The articles are everywhere — the housing market is insane. So our take on it is that, yes the market is, indeed, insane, so you need sane people to guide you through it.
Myth #1 — People will pay anything in this market — I’ll just name my price and it will sell for more.
First, buyers do look at recent sales and do their research. While it may feel like buyers are paying too much, it’s a function of the time of year and as well as how low the rates are at the time.
Second, did you know that pricing a home too high will actually lose you money? The delicate balance is to price a home high enough that you are not leaving money on the table- but not so high that you alienate buyers. Time and again, we have seen homes prices too high sit on the market, undergo multiple price reductions and then sell for less than what they could have gotten if they had gone out at market price.
So if pricing too high is a problem, how do you price a home to maximize your return without alienating buyers? This is where a good agent is really helpful. In “cookie cutter” subdivisions the analysis is more straightforward but, especially in historic areas, block-by-block knowledge of the neighborhood as well as the individual home is key.
Many items are considered when pricing a home: age of major systems, size of lot, privacy, general condition, improvements, presence of environmental concerns, etc. The older a home is, the more there is to consider.
Myth #2 — There is so little inventory and so many buyers, I can just put a sign in the yard and sell my house myself.
Many law and business people are not intimidated by the process of selling a home. Selling on your own has always been an option. And in this market, there’s no question that it will sell. But at what price? Could you have gotten more? Leveraging a professional real estate agent gives a seller confidence in the process and their choices.
Agents are trained to help sellers work through the following decisions:
- Preparing / Pricing — What changes, if any, should I make to increase my property’s appeal? When is a pre-inspection a good idea? How do I price my home to get the most $$ out of it? (Note: Higher is not always better, see myth 1 above.)
- Sales & Marketing — What distinguishes my home from others in the area? How do recent and pending changes to my city and neighborhood impact the marketability of my home? How do I get the word out that I am ready to sell? Should I hold an open house?
- Negotiations — Beyond price, how do I assess the “quality” of a buyer/offer? How do the different dates in the contract impact me? Do I care if one buyer offers Earnest Money and another offers a Due Diligence fee (what’s the difference)? Can a buyer try to reduce their offer price after we are under contract? What buyer requests are reasonable? If I am fortunate enough to receive multiple offers on my home, how do I know which one(s) will most likely result in an on-time sale at the agreed price?
- Contract Management — What forms are required to sell a home in NC? What are my obligations in a sales contract? What happens if my buyer walks away?
By knowing all of your options and being able to make clear decisions, you should be able to maximize the price. While process is pretty standard, the strategy on how to approach the sale/marketing of a home these days can make all the difference in the world, to the tune of tens of thousands of dollars.
Myth #3 — People are so desperate for a house, I don’t have to update anything.
While it’s possible that your property may be ripe for renovations and you don’t need to do anything, you could be leaving money on the table by not putting the best foot forward.
An experienced professional knows how to help you identify and prioritize a comprehensive list of improvements that will increase your sales price. For example, if you have a limited budget should you focus on adding quartz countertops or fixing the roof? Unfortunately the answer isn’t always obvious, but generally buyers would much rather spend money on interior decoration items after they move in rather than fundamental systems.
A good Realtor will also help you to assess (1) who your target buyer is, (2) what those buyers expect in your area and price point and (3) what other properties you will be competing with. Based on this information, you can discuss budget-friendly ways to make your home stand out amongst the rest so you will sell quickly and for more money.
Myth #4 — A pre-inspection will scare away buyers and make them offer less for the house.
This is one that even agents don’t agree on half the time. Many agents believe that it’s important for a buyer to fall in love with a house and commit to it before they learn all the inspection items. I, however, feel quite strongly that it better serves both buyers and sellers if all the information is known up front. This approach reduces the opportunity for unhappy surprises later in the process.
For sellers, a pre-inspection can protect you against an anxious and/or litigious buyer. If a buyer puts down a substantial due diligence fee only to be surprised by their inspection findings, it can make for a very ugly situation. (Note: The risk of this happening goes up as your home ages.) In this hot market, there is already talk amongst agents and closing attorneys of a tidal wave of lawsuits based on the buyer being surprised by a finding and not getting their due diligence money back.
From a marketing perspective, my thinking is that if a buyer is scared away by something in the inspection report, then they are simply not the right buyer for the house. As a seller in this market, this means that maybe you will get 5 offers instead of 15. But those 5 will be much more qualified because they will make that offer based on the information that has been provided.
From a liability standpoint, if you have lived in your house for a very long time, an inspection report can help you accurately answer the questions on the Property Disclosure.
At the end of the day, things in a home can be fixed. Your floor plan, view, location, school district, and other factors are what bring the most value to your home, so be confident in those and transparent about any inspection items.
Myth #5: All agents are the same. I’ll use my friend who just got his license — he can get me a deal.
Working with someone you know and trust is ideal. However, going back to what else we’ve talked about in terms of knowing what buyers expect, how to handle multiple offers, etc, make sure that you’ve interviewed them about what is important to you. We suggest discussing the following:
- Other situations where multiple offers have been handled.
- How they’ve helped negotiate good terms.
- Different marketing strategies and their benefits.
- Experience in the area where you are looking to sell.
There’s really not a one-size fits all approach to listing a home. Each seller is different. Each house is different. Each location is different. Each contract is different. Knowing a Realtor’s approach and methods is key to ensuring a good match.