Selling a home can be just as emotional as purchasing one. Ask any first-time home sellers. Between the anxieties of getting close to, if not exactly, the market value of the home and getting it prepared to place on the market, the prospect of things going wrong is conceivable. In a recent survey conducted by the Texas Association of REALTORS®, there are several common mistakes sellers make.
For some, the presence of substandard remodels can raise flags during the inspection and either jeopardize the sale of the home or require more money to fix. Dishonesty by not disclosing known issues with the property is another; this could lead to a lawsuit.
Even when a seller has a decent offer on the table, problems can still arise. Greediness is most likely to fault when he or she rejects reasonable offers in anticipation of higher offers. Then, there are sellers whose emotions can endanger negotiations. Yes, the house most likely holds a lot of cherished memories for the sellers. However, those moments do not warrant any merit in the home selling process or the buyer’s bottom line. While these situations are familiar, here are the top three costly mistakes sellers make:
1. Renovation costs are not recouped. There are necessary expenses that yield a worthwhile investment. Then, there are unnecessary expenses the seller either never recoups or end up costing the seller by way of repairs or credit for repairs. According to the 2016 Cost vs. Value Report by National Association of REALTORS®, some of the projects that offer the best return on investment include attic insulation at 123%, new garage door at 101%, master suite addition at 58%, and bathroom addition or remodel at 57%. The seller can spend too much money renovating the property and find that they have simply over-improved for their neighborhood. In some situations, they opt for finishes that cater to their specific tastes, rather than remaining neutral to suite a wide range of buyers.
What you can do: If possible, discuss such improvements with the seller prior to them investing their funds. Share data with them so they can educate themselves on determining what projects would yield the most return on their investment.
2. The home is overpriced. Since Texas is one of several states where disclosure of the sales price is not required, the accuracy of the value of a home can be questionable. When sellers overprice their homes, they usually seek out a REALTOR® willing to go along with that price. This might hurt your sellers’ chances to sell quickly, even when they are presented with a good offer or one that can be negotiated. They find themselves not wanting to budge on the price, especially if the offer is within days of the property being on the market. They have the illusion that more offers will come, or they anticipate a bidding war. By doing so, they take a risk of the house remaining on the market longer than expected and, ultimately, accepting a lesser amount than what they were originally offered.
What you can do: Once you meet with the seller to discuss price, present comparables in the area that are similar to theirs. Explain that the house down the street that is $50,000 more than theirs has an extra bedroom, bathroom, and a swimming pool, thus warranting the higher price. Invite them to an open house so they can visually analyze their competitors. This will hopefully provide them with a better understanding of what buyers might be comparing their house and their price to. Be honest with your sellers and if they value your expertise, they will take your suggestion and rethink the asking price.
3. The home requires basic repairs, or it is in an unsightly state. A common complaint REALTORS® hear from buyers concerns the condition of the seller’s property. Since most buyers start their home search online, they seek properties they can see themselves moving into that usually require minimal to no work. When sellers place their homes on the market, they need to appeal to as many buyers as possible, so the condition of their homes is crucial. Whether they are simple repairs like painting walls neutral colors, decluttering the home, or fixing minor issues, the money spent will help with the showings. A messy property or one permeated with pet or cigarette smells can deter otherwise interested buyers.
What you can do: While most sellers prefer not to spend money on a property they will soon place on the market, they need to appeal to buyers. Unless the property is one that is sold “as is” or is clearly a fixer upper, now is the time to have a frank conversation with your seller. Explain how making simple changes and prepping the home for sale will be money well spent in the long run.