A Big Mistake that Cost One Home Seller $36,000. SP

Dated: May 5 2020

Views: 19


                Chuck wanted to sell his home. A real estate agent contacted him and told him that someone wanted to buy his home. The buyers were offering $285,000 and were approved for a loan. “Will you sell your home to them?” the real estate agent asked.

            On the surface, it all seemed like a great deal. Chuck could sell his home quickly and avoid the inconvenience of the normal home selling process.

Without further ado, Chuck accepted the

$285,000 offer and moved on with his life.

                A few weeks later, Chuck’s neighbor sold his house for $321,000. The neighbor’s house was very similar to Chuck’s home. It was a little bit smaller but otherwise comparably to Chuck’s. it wasn’t in better shape than Chuck’s house.

Why did Chuck sell his house for

$36,000 less than his neighbor?

·         Why did he work so hard to pay down his mortgage?

·         Why did he work so hard to keep his house in tip-top shape only to sell it for less than it was worth?

  Because he didn’t know what his house was actually worth! Unfortunately, Chuck never checked with anyone to find out what his house was worth.

He didn’t get an appraisal or a second

opinion from another real estate agent.

               Here is how to avoid having this happen to you. Obtain a second opinion of the value of your home, BEFORE you put it on the market.

If you don’t price your home

correctly, you take the risk of:

·                             Selling your home for less than it's worth.

·              Wasting time while your home sits on the market (because it’s not priced correctly).

Here is how to avoid having this happen to you. Price your home so it sells quickly and for the highest price possible.

If we’re being honest here, we probably all have skewed ideas of the worth of our homes. Rather we think it is far more marvelous than it actually is, or we’re so tired of it that we think it is a horrendous cross to bear.

Add to that your hopes and dreams of what to do with your money once you sell, and pricing your own home is a complete danger zone. This is one area where the aid of a real estate agent really does come in handy.

Danger Zone #1: Pricing Below Value

                It is possible that a home priced too low could eventually aid a seller to start a bidding war so that the price is driven above what the sellers wanted to make in the first place.

            However, conditions must be ripe for this kind of arrangement to work. Well-laid out and professional plans are also crucial to this maneuver’s success.

            On the other hand, when a home is priced far below market value, potential buyers are left feeling as though there is some hidden, ominous fault with the property – even if there isn’t.

            That kind of mentality can leave a home simply hung out to dry, which wastes valuable time. The longer a property stays on the market, the less money that sellers are likely to make.

Danger Zone #2: Pricing Above Value

                Pricing too high, obviously, leaves your home sitting stagnant in the water while all of your neighbor’s homes are snatched off of the market. Why would anyone purchase your home if one very similar is priced thousands lower nearby?

            Common sense says that your home is not going anywhere anytime soon. Now you’re sitting and playing the waiting game while your peak selling time is slowly dwindling away.

            These dangers are why getting an accurate price on your home from the get-go is imperative to your selling for top dollar.

            There are several ways that you can proceed with discovering this mythical figure, but it isn’t necessarily a simple or cost-free endeavor.

Avoid the most common mistake

novice home sellers make.

                 They don’t check comparable sales and just put the home on the market. It sounds too simple to be true. But, it happens all the time.

             At other times, they do not check the highest and best value of the property and sell a prime development property for pennies on the dollar.

             One savvy investor bought a prime development property for about $275,000 and re-sold it for over a million dollars! The sellers made the mistake of selling their property without checking out all their options.

Understand how different market settings affect how

you should price your home.

                 First, you need to determine whether or not you are in a buyer or seller’s Market.

            While you’re scouting out other homes for sale in your area, you should also pay attention to how long they’ve been on the market.

            Places like Zillow often have a little section under each home that tells how long it has been up for sale in their system, although not necessarily how long they’ve been on the market.

            If home in your neighborhood is getting snatched up right and left, you stand a good chance of the same happening for you if your home is priced right.

            This would be referred to as a seller’s market, and you could get more profit from your home’s sale.

            On the other hand, if the ‘Home for Sale’ signs in your area seem to be growing roots and taking up permanent residence, then you are probably in a buyer’s market.

How to price your home in a seller’s market.

               Sold homes don’t matter that much. You should price your home to be competitive with the other homes on the market. But, you don’t have to match the price of what homes have sold for.

            For example, a home recently sold that was seemingly about $100,000 overpriced. Comparable homes were selling for about $525,000 to $550,000. However, home prices in the area were increasing rapidly.

            Nothing similar was available for less than $650,000. The seller owed $650,000, so they priced the property at $699,000. And guess what? It sold 3 months later for $674,000.

How to price your home in a buyer’s market.

               If your local market is a buyer’s market, then you should look at all of the other homes for sale and make that your home is priced competitively with them.

            If your home is not selling, then you will need to adjust the price until it sells. This is never fun.

How to determine your home’s exact value.

                There’s more than one way to find out the value of your home. You can use the following method by itself. However, a combination of some or all of these suggestions will likely give you the best pricing direction.

            Hire an appraiser: One way you can get an accurate valuation is by consulting a professional. Many appraisers will charge hundreds of dollars to give you a reasonably accurate home price estimate.

            Let me help you: Do you know there is a simple way that is 100% free? As an agent, I have access to the same information. I’d be happy to put together a Comparative Market Analysis (CMA) for your home!

            The CMA will provide you with the following information:

·               Detailed information on each house sold in your area over the last 6 months along with the final sale prices. If you are thinking of selling, this will help you price your home realistically.

·               Detailed information on all houses for sale in your area and their asking price. These homes are your competition.

 Skip ahead to the last chapter if you would like more information on how to request a free home valuation.

               Do your own homework: There is a free way of getting a decent valuation of your home, but it is risky and time-consuming.

            You can use the Internet to scout out other homes that are for sale in your area, and narrow them down to those that are similar to yours. The prices on these homes can give you a good benchmark for setting your own price.

How to find accurate comparable sales and use them to

determine your home’s exact value.

               Search on the internet, sites like Zillow or Realtor.com can show you similar sales. To search for homes similar to yours, enter criteria, such as square footage, the number of bedrooms, etc.

            The key to finding accurate comparable sales is to find the properties that are closest in location, condition, square footage, features, etc.

How to determine which comparable sales

you should use and which to ignore.

                The following comparable sales should not be used. Very few of these properties sell for a fair value. Here is why each of these property types are NOT good comparable sales.

            Bank Owned/REO Properties. Banks always sell their homes for less than they are worth. I don’t know exactly why this is. But, they do it so often that I know it is true.

            The average bank-owned home in today’s market is selling for 5-10% less than its fair value. This is true even for the homes that are in good shape.

            Short Sales. Buyers and their agents hate short sales because they are tricky and unreliable. A buyer will often fall in love with a short sale home, only to find out the banks won’t approve the short sale.

            Agents do not like to show them for the same reasons. As a result, the pool of buyers for a short sale is much smaller than for a regular listing.

            Ugly Homes. These are homes that are unappealing and aren’t kept up. People buy homes because of emotion. Logic doesn’t always apply. As a result, a well-kept home will sell for more money.

            We have seen well-maintained homes sell for 10-15% more than unappealing home. We have seen professionally staged homes sell for 20% more than an un-staged property. Yes, the condition of a home counts. Don’t use an ugly home as a comparable.

Are you in a Buyer’s or Seller’s Market?

                While you’re scouting out other homes for sale in your area, you should also pay attention to how long they’ve been on the market.

            Places like Zillow and Realtor.com often have a little section under each home that tells how long it has been up for sale in their systems, although not necessarily how long they’ve been on the market.

            If homes in your neighborhood are getting snatched up right and left, you stand a good chance of the same happening for you as long as your home is priced right.

            This is referred to as a seller’s market, and you could get more profit from your home’s sale.

            On the other hand, if the ‘Home for Sale’ signs in your area seem to be growing roots and taking up permanent residence, you might benefit from setting a little lower price than your competitors. You may not make as much profit as you would have liked, but some profit is better than none at all.

It’s all in the timing.

                Timing is a slippery slope for sure. If you take too much time actually going through with a sale, just holding out for the perfect offer, you’re probably doing yourself a disservice.

            What is more likely to happen is that the buyers will notice your home is just sitting there, and only offer lower prices. Market statistics suggest that the first is most often the highest, anyways.

            Conversely, if you need to sell quickly, you don’t have a whole lot of wiggle room when it comes to negotiating. You need to get out of the home, and you’re limited to taking whatever bids are thrown at you.

To all things there are a time and a reason.

               More often than not, the best seasons to put a house on the market are in the spring and fall. Keep this in mind as you prepare your home for sale. If the timing allows, shoot for your next hot season to begin the marketing process.

            For instance, if you decide you want to sell in June, plan to put your home up for sale in the fall. Use the intervening months for the necessary preparations.

A Little Nudge.

               It isn’t uncommon to get to a place where you’re desperate to get this selling business over with, and yet, there are no takers. Give your prospective buyers a little nudge.

            Everyone loves a bargain. There are several ways that you could use this psychological tendency to your advantage.

·               Offer an allowance for decorating, new appliances, or even landscaping. Look at the flaws of your home, and instead of trying to correct them with MORE improvements, correct them with money. Buyers love being able to pick out all of their own, new stuff.

·              Consider paying for a home warranty. They aren’t typically astronomically expensive, usually just a few hundred bucks, and they give a new homeowner the peace of mind to buy your used home.

·              Think about paying the closing costs. While this may seem a little unfair, if you can sell your house quickly, you’ll be benefiting tremendously. Remember, the longer your home marinates on the market, the less you’re going to make it anyway.

Blog author image

Oscar Vasquez

For the majority of people, the purchase or sale of a home is their largest single investment. My goal is to guide you successfully and easily through the contractual, investment and emotional decisio....

Latest Blog Posts

What to Avoid

`  Here’s another example of a stupid mistake that caused a seller to lose about $50,000 on their home sale.            An

Read More

Does Listing Price Matter?

Are you sick of being told the reason your home didn’t sell was that it was “overpriced”?            Most people think a

Read More

Should You Consider Hiring a Real Estate Agent?


Read More

How to Find Out Exactly How Much Money You Will Receive on Your Sale


Read More