A lot of time is dedicated to providing advice to first-time homebuyers – as it should be. However, selling a house for the first time can also be a bewildering experience. These sellers are navigating what, for them, is unchartered waters, and missteps can keep their home on the market longer, or cause them to leave money on the table.
According to Tracey Williams Barnett, a Washington, DC-based associate broker at District City Living|RLAH|Christie’s International Real Estate, reality television has glamorized and oversimplified the real estate sales process. On TV, everything is quick and easy, and homes often sell for more than the list price. “When it comes to selling a home, these depictions have made it more challenging for real estate professionals to meet the expectations of today’s sellers.”
If you want to avoid unnecessary surprises, delays, and headaches, these are some of the first-time seller mistakes to avoid.
Overpricing the Property
Williams Barnett says first-time sellers often disagree with their realtor regarding the home’s selling price. “When you decide to seek out a realtor, you should understand that you are hiring an experienced professional who understands the market and knows what the home should be sold for,” she says. A home is worth what a buyer is willing to pay, and Williams Barnett says realtors view hundred and thousands of homes, so they’re qualified to know what a home should be listed for.
Sometimes, a first-time seller may think that overpricing their property will give them room to negotiate. But that’s a bad strategy. “Overpricing can actually turn off potential buyers and cause the property to sit on the market for too long,” warns Nicole Beauchamp, associate real estate broker at Engel & Völkers in New York.
Not Understanding the Buyer’s Financing Plan
Just because a buyer expresses a sincere interest in your property doesn’t mean that you’re on your way to a quick closing. According to Jeff Devereaux, SVP and mortgage banking executive at Studio Bank in Nashville, TN, it’s important to understand how the buyer plans to finance the purchase. “Their creditworthiness and the method of financing they’re pursuing can impact the probability of the sale closing.” Devereaux says the best chance of closing with a financed sale will happen with an “ideal buyer,” which he defines as already pre-qualified by a reputable lender, with proof of cash for their down payment and closing costs, and someone who knows what program they will be using. “The type of financing the buyer is using can also affect how long it takes to actually close the sale: most Conventional, VA, and FHA mortgages can close within 30 days, but other types of mortgages can take longer.”
Inadequate Marketing
It’s still a seller’s market, but that’s not a guarantee that buyers will be rushing to purchase your home. Samuel Jung, a realtor with Century 21 Blue Marlin Pelican in Crestview, FL, says marketing plays a huge role in the home selling process. “Poor quality photos, limited property exposure, or ineffective listing descriptions can make it difficult to generate attention and attract potential homebuyers,” he warns. Jung recommends investing in effective marketing, which includes using high-quality professional photos, engaging descriptions that focus on the benefits of your property – not just its features – and a variety of marketing channels (open houses, flyers, and social media). “Don’t be pennywise and pound foolish – these steps may cost you more upfront but can pay off enormously with the final purchase price of your home.”
Thinking You Can Sell the House Yourself
In addition to marketing, there are various other factors that go into selling a home. Williams Barnett says it’s not as simple as putting a For Sale sign in the yard and listing the home on the MLS. “There’s a plethora of behind-the-scenes endeavors, research, professional advisory, and negotiation services that the seller may never experience first-hand,” she explains.
And that’s why Beauchamp believes that not hiring a reputable real estate agent is a major mistake. He says that first-time sellers may try to sell the property on their own to save money, but warns that this could be a risky move. “A reputable real estate agent can help navigate the complex process of selling a home, and can often help sellers get a better price for their property.”
Waiting for the Right Time to List
Many first-time sellers are waiting for the perfect time to list, but there may not be a perfect time. “They try to time the market and are afraid when there are no listings on the market in their immediate area,” says Diana Sutherlin, a broker associate at Compass in Jersey City, NJ. However, she recommends using the principles of supply and demand to work on your behalf. “If your home is the only one on the market, demand will drive your price up – it’s always in your best interest as a seller to list before similar homes come to market.” Sutherlin provides what she calls an extreme example: if two condos in the same building, with the same layout, are on the market at the same time, she says the owners will get less because they’re competing with each other. “If there is no inventory like yours listed at a price informed by the actual market, there’s a much better chance that it will sell.”
Waiting Until You Find a Home You Want to Buy
Understandably, some sellers don’t want to sell until they know where they’re moving to. And some sellers need the proceeds from this home sale to purchase the next home. “The risk these sellers believe they face is to sell their current home without being under contract on their new property, and then either not having any home at all, rushing into a purchase of a home that doesn’t meet their needs because their current one is sold, or moving twice as a result,” says Bret Ceren, realtor at Platinum Living Realty in Scottsdale, AZ. He recommends that sellers put their home on the market and then negotiate a clause in the contract that provides a period of time to find a home.
Failing to Plan the Cash Proceeds
Selling a home can be hectic, and you may not have thought about what to do with the profit from the home’s sale. Devereaux recommends having a plan long before you get to the closing table. “If you have a specific plan and place for the money, it’s less likely to erode through unmindful spending.” If you put it in a separate account, Devereaux says this will force you to make a conscious decision to access the money. “If you’re planning on saving the cash for more than a few weeks, talk with your banker about putting it in a high yielding account, such as a money market.” He also recommends talking to a tax professional before the sale. “As a seller, you may face capital gains taxes, but those can sometimes be deferred if the proceeds are immediately reinvested into a similar property.”