FREQUENTLY ASKED SELLER QUESTIONS
What to expect from your listing (seller’s) agent
Since I want to sell my home for top dollar, isn’t it a good idea to price it high? I can always reduce the price later if it doesn’t sell, right?
While pricing your home optimistically high sounds like a great idea, it is one of the most common reasons for homes remaining on the market too long—or sometimes not selling at all.
A property’s market value is defined simply as the amount a buyer is actually willing to pay for the property. Factors that influence value are:
- Location
- Age
- Size of house and lot
- Floor plan and architectural style
- Interest rates and availability of financing
- Buyer demand
- Prices of recently sold properties (contained in a CMA)
- State of the economy
- Seasonal demand
- The number of similar properties for sale
- Their prices, financing terms, location, and physical condition
- The amount that the seller paid for the property when he or she bought it
- The amount of money the seller hopes to get out of the property
- The balance of any mortgages against the property
- Unfounded opinions offered by other people
While the list price can be lowered if the property fails to generate much traffic, this approach is often characterized by "too little, too late." That is, by the time the price becomes reasonable, most of the prospective buyers who were interested in your home will have purchased other homes. Additionally, homes generate much more traffic when they are new on the market. Even a dramatic price reduction has limited impact once a home has been on the market for an extended period of time. I had a listing some time ago that was a very popular type of home in a mainstream price range. The sellers insisted on an overly ambitious price for their home. They rejected an offer that they received after the house had been on the market for only one day. That was the last bona fide offer that those sellers saw for nearly a year. After multiple price reductions and months of sitting vacant, the house sold for slightly less than the offer they had received on day one.
What do I need to do to prepare my house for sale? Will my work be worth all the effort and money when the house eventually sells?
Homes that are in move-in condition tend to sell considerably faster than "fixer-uppers." Some types of improvements can have a tremendous payoff by reducing marketing time and increasing selling price, while some fix-up jobs can consume more money than can possibly be recovered at selling time. The key is to prioritize tasks and to concentrate on those which will have maximum impact at a modest price. Here are some suggestions:
- Maximize curb appeal. Trim shrubs; keep grass neatly mowed; plant flowers. Landscaping can often have a great payoff! Examine exterior paint or stain, gutters, roof and windows to identify ways to enhance the home’s outside appearance.
- Think neutral, so your home will appeal to as many prospective buyers as possible. Replace old or dark carpet with neutral light-colored carpet. Replace wallpaper with fresh paint.
- Make a positive first impression when prospective buyers walk in the front door by paying particular attention to the entryway or foyer.
- Kitchens tend to be a focal point within most homes, so consider focusing your efforts here. Kitchen improvements, however, can be very costly, so carefully weigh your investment with the potential payoff.
- Finally, looks aren’t everything. Smell can have a huge and immediate impact on prospective buyers. The two most common sources of unpleasant odors are smoking and pets. While your home is on the market, avoid smoking indoors. Keep pets clean and change cat litter frequently. Some good news: Doing some of the other types of improvements can help your house smell better, too. Fresh paint helps make a home smell new. Since carpet and padding can trap pet odors, replacing carpet can also have a positive aromatic impact!
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Email Matt Difanis
Why not sell by owner? Since I obviously know more about my home than you do, can't I sell it myself while saving thousands of dollars?
It is easy to see why a seller would be motivated to try selling his home on his own. For a typical home sale, you can expect to pay thousands (often many thousands) of dollars in real estate commissions if you list your home with a real estate brokerage. That is a tremendous amount of money, and no sane person would want to part with such a princely sum if he could easily avoid doing so. Despite the intense motivation to save big money, there must be a good explanation for why nearly 4 out of 5 homes sell with the help of a professional and why only about 1 out of 6 homes sells by owner (according to the most recent biennial NAR survey of sellers).
Many sellers--even those who have bought and sold homes before--have no idea of what they are in for when they decide to try selling their home without the help of a professional. From my own observations, the following are the obstacles most often encountered by FSBOs:
- Inability to establish appropriate list price and bottom-dollar selling price
- Inability to keep from talking too much to all buyers
- Failure to use appropriate documents (e.g., contracts, government-mandated disclosures, etc.)
- Failure to pre-qualify buyers to know which buyers were worthy of a showing
- Failure to be available to respond to inquiries about the property
- Inability to negotiate effectively with prospective buyers when an offer was received
- Ignorance of applicable federal, state, and local laws
- Inability to effectively market the property to qualified buyers
Lest you think I am trying to intimidate you into listing your home by bashing your intelligence, I want to emphasize that very intelligent people make some (or even all) of the mistakes described above. In fact, I suspect that the average homeowner probably has a higher IQ than the average real estate agent. Unfortunately, that makes it all the more frustrating for intellectually gifted property owners who must often seek help from intellectually deficient agents at such a huge cost. The fact is that a reasonably diligent (not even brilliant, just diligent) REALTOR can overcome most or all of the above obstacles because that is exactly what REALTORS spend their working hours doing. (See "What you should expect from a listing agent.") A little bit of training and a great deal of experience allow good REALTORS to handily conquer most challenges that are often insurmountable when faced by FSBOs who chose to go it alone.
Almost every full-time REALTOR I know strongly identifies with the slogan advertised some time ago by the National Association of REALTORS: "Relax. Real estate is OUR life." Most good REALTORS live and breathe real estate transactions--and all of the details and challenges associated with them--day in and day out. I spend most of my life within arm's reach of my cell phone/PDA and computer. And not just Monday through Friday during normal business hours. I mean seven days a week during virtually every waking hour. Real estate is what I do--and I do it well.
Even if you are willing to sit on top of the phone all day, it would still be nearly impossible for you to learn all the other details that are essential to a smooth (and litigation-free) transaction. Why waste so much of your time (which often translates into lost money) and take on so much unnecessary risk when odds are that you will list your home with a REALTOR anyway? Even if your home sells as soon as it hits the MLS, the system did what it is supposed to do, i.e. produce a buyer, and it did so quickly. Additionally, a swift sale does not mean that the agent takes a nap until collecting a check at closing. Rather, the agent still coordinates a myriad of transaction related details. Many clients are shocked to see how much work my assistants and I do between the time a contract is signed and closing.
Finally, let me emphasize that these are my own sincere opinions--not some script handed to me by the National Association of REALTORS' Thought Police. :-) I work diligently and efficiently to provide an array of valuable services to my clients at a fair price. That's why I got into this business, and that's why I love being a REALTOR.