You’re selling your home! It won’t be long before you’re trading the house keys for a sweet pile of money to fund your next great adventure.
But a home is one of the most expensive items you’ll ever sell. Messing it up will make your stomach churn, and it’ll drop a bomb on your other financial goals. So protect yourself from common home-selling mistakes by knowing what to watch out for ahead of time.
Here’s a list of 12 home-selling mistakes and how to avoid them.
Mistake #1: Not Expecting Home-Selling Costs
Okay, you’re selling a house and someone else is buying it. No need to prepare for any expenses, right? Big mistake! Don’t let these costs catch you by surprise:
- Agent commissions: Did you know sellers typically use their proceeds to cover the commissions for their listing agent and the buyer’s agent? According to most real estate websites, you’ll probably pay around 6% of your home price to cover agent commissions. So, if your home sells for $200,000, don’t be surprised if $12,000 of that goes to the agents who helped you seal the deal. Is it worth it? For sure! Just know up front where some of that money will be going.
- Closing costs: A seller’s share of the closing costs is usually 1–3% of the home price.(1) These costs could include sales tax, a title transfer fee, attorney fees and a fee for whoever organizes the final transaction on closing day—like a title company or a lawyer.
- Staging costs: The cost to stage a home varies widely based on factors including where you live, the size of your home, how many rooms you want to stage, whether or not you’ll be renting decor, and different pay structures including an initial consultation and monthly fee. On average, home staging costs around $350–1,600.(2)
- Home inspection repairs: It might be wise to pay a few hundred bucks for a home inspection before you even list your house. (See Mistake #5 below). Depending on the seriousness of the issues that come up, repairing your house could cost thousands or even hundreds of thousands of dollars! Sure, that doesn’t mean you have to pay to fix it. But if you don’t, buyers are definitely going to expect a discount.
- Seller concessions: Speaking of discounts, buyers may try to negotiate for a lower asking price—depending on the housing market. Or they might offer to pay your full asking price if you provide seller concessions. These might include an arrangement where you throw in items like your washer and dryer or pay all of their closing costs, which is usually 3–4% of your home’s price.(3)
- Your next home: Whether you’re sizing up or down, make sure you can pay for your new house in cash or find a mortgage that fits your budget. We recommend keeping your monthly payment to 25% or less of your take-home pay on a 15-year fixed-rate mortgage. If that sounds challenging, first make sure you’re not carrying any non-mortgage debt and have a fully funded emergency fund. Then you’ll be financially secure enough to buy a home again.
- Moving expenses: Did you forget? You’re moving too! The average cost to move a three-bedroom house locally ranges anywhere from $560–1,000.(4) And if you’re not moving directly into your new home after selling your old one, you’ll need to account for rental and storage fees.
When you add up these expenses, the total can seem overwhelming if you’re not prepared for it. But don’t worry! A good real estate agent knows how to best arrange your home sale with these costs in mind.
Mistake #2: Selling When You’re Upside-Down on Your Mortgage
If you still owe a mortgage on your home, use a portion of your sale proceeds to pay off the remaining balance of your loan. But what if your property went down in value? What if you owe more than what it’s worth? This is referred to as being upside-down, underwater or having negative equity on your home. If you sell it, you still won’t make enough money to pay off your mortgage. Breaking even on your home sale is at least better, but it’s still not great.
If you’re in either situation, don’t sell unless you need to avoid bankruptcy or foreclosure. There are other ways to handle an underwater mortgage. But, usually, the best option is to stay in your home and work hard to build more equity before you sell.
Mistake #3: Selling It by Yourself
This is a big one. Not using a real estate agent, or going the “For Sale by Owner” (FSBO) route, is a massive home-selling mistake. Do you save yourself from paying a commission to an agent? Sure. But you could miss the chance to make a whole lot more money. In fact, the latest data shows the typical FSBO home sold for $200,000 compared to $265,000 when sold by an agent.(5) That’s a $65,000 difference!
In fact, the latest data shows the typical FSBO home sold for $200,000 compared to $265,000 when sold by an agent.(5) That’s a $65,000 difference!
Most sellers already know it’s a mistake to sell solo. Last year, less than 10% of all sellers sold their home by themselves compared to the 90% who used an agent.(6)
We know what a loss it can be to try and sell a house without an agent.
Mistake #4: Pricing It Wrong
Pricing a home can be tricky! If you price it too low, you could miss out on thousands of dollars in profit. Price it too high and you could turn away serious buyers or run the risk of wasting weeks or months before you have to reduce the price to get an offer.
Don’t trust the internet. Ask a real estate agent for a comparative market analysis that will show you how much homes like yours are selling for in your area. Setting the right price from the start can make all the difference in how quickly you sell your home and how much money ends up in your pocket at the closing table.
Mistake #5: Hiding Major Repairs
Think your buyer won’t notice that roof leak? How about the bug problem? Guess again. If your buyers are smart, they’ll likely get a home inspection after you accept their offer. And if a major problem with your house comes up during the inspection, it could delay your closing date or even terminate the deal altogether. Consider paying for a home inspection before you list your home to make sure it’s in great shape for your buyer.
Mistake #6: Skimping on Staging
Staging a home may not sound 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, almost one-third 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%.(7) In other words, if you stage a $200,000 home, your offers might bump up an extra $2,000–20,000!
Almost one-third 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%.(7) In other words, if you stage a $200,000 home, your offers might bump up an extra $2,000–20,000!
Whatever you do, don’t show an empty house to potential buyers. Instead, rent furniture and decorations from a staging company to give buyers an idea of what it’d be like if it became their home.
Mistake #7: Not Clearing the Clutter
This goes without saying, but it’s hard to show off the beauty of your home if it’s full of clutter. Piles of paperwork, misplaced toys and unkempt furniture make your home look like a slop-fest to buyers. And don’t forget pets. If you want to attract buyers, you’ve got to pretend Lassie doesn’t live there anymore.
So, clear every surface, pack up the toys, eliminate odors, clean up stains, and get rid of half-chewed rawhides. You’re marketing a house. It’s time to treat your home like it’s the buyer’s home. Get everyone in your household on board. Tell them your house is now a fancy bed and breakfast.
Mistake #8: Forgetting About Lighting
Unless Batman’s in the market for a new lair, dark corners are not your friend. Bright rooms make your home look bigger, so throw back the curtains and shine a light on every nook and cranny! Start by filling lamps and overhead fixtures with 100-watt bulbs. Add a warm and cozy feel with a few candles and a fire in the fireplace.
Mistake #9: Using Listing Photos That Look Bad
These days, buyers cruise for homes from the couch. In fact, 50% of all buyers who purchased a home last year found theirs online.(8) So if your online photos look like you took them with a camera phone in five minutes, you’ll lose buyer interest before they ever pull up to the curb. That’s why it’s important to work with an experienced pro who knows how to make your home shine on camera. You’d be amazed at the difference the correct lighting and a wide-angle lens can make!
Mistake #10: Not Letting Your Agent Handle Showings
Sticking around for showings does nothing but make everyone feel awkward. Leave the questions to the agent and give the buyer room to look around without you breathing down their neck. After all, do you really want to stand in the way of the buyer’s ability to see your house as their dream home?
Sticking around for showings does nothing but make everyone feel awkward. Leave the questions to the agent and give the buyer room to look around without you breathing down their neck.
Mistake #11: Taking a Low Offer Personally
Remember, a buyer’s offer is not a reflection of their opinion of your home or your housekeeping abilities. Hey, they like your home or they wouldn’t make an offer, right? The sale of your home is a business transaction. Even if you’re starting with a low offer, now’s the time to negotiate. Make your counteroffer. If they’re truly interested, the potential buyer will improve their offer.
Mistake #12: Not Firing a Bad Real Estate Agent
A home-selling problem could be due to a dud agent. But a do-nothing won’t give themselves a kick in the pants. That’s your job! You’ll be paying your real estate agent thousands of dollars to sell your home, so make sure they’re worth the money. If your agent doesn’t measure up, find one who does right away!
Article courtesy of daveramsey.com of Ramsey Solutions