We are all about empowering consumers – and that includes sharing “what not to do” when selling your home. So let’s look at our friend Kelly and learn from her mistakes so you can sell your home the right way – the first time.
Keys to Pricing Your Home Right
We’ve said it before – and we’ll say it again – one of the most important factors of selling your home successfully, and for top dollar, is pricing your home accurately. We even have The 3 Keys to Pricing Your Home because we know how crucial this step is. This happens with both FSBO’s and Realtor®-listed homes. An agent will very rarely tell you your home is overpriced, because they want the listing.
It’s important to do the legwork and make sure you’re in the right price range. And with all the hype about homes selling at a record pace (most homes take 3-4 months to sell) homeowners got frustrated when there were no buyers who made an offer on the home not matter if they are FSBO or using an agent. It is very important to look at all 3 keys to pricing your home.
Let’s first look at a method that most sellers use to determine their list price. The process for many of these sellers is to locate homes similar to theirs and note the list/asking price. They, in turn, used that as the single guide for the price they would ask for their home. Mistake #1: The comparable current listings are not what are used to determine your list price. You want to make sure you have the current sales price for the comparable homes that sold. That is a key factor in determining your price. Remember, accurately pricing your home is crucial for getting top dollar – and it is imperative you have the most up-to-date and correct information to pull from so you can confidently price your home. Pricing your home on the market brings serious buyers.
Unfortunately, when a home is priced high, it can cause a challenge because no buyers are requesting to see the house, and no offers are submitted. We understand this is disappointing and when 30 days pass and there is not much traffic, with no offer in sight, it can cause a panic. What many sellers don’t understand when selling either with an agent or FSBO is it typically takes 2-3 months to secure an offer that is acceptable.
Many times, a seller will think if they list their home, it will solve the problem; yet all it does is ensure they will net less money at closing because now they must pay the real estate agent a commission. Remember over 50% of homes listed do not sell during the listed period. And that 6% can eat up nearly 40% of the funds they thought they would walk away with.
Kelly’s Story
We believe in learning and celebrating our failures at ListingDoor
Let us introduce you to Kelly, a seller who wanted to share her experience in hopes of helping other sellers avoid the pitfalls she found, and make a better decision when selling their home.
Kelly and her husband wanted to sell their home because they had had a baby and needed more space. She was planning on purchasing another home so she wanted to get top dollar for her home and walk away with money to use as a down payment for her next home. She met with a friend that was an agent and the agent told Kelly that she should list her home for $575,000. Kelly liked the agent – but knew if she listed with her she would walk away with less money at closing after paying the commission. Kelly saw an article in the Sunday newspaper that said homes were flying off the shelf so she decided to FSBO her home and save her hard-earned equity. She was excited she would have that extra money to put down on her next home and still have money to upgrade if needed, or purchase furniture.
She decided to use ListingDoor service but opted not to do any research regarding the pricing of her home – she figured her friend had done the due diligence and she would use her suggested list price. She never downloaded her IntelReport or read the 3 Keys. Which showed that $575,000 was for homes that had been updated with a garage and hers did not have a garage nor was it updated.
She put her home on the market for $575,000. Her first offer was for $545,000 and, because she believed her friend was correct with the $575,000 list price, she was a little insulted by the offer. Kelly did not counter the offer. Mistake #2: We recommend you always counter an offer within 48 hours, making sure to review and reconfirm comparable homes that have sold and that support your initial list price. We suggest you use those comparable sales to support your price to the potential buyer. Things change quickly in this market and it is important you are using recent and accurate pricing information to support your price. Oil went from $100 a barrel to $48.
That was the beginning of a frustrating 30 days. Kelly did not receive any other offers during that month so at the 45-day mark, in desperation, Kelly listed with her friend $575,000. Shortly after listing the home – 7 days – the agent had Kelly lower the price to $559,000. After some negotiation with the buyer via the real estate agent, the house sold for $557,000. When we look at the numbers it may appear she did better with the agent, yet when you look at the net proceeds Kelly received you see Mistake #3. After paying the real estate commission, Kelly’s net sales price was $523,600, significantly lower that her first offer of $545,000.
FSBO Lessons
So the lessons learned are:
- Thoroughly research your sales price. Do not think an agent’s opinion is the end all be all. In fact, the National Association of Realtors (NAR) shows the opposite. NAR has shown that FSBO homes sell for closer to asking price than ones listed with an agent. The same study shows FSBO homes sell faster. In many cases, real estate agents will state a higher selling price to the seller as a marketing tactic.
- A real estate agent isn’t going to somehow find a loophole in the market and sell your home for more than it’s currently worth. Numbers don’t lie and all supporting comparable sales need to be reviewed for an accurate list price.
- Let’s face it, some unscrupulous agents, in the name of salesmanship, state an inflated price as a way to snag a listing. But remember – their job is not to list the home – it is to sell the home. That is where this tactic backfires; and, unfortunately, the seller suffers the loss.
- Decide if you will list your home on the MLS. Sellers who have interviewed a real estate agent think this is mandatory – because this is where agents look first for homes for sale. That is not the case at all and now with sites such as Zillow and Trulia – these are where buyers are looking for their next home. You can read more about the pros and cons of listing your home on the MLS.
- Counter all offers. This is part of the negotiation and you won’t know if the buyer will come up in price without countering the original offer. The buyer with the first offer of $545,000 may have increased their offer if they had received a counteroffer with a simple explanation or supporting documentation reflecting the value of the home.
- Most homes sell within 30-60 days. Kelly got frustrated early in the process – don’t throw in the towel too early. When you read that a home sold in 24 hours and had multiple offers, that is almost a guarantee the home was under priced.
The Internet has opened up a wealth of information and numerous alternatives to selling your home yourself. It is important to find an avenue where you have resources to address the process. We don’t want you to undergo the frustration or panic some sellers have experienced when deciding to FSBO their home.
At ListingDoor we believe in learning and celebrating mistakes and we will openly share them with you. And we especially want to thank Kelly for sharing her story.
