offer actually looks like. Are they pre-qualified? Is it contingent on them selling their home? Is it even in the ballpark of what you’re willing to accept? And that’s if it even becomes an offer at all.
As an agent, I always tell my seller clients “They said they liked it and they might make an offer, but don’t get too excited yet. Offers fail to materialize all the time.” It’s okay to celebrate that lots of people are coming to see your home. It’s okay to celebrate that you’ve made the home attractive enough that it’s getting some attention. Just know that you might have dozens of showings before anyone decides to make an actual, honest to goodness offer.
As a FSBO, you don’t have a listing agent like me to temper your expectations, to be the voice of much experience saying “I’ll believe it when I see it,” so I’m here to do that for you. Next time a buyer or buyer’s agent says “We’re making an offer,” you say “Great!” And in your head you say “I’ll believe it when I see it.”
Don’t count your chickens before they’re hatched. It’s a great way to be really disappointed.
The bottom line: There are way more lookers out there than there are buyers. Don’t get too excited about offers until you actually GET them.
There you have it. The top 5 mistakes I see sellers make, that I’d like to help you avoid.
What do you think? Is there a mistake you’ve made as a seller that you’ve learned from? I’d love to hear what it is.