It's a seller's market in real estate, which means that buyers have much to feel anxious about. But sellers have reasons to lose sleep, too. What if they make an expensive mistake?
It's easy to find lists of common homebuying mistakes, but home selling errors are harder to describe. They're subtle, often involving mindset and attitude.
Here are six home selling mistakes and how to avoid them.
Thinking of it as your home
Even if you still sleep and shower in your house while it's on the market, it’s not really yours anymore.
"A mistake is still thinking that their home is a home when they're putting it on the market for sale. It is now a product," says Terri Robinson, a real estate agent with Re/Max Select Properties, in Ashburn, Virginia.
Part of Robinson's job is persuading sellers to showcase the house to appeal to the masses, the way a model home in a new housing development is designed to do, she says.
Ideally, she says, home staging will:
- Depersonalize the property "so that persons are not getting enamored with your baseball collection, but they're enamored with the house."
- Make the dwelling a blank slate so buyers can imagine putting their own imprint on it: "That wonderful mauve that you put on the walls of the living room may not be as appealing a product to potential buyers."
Robinson believes some buyers will continue to prize adaptable spaces that can be set up as bedrooms, dens, offices or for remote learning, so it might be advantageous "to lightly stage a home to show a place that can be an office space — if you don't have a dedicated office in your home."
Selling as-is without an inspection
You're more likely to sell your home as-is, without paying for repairs or renovations, when you're upfront about its condition.
Sherry Chen, a San Diego-based Realtor with the Kappel Realty Group at Compass, recommends getting an inspection before you list the home. Share the report with prospective buyers "so then there's no surprises during escrow. We can tell them, 'Hey, offer a price based on these issues that the home has.'"
Smart buyers will get their own inspection reports. If your inspector did a thorough job, the subsequent inspections shouldn't uncover anything major. "If we do end up accepting an offer, they can't really tell us, 'Hey, I want a $10,000 credit for this item that I already knew about,'" Chen says.
Overpricing the home
Home prices are zooming upward because demand is greater than supply. The median resale price of an existing home went up 23.6% to $350,300 in the 12 months ending in May 2021, according to the National Association of Realtors.
It's tempting to predict where neighborhood home prices will be in a few weeks or months and set an asking price based on that. But that's a recipe for pricing the residence too high. It could sit on the market longer than necessary and yield a lower-than-desired price.
Your agent, if you use one, can find prices of pending sales: deals in which the seller has accepted an offer, but the sale hasn't closed yet. Base your asking price on pending sales of comparable homes.
"Even though this is a seller's market, you have to put a product out that a buyer wants," Robinson says. "And that means condition and price — even in this market. Don't make the mistake of just throwing a house out there and think you're going to get top dollar because there's an inventory shortage."
Seeking multiple offers as an end, not a means
Dana Bull, a real estate agent in Boston, says that when clients aim to receive multiple offers, she responds, "What's the goal?"
Your goal is to capture the best price and terms. Encouraging a bidding war is one way to get what you want, but it's not the only way — and it carries risks.
A classic method to incite a bidding frenzy is to set a deadline for offers. When this tactic works, a bunch of people submit bids and then they wait for their phones to vibrate with the good news that you've accepted the offer. But if the tactic doesn't work, you can end up with one or two tepid bids, or no offer at all. And your next offer is likely to be lower.
"You need to be sure there will be a lot of interest in the home, from more than one buyer, if you give a deadline for offers," Bull says. "This might be harder to accomplish if your home isn't similar in construction, time period and style in the neighborhood."
Not taking yes for an answer
Before listing a house, Bull says to clients, "Think of your dream scenario. Not just price, but what sort of timeline do you want? What sort of flexibility do you want to be offered? And if we meet that goal, are you going to be happy?"
If an agent asked you that, you probably would say yes, you'd be happy to get your dream offer. But what if you realize your dream scenario within hours of listing your home for sale? Will you accept it, or will you gamble that an even better offer will arrive soon?
Bull once had clients who got a best-scenario offer, with one condition: that the sellers cancel a scheduled open house. The sellers held the open house anyway, and ended up having to accept an offer from another buyer for $20,000 less. She says the clients knew the risk they were taking, and accepted the result with aplomb.
If you know you wouldn't be a good sport about such a turn of events, maybe you should go ahead and accept that great offer.
Sometimes delays creep into the mortgage process. One common source of delay is an "appraisal gap," when the house appraises for less than the purchase price. The buyer typically has to come up with cash to bridge the difference. And that can delay the closing.
"Most of the buyers I work with, they do everything in good faith to close on time," says Shashank Shekhar, CEO and president of Arcus Lending, a mortgage lender in San Jose, California. "It's not as if they're intentionally trying to delay the process."
Instead of nixing the deal, putting the home back on the market and risking selling it for a lower price, "I would advise the sellers to be more flexible when some things do go wrong but the buyer is working on it in good faith," Shekhar says.
Sellers tend to favor buyers who pay cash or have big down payments — even if they're not the highest offers — on the assumption that the transaction is more likely to be consummated. But Chen says it pays to ask about the finances of buyers with small down payments. Some people make smaller down payments by choice, and can pay for appraisal gaps and repairs by liquidating investments.
Be confident, yet humble
A lot of seller errors are born of overconfidence. Yes, we're in a hot real estate market, and sellers have the upper hand in negotiations. But things will go more smoothly if you lightly stage and depersonalize your place, inform buyers of the home's condition, price it correctly, know which offer to accept and roll with it if the buyer hits a bump on the road to getting the loan.