COMMON SELLER MISTAKES
Never experiment with selling your home and certainly you should never make the same mistakes as others. Your home is one of the most expensive items you have to sell and the proceeds will make moving on just that much less stressful.
To achieve a lucrative sale and peace of mind, you must protect yourself from common home-selling mistakes by knowing what to watch out for ahead of time. It is impossible to list them all here; however, this is why I am highlighting the most common seller’ mistakes which can cost you thousands of dollars, lots of stress and a possible lawsuit.
Remember the adage for lawyers: “A Man Who Is His Own Lawyer Has A Fool for a Client”? This also applies to real estate!
#1 NOT USING A REALTOR®
The temptation to sell on your own is strong at this time because you a) perceive that the market is hot, homes are selling fast and b) you can get a FSBO sign in the front yard with the property listed in the MLS for a few hundred dollars. That’s just the start of your ‘fun’ - particularly if you’ve never sold a home yourself before!
Legal Issues
Selling a house involves numerous legal documents in addition to your contract documents. You will have more from lenders, appraisers, title insurance agents, and inspectors. If the proper forms are not completed correctly, it could blow the deal.
The Texas Real Estate Commission (TREC) and the National Association of Realtors® require their specific documents be used in each real estate transaction by Realtors (non-members are not allowed to use these forms). A buyer or seller, not represented by a Realtor, would have to hire a licensed real estate attorney to prepare their documents, if the process is to be legal.
Knowing which contract to use, which addendums, disclosures, amendments, and notices, and when to use them, is vital to keep from making mistakes. One small oversite, even if it is unintentional, could cost you thousands of dollars, and/or cause you to default on your contract and trigger a lawsuit.
This is a serious point and one you must carefully consider. Would you know which ones to use to keep you out of a lawsuit? Can you trust a part-time agent to know which ones below to choose when there are:
5 Contracts
- 20 Addendums
- 5 Disclosures
- 3 Amendments
- 40+ Legal Notices
Besides training in real estate contract law and all the documents, an experienced Realtor will know how to handle any issues that arise. They understand when the market shifts and how to use it to your advantage, how to negotiate your contract price and terms to your best advantage consistent with your goals and situation, make sure your buyer is qualified, provide a strategic marketing plan, and oversee the entire process through closing.
“Listen to advice and accept instruction,
so that you may gain wisdom in the future.”
Proverbs 19:20 (ESV)
Hiring The Wrong Realtor To Sell Your Home
If you have decided to hire a Realtor, congratulations on making that wise choice! However, make sure you don’t hire the wrong one! Have you ever had the wrong mechanic work on your car - ouch!
Hiring the wrong Realtor® when selling your home can be a huge mistake also and cost you thousands of dollars from your net proceeds. If you’re selling your home you need to be on the lookout for signs in case you may have hired the wrong real estate agent. A tell-tale sign is a minimal to a complete lack of online presence from your Realtor. If you perform a Google search of your real estate agent's name and do not find anything, you seriously need to reconsider hiring this agent, or if you have already hired them, investigate making a change. Online marketing is huge in real estate, and the agent should have an active online presence in as many places as possible - more than just a website!
Hiring an Agent Because They Suggest The Highest Price
This is a big trap that many sellers unfortunately fall for - choosing a real estate agent simply because they suggested a higher price; this is not in your best interest. What happens after that is usually a sad story for the seller because an overpriced house can be a problem for the seller and affect what you will end up getting out of the sale.
Let me be candid for a moment. There are many types of agents, and like every profession, some are very good and highly professional and some, well, not so good. One of the tactics some agents use to acquire a listing is to quote the highest price or agree to your price even when the ‘comps’ don’t justify it.
This type of agent is usually the weakest negotiator, maybe doing real estate part time or who is new in the business and/or inexperienced. They will quote you the highest list price and lowest commission structure just to get the listing. You don’t want the weakest agent negotiating your offers on your behalf, do you? Of course not.
Selecting the Realtor who offers sales data and a strategic listing price, not the highest price, will be best for you in the long run. We have a well-established track record of getting sales in this market well above the listing price - not because we started high but because we priced right and had a great marketing plan!
Beware Of Hiring A Friend Or Relative
With your biggest investment, do not fool around! Just like hiring a full time professional such as a CPA to do your taxes, or an attorney for a legal issue, or even a doctor for a health problem, you should always choose a person with the most knowledge and experience in their field of expertise.
You may have a well-meaning friend or family member that you want to help out by giving them your listing. However, I would not take that chance if they are inexperienced or part time, there is too much at stake here. You can always help them in some other way—You must hire an EXPERT! Besides, if something goes sideways you could end up losing a friend or alienating a family member.
Not Taking Your Realtor’s Advice
Although most sellers only sell a few homes in their lifetime, many think they know how to sell a house and everything that is involved. There will be many times before you put your home on the market, during the marketing phase and in the closing phase of a real estate transaction that your Realtor will give you advice. You must listen!
If you hired an experienced, competent Realtor (hopefully you did your homework) you should always heed their advice.
When your Realtor tells you the market value of your house—Listen! When your Realtor tells you, “the house needs to be painted, cleaned or staged”—Listen! When they tell you, “the market has shifted”— Listen! When they provide you feedback on the showings, “what adjustments or items are needed to overcome the objections”—Listen! When they tell you, “an offer is good based on the price and terms”— Listen!
“Get all the advice and instruction you can,
so you will be wise the rest of your life.”
Proverbs 19:20 (NLT)
#2 OVER OR UNDER PRICING
The worst seller mistakes involve the issue of pricing. Whatever you do, don't be misled by pricing Misconceptions. It's a BIG mistake to think these factors affect the market value of your home.
- What You Paid
- What You Need
- What You Want
- What It Costs to Rebuild Today
- What Your Neighbor Says
- What Another Agent Says
- What Your Tax Appraisal Says
- What Zillow or Other Internet Real Estate Websites Say
Unfortunately, as much as you would like these reasons to make a difference, none of these factors determine or influence the market value of your home. Only comparable homes in your neighborhood that have SOLD in the last six months determine market value. Recognizing this will help to avoid over- or underpricing, a major factor that leaves homes languishing or unsold...and you, an unhappy seller!
Guessing Instead of Researching Price
Basing your home price on what the neighbor down the street has listed his home for is not a reliable method of pricing your home for sale. The Comparative Market Analysis (CMA) is still your best source for setting an asking price. If a home in your area sells for a low price, don’t assume yours is worth the same amount. Your home might have something to offer that the other one didn’t. Let the CMA be your guide, and get the advice of an experienced real estate professional.
Setting The Price High, Thinking You Can Reduce It Later
A big trap that many sellers make is setting a higher price expecting to either get lucky or to be negotiated down. This works with selling a car or a lawnmower, but not selling a home. The buyer will likely come in with a buyer’s agent and they will spot the over price and steer away from the house. What happens after that is usually a sad story for the seller because an overpriced house, as you have seen already, can be a problem for the seller and affect what you will end up getting out of the sale.
Since most buyer showings come within the first two weeks of it being on the market and listed in the MLS, it is vital your property has a realistic price from the very beginning. Buyer interest peaks when your home is new on the market. Price it right while buyer activity and interest are high! In a nutshell, here are the dangers of an unreasonable asking price, and the common results of overpricing can be:
• Lack of Showings
• Tough Negotiations
• Appraisal Problems
• Buyer’s Remorse
• Stagnation and Stigmatization
• Helping Competing Listings
Testing The Market With A High Price
Even if you are not in a hurry to sell, it is not a wise move to “test” the market by listing your home at a high price to see how it goes. Serious home shoppers may take months to find a new home, so they are continually looking for new listings, not ones that have been sitting on the market. ‘Days On Market’ will determine the price of buyer’s offers.
#3 NOT PREPARING FOR THE SALE
Most of us would probably be lying if we said our homes weren’t overdue for a good cleaning, so don’t forget to check this box before listing your home for sale. There’s nothing more off-putting during a home tour than realizing the house is dirty, and potential homebuyers may wonder what else you’ve been neglecting. I suggest you hire a professional cleaning company to deep clean your home.
An experienced Realtor will have a fresh pair of eyes, to point out areas of your home that need work. Because of your familiarity with the home, you may be immune to its trouble spots. Decluttering, cleaning thoroughly, putting a fresh coat of paint on the walls, and getting rid of any odors will also help you make a good impression on buyers.
#4 IGNORING MAJOR REPAIR ISSUES
Do you have knowledge of repairs that are needed to your home? Do you think you can get away with ignoring major problems with your property? Think twice. The buyer may not notice anything, but the Home Inspector will! You do not want to settle on an offer price (which might be lower than you anticipated), then to find the buyer negotiating with you even further after the inspection report reveals problems--which happens in many cases.
You have three options to deal with any repair:
1. Fix the problem ahead of time
2. Price the property below market value to account for the repair
3. List the property at a market value and offer the buyer a credit to fix the problem.
In either case, if the problem exists, you cannot ignore it. It MUST be on the required Seller’s Disclosure.
If the repair is obvious, and you do not fix the problem in advance, you may eliminate a fair number of buyers who want a turnkey home. Having your home inspected before listing may be a good idea if you want to avoid costly surprises once the home is under contract. Furthermore, Texas has ‘seller disclosure’ laws that require you, under penalty of fraud, to disclose known problem areas of your home.
The best practice if you do have major repairs come up after the inspection, is to give a dollar amount to the buyer so they can hire their own contractor of choice to do the repairs after closing. The one thing you do not want to do is agree to do the repairs, pay your contractors to fix the problems, and then the buyer not approve the repairs—now you have wasted your money and your emotions will be running high.
#5 NOT STAGING YOUR HOME
Staging a home may not seem like a big deal but skimping on this step is a huge home-selling mistake. Most sellers’ agents report that staging a home has a dramatic impact on selling it faster. Also, a quarter of agents said staging increased the dollar amount of buyer offers by 1–5%, while others said it kicked that amount up by 6–10%. In other words, if you stage a $200,000 home, your offers might bump up an extra $2,000–$20,000!
Recently, my client received $75,000 over list price because we painted one wall and I staged it to a style most popular to homebuyers.
#6 FORGOING PROFESSIONAL PHOTOS
Let’s face it, if your listing photos aren’t done professionally, you won’t attract as many potential buyers. Nothing sells a house faster and showcases your home’s best assets than professional photos. This is especially true now, as more homes than ever before are being sold sight-unseen. The listing photos are the first thing a prospective buyer sees of your home online and may determine whether they request a showing. In fact, houses with professional real estate photos, on average, sell for more money than other listings.
#7 SHOWING MISTAKES
Not Accommodating Buyers
I am going to be very clear about this – a missed showing is a missed opportunity. Sure, there are going to be times when showings are going to be difficult. You have a family and a life. Sometimes they get in the way but turning down a showing when it is not convenient for you, could be a major mistake if it happens to be the buyer that would offer you the most money!
Don’t ever assume the agent or buyer’s schedule can fit into yours— especially the relocation buyers that are only in town for just a few days.
If you want to sell your home, however, in the shortest amount of time for the most money, let the buyers come on their schedule! The more restrictions you put on buyers and their agents, the more challenging it will be to sell.
Being At Home During Showings
“Hovering” is the worst! Never be at home during a showing. Sellers typically get in the way of a good sale by trying to help. Lurking sellers make buyers nervous. Buyers may feel they are intruding into the seller’s space and then rush through. Buyers may be hesitant to talk about changes to the home or features they do not like with sellers’ present. Buyers will feel uncomfortable closely inspecting the house in the presence of the owners. It is easier for buyers to visualize the home being there when they have a chance to critique and discuss the home among themselves. Let me be direct – buyers are buying a home for themselves and do not want to have the picture of “their new home” with you in it!
Telling Too Much To Buyers
One of the tactics real estate agents and buyers use to know how to negotiate in their favor, is by asking the seller questions. They are looking for clues as to how to get the best deal. If you share personal information, such as a need to sell the house quickly or the fact that you have been trying unsuccessfully to sell it for months, the buyers are apt to make a low-ball offer. Avoid telling the buyers about your motivation to sell. This is why it is always best to let your Realtor do the interfacing with the buyer and/or buyer’s agent.
Although some questions may seem simple and innocent, such as “Why are you moving?” I have seen sellers tell information that has caused them to lose negotiating power, thereby losing thousands of dollars.
Industry Secret: If you get caught leaving as the buyer comes in to see your home, whatever you do, say nothing!
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#8 TAKING A LOW OFFER PERSONALLY
Regardless of your reasons for moving, the fact that you have probably lived in your home for years means that you have a lot of strong feelings attached to it. So, when you receive a lowball offer, it is natural to be offended. If you allow your emotions to go unchecked, it could kill the deal.
Many buyers feel they must make low offers in the beginning just to see what they can get. However, even when I think a buyer is being ridiculous, and it is a waste of time, I advise my sellers to make a counter offer. Often, I have been shocked to see a buyer come up in price so much from their initial low offer. The point is, never just give up in the beginning!
An experienced real estate professional can separate their emotions from the process—let them lead you because they have faced this situation many, many times and know how to properly address it. For example, they can advocate for you because they are removed from the fear of losing the home. Furthermore, your Realtor can draft the strongest counter offer, after talking to the buyer’s agent and finding out what the hot buttons are of the buyer. Also, there are many terms in the contract and addendums that your Realtor can use to negotiate countering the price—you must know what they are!
If you will listen and trust your Realtor, and they have good negotiation skills, savvy buyers will not be able to take advantage of you. I can tell you the difference between a good deal and a bad one. If I think the deal is right, I will tell you to seriously consider it.
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#9 NOT TAKING THE FIRST OFFER
This happens often and I guess we can attribute it to the baseball advice to ‘not swing at the first pitch.’ The seller gets a nibble or even a bite early on and is suddenly filled with confidence that the house will easily sell and maybe even inspire a bidding war. It feels like you are standing over a pond packed with hungry fish. The first offer does not seem great, and you naturally assume there must be bigger, juicier fish to be had. So, you throw the not-so-small-after-all fish back in. Big mistake. That ‘small fry’ may be the ‘catch of the day.’
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#10 LETTING EMOTIONS TAKE OVER - Negotiating
Keep calm throughout the selling process - during the negotiations of the price and terms and especially during and after the home inspection. Be practical and anticipate that issues will arise. It is not uncommon to have to pay for some repairs. Do not let the buyer’s request to complete a minor repair kill the deal.
Industry Secret: Statistics show, the first offer is usually the best offer!
#11 SELLING TO UNQUALIFIED BUYERS
Never sign a contract before making sure the buyer is qualified! The last thing you want is to get down to closing, 30-45 days after a contract is signed to find out your buyer does not qualify! Not only have you spent a lot of time packing and preparing where you will move next (you may have already purchased a home, or it is under contract) and now you cannot close!
Here is an example of what happened to one seller that did not properly qualify a buyer. The seller spent two weeks preparing his home for an acquaintance who wanted to buy his home. The seller spent $1,000 removing a shed the buyer wanted moved and met with the prospect several times to discuss price and terms. It was well into the process when the seller found out the prospect could not qualify for a loan. Not only did the seller waste his time and money, he missed out on the opportunity of selling to a qualified buyer.
#12 DELAYING REQUIRED PAPERWORK
This example is the worst and longest transaction I have had in four decades! I had a client that was going through a divorce. The wife, who was still in the house with three young children, called me to list the home and sell it for them. Once the house was listed in MLS, we immediately had two offers. We accepted the best offer; however, the husband was reluctant to help with all the information we needed for closing.
After months of trying to get the payoff information and authorization to speak to his mortgage company, I discovered that he had not made any payments for two years. Because of that, he was in a lawsuit with the mortgage company, had filed bankruptcy, had a substantial IRS lien, and now the home was posted for foreclosure—it was a mess!
I was able to pull the house out of foreclosure with the contract I had executed and put into a short sale immediately. I still had to deal with the mortgage company, two law firms for the bankruptcy, both divorce attorneys and the IRS for the tax lien. After months of working on this, the first buyer finally got tired of waiting and terminated the contract.
I was able to get it under contract again within a week, but with all the hoops I had to deal with getting all the necessary paperwork, it took another seven months to close—thankfully, buyer #2 was patient enough to hang in there with us. The bankruptcy was dismissed, we got the IRS paid off, and the short sale was approved--Total time was eleven months to get this closed, because the husband dragged his feet and was uncooperative with everything!
The seller could have saved himself thousands of dollars in attorney fees, interest and late penalties on the mortgage and IRS lien, if only he would have cooperated! And the soon to be ex-wife and his three kids would not have had to experience 11 months of stress not knowing when they would have to move.
It is a sad story with a mostly happy ending, as the house sale closed successfully. Since it sold as a short-sale instead of a foreclosure, both the husband and wife were spared of having the bigger ding of a foreclosure on their record and credit score. I had a clause in the agreement with the mortgage company that they had to ‘forgive’ the debt, so the sellers were spared this large debt as well.
#13 PACKING OR MOVING BEFORE YOUR CLOSING
Never change the way your home looks for showings, until you close! Do not pack any major pieces or things you need or move out of your home before you go to closing. For years now, I have been negotiating 3-5 days (or longer for a larger home) after the closing for my sellers to pack and move to make sure they are covered in case anything happens. For many years, negotiating this extra time for the sellers was a hard fight to win, but over the past decade more agents started following suit. Now, it is a typical practice to see such terms in a contract.
In one case, I negotiated five days after closing for the sellers to pack and move. Unfortunately, my sellers did not take my advice and started packing everything immediately. They even paid someone to have all their stereo and TVs removed and boxed up. There were boxes everywhere and in every room.
The tragedy of 9/11 struck and the buyer got spooked about closing and found a legal way to back out. The sellers were devastated that they had to put everything back and start all over showing the house to new buyers.
Another error that gave the buyer the legal right to terminate was made by the buyer’s agent and seller. By law, Homeowners Associations have 20 days to get the resale certificate and documents to the buyer. The other agent insisted we only have 15 days, which was a big negotiating factor in the transaction. The buyer’s agent would not budge, so the sellers finally agreed to it, although it was against my advice. Even though we put a ‘rush’ on the documents to be delivered, it came in one day short of the deadline, so the buyer terminated the contract.
To top it off, the sellers already had bought a home and were supposed to close the next day after our closing. They almost defaulted because they could not close, but I was able to save the deal. Now when I am negotiating a contract, I tell both the seller and the buyer’s agent this story and insist they put 20 days in the contract.
#14 NOT SATISFYING ALL LIENS & PROBATE ISSUES
I had a client that was selling his deceased parents’ house. I had open houses and received offers fairly quickly. After 3 months the title company said they could not close the house due to the probate and heirs of affidavits not done properly. The buyer had to terminate.
Three years later, after the seller had hired attorneys to get the issues resolved, we thought it was ok to put it back on the market. But I had learned from past experiences to verify that everything was settled, which I did. The probate attorney, title attorney and escrow officer all said it was ready to be sold. I put it on the market again and soon received 8 offers. The seller accepted one and we thought since it was cash, we could close within a couple of weeks. Unfortunately, the same title attorney that said it was ready, was now saying they would not issue title insurance because the heirs of affidavits were done wrong.
Long story short, after 7 extensions for the closing date, the seller was forced to give buyer concessions of nearly $12,000.00.
Bottom line: I have seen far too many homes that have had tax liens, mechanic liens, judgments, divorce and probate issues that should have been satisfied BEFORE the property was ever put on the market for sale. These issues always cause delays! The results are: buyers terminate the contract, the property lingers on the market far too long which ends with a lower sales price and lower proceeds for the seller.
Industry Secret: Anticipating problems before they come up is half the battle of selling your home. Learning from the mistakes of others is a far simpler and less expensive process than making them all yourself. Although we all make mistakes and stumble, these lessons can minimize the most destructive ones and prevent you from stumbling.
