The 5 Most Common Mistakes That Home Sellers Make
During my 21 years as a real estate agent, I continue to see home sellers make the same home selling mistakes over and over, and these mistakes are costing them thousands and thousands of dollars and in many situations, preventing their homes from selling. The good news is, each and every one of these mistakes is entirely preventable. Let’s take a look at the 5 most common mistakes that home sellers make:
1. Assuming that all real estate agents are the same
Did you know last year in the Peoria Illinois area that 9009 homes were listed and only 5901 actually sold? That means that 63.14% of the homes listed actually sold and 36.86% did not sell. As you can see, that's a high number of homes that are not selling. There's a lot of agents out there that are listing homes and not getting them sold. The average agent in our area last year only sold 8 homes. That is total transactions including seller transactions and buyer transactions. It does matter which real estate agent you hire.
2. Hiring an agent because they recommend the highest asking price
When selling your home, there are two important decisions a home seller must make:
- Selecting a real estate agent
- Establishing an asking price
These two decisions should be kept separate. Many sellers make the mistake of hiring the agent that recommends or agrees to the highest asking price. When agents know they are competing for the listing, some will tell the seller what the seller wants to hear to secure the listing. They will give the seller an inflated price, knowing the home will not sell at that price. Once the agent has secured the listing, they will then recommend price reductions down the road knowing that it is only a matter of time before the seller is willing to drop the price.
Selecting an agent based on the price they recommend often leads to listing with the highest bidding agent instead of the most qualified one.
Choosing an agent who will tell you the truth will create a better outcome than one who agrees with the highest asking price. The best real estate agents believe that it’s better to lose a listing by telling the truth, than to gain it by overpricing. You want your real estate agent to give you honest advice. It's the only way you can make proper decisions and plans.
Real estate agents don't create the market, they simply report on it. It’s no different than a doctor reporting the results of an x-ray. The doctor did not create the broken bone, he/she is simply reporting the results of what the x-ray is telling them.
Overpricing a home can cause damaging effects that are hard to recover from. The most significant problem is that your home will likely sell for less money than if you would have priced it properly from the start. An overpriced home sits on the market, gaining a stigma and leading buyers to assume there is something wrong with it. Learn more about how to price your home properly and the traps to avoid when pricing your home.
3. Hiring the agent that agrees to the lowest commission
It is natural to want to make as much money as you can from the sale of your home. Many home sellers think that they will net more money by hiring the agent that charges the lowest fee. This is not accurate. If an agent is taking less commission, they have less money to spend on marketing and other services. If an agent doesn't have enough money to spend on marketing, you're actually going to put less money in your pocket...not more. It's not about how much the agent charges, it's about how much you net. Just because you pay a reduced commission does not mean you will net more money.
How much are you saving if the person you hire cannot get your home sold? As we mentioned earlier, the average agent only sells eight homes per year and close to 40% of homes listed do not sell. If you select and agent that cannot get your home sold, how much money did you save? It doesn’t matter what fee they agree to if they cannot get your home sold.
If you hire an agent because they agree to a low fee and your home does not sell, it’s going to be much harder to sell moving forward. A home has its highest perceived value early on and the longer it’s on the market without selling, the less perceived value it has and the less it will likely sell for.
If an agent caves in and reduces their commission, how quickly will they cave in when negotiating on your behalf? Do you want a strong negotiator? The top agents are not the cheapest, but will likely sell your home for more money, and in less time. It costs a lot money to be able to market your home aggressively, and to provide top notch services.
It is also important to understand how commissions are split in a transaction. The company that represents the seller typically receives half of the commission and the company that represents the buyer typically receives 50% of the commission. If an agent agrees to take less, you want to know if they are taking the hit or if they are reducing the commission amount offered to the agent that represents the buyer. If the agent is reducing the commission amount offered to the buyers agents, will agents be as motivated to show your home vs a home that is paying a full commission?
4. Listing your home before it's ready
Many agents will try to get you to list your home at the first appointment. These same agents will probably tell you that your home looks great and you don't need to do anything to prepare it to sell. Their only goal is to walk out of your home with a signed contract. They do this for a couple reasons:
- They don't want to take a chance of you signing with another agent
- They want a sign in your yard to generate buyer leads for themselves
It is said that for every listing an agent takes, they should be able to generate at least one buyer closing from that listing even if the buyer does not buy your home. Agents want as many signs in yards as possible so they can generate more buyer leads. The problem with these agents is that they are looking out for their best interest, and not yours. At the listing appointment, their main goal is to get you to sign a contract with them and to get a sign in your yard ASAP.
If you want to sell your home for top dollar in the least amount of time, it's important to do the right things in the right order. Listing a house is a process, not an event. It's important to convert your home from living condition to showing condition. You want to hire an agent that will guide you in that process or refer you to someone that can, like a professional home stager.
There are situations where sellers don't want to do anything to their home and just want to sell it as it is. You can do that, but obviously you're not going to make as much money. You will need to price your home for quite a bit less than you would if you were willing to prepare it properly.
You only have one chance to make a good first impression so it's critical that your home shows it's very best the day it goes on the market. Buyers scour the internet looking for the new listings. It's a wasted opportunity if your home does not show its best at that time. If buyers don't like what your home looks like online, they will not make an appointment to view your home in person. Times have changed a lot over the last twenty years in real estate. More in person showings were scheduled years ago than there are today but homes are actually getting viewed more often today. The first showing happens online, and if they like what they see online, they will then make an appointment to view the interior of your home.
The goal when you're selling your home is not to get a sign in your yard as fast as you can. The goal is to get to the closing table as fast as you can, and sell your home for the most amount of money in the least amount of time. Sometimes it may take a week or two more to get your home on the market if you prepare it properly, but typically if you do the right things in the right order, your home will sell faster and for more money, and you're going to get to the closing table and receive your proceeds check faster.
For more information, check out How to properly prepare your home for sale and the most frequently questions asked about preparing homes to sell.
5. Signing a long-term contract that you cannot get out of
Most real estate agents are going to ask you to sign a long-term contract, typically four to six months… it varies. Once you sign this contract, you are committed to that agent until the contract expires. You're stuck even if you are unhappy with the agents’ performance.
- You are not happy with the amount of advertising on your home?
- What if your phone calls are not returned?
- What if you never hear from your agent?
- What if feedback is not provided after showings?
None of the services are part of a real estate contract. I would not recommend signing a contract that you cannot get out of. Insist on being able to cancel the contract at any time if you are not happy with your agent’s services.
Hopefully the above information was helpful. It’s important to avoid these mistakes when it’s time to sell your home.
Whether buying or selling, the Rodgers Real Estate Group would love to have the opportunity to meet with you to discuss your real estate needs. Call us at (309) 693-1133 or e-mail [email protected]