Six Mistakes DIY Home Sellers Make
Posted on April 18, 2017
Gladys, a retiree, decided to save real estate commissions by selling her home herself. She checked the value of her home, put her home up for sale, and sold it almost immediately.
Is this a success story for DIY? Not exactly.
In fact, Gladys left $50,000 on the table because she failed to identify the sales price accurately. Luckily for Gladys, that was the only mistake she made.
In an industry fraught with details and financial nuances, it pays (literally) to consider using an agent who understands the finer financial points involved in a sale.
Otherwise, you risk making some key financial mistakes.
Mistake No. 1: You assess the property value incorrectly.
For Sale by Owner (FSBO) homeowners often defer to Zillow, an online real estate database, to identify their home’s sale price. But Zillow is not always accurate if your home is other than a suburban cookie-cutter style.
Another source, which Gladys used and which was inaccurate, was the assessed property value. Market value, in fact, drives home sales prices, not the assessed property value.
For a detailed look at the factors that inform a home’s value, take a look at last month’s blog, 3 Mistakes Sellers Make When Estimating Their Home’s Value.
Mistake No. 2: You don’t ask for earnest money.
Gladys also failed to ask for earnest money upfront. Luckily, her sale went through, probably because she valued the property low.
Earnest money is a percent of the purchasing price the buyer pays to the seller upfront. It says, in effect, I intend to buy this house and I’m putting my money where my mouth is.
Should the buyer change her mind, she forfeits that earnest money.
Mistake No. 3: You aren’t prepared to cover any honest errors and omissions.
Real estate transactions have a lot of details, and sometimes, there can be honest mistakes. For instance, the seller may not mention a roof leak that only occurs during heavy rain. Instead, he/she paints the ceiling so the leak is no longer obvious.
That should take care of it, right? Wrong.
In fact, when the next rainy season begins, and the roof leaks, the buyer can sue the seller for false representation.
Part of the overhead of a real estate agency is errors and omissions insurance. It covers honest oversights. Realtors also provide an in-depth report that lets the potential buyers know of the property’s defects and related repairs.
Mistake No. 4: You don’t understand the art of negotiating repairs.
All repairs are negotiable, and in a fast-moving market, a buyer may even agree to buy the home as-is. Underlying this, however, is understanding each party’s priorities.
For instance, the seller may want to remain in the home long enough to be able to purchase another property. The buyer may want to have access to the property prior to finalizing the sale to get contractor bids for repairs and/or improvements.
Experienced agents are adept at the art of the negotiation, and uncovering the underlying motivations that drive those negotiations.
Mistake No. 5: You aren’t prepared emotionally.
As a DIY seller, you’re all alone. There is no one to distance you or temper your emotions. There is also no one to talk things over with, offer advice and guidance, or share lessons learned from similar real estate situations.
There is also no one to act as a practical, objective filter to insure you make no mistakes.
Selling a home is emotional. After all, this is where you may have raised your kids, or planned your retirement, or said farewell to a partner. You’re invested, physically and emotionally.
The problem is that such emotions can cloud practical thinking and your expectations about your home’s value, or the terms of the sale.
Additionally, a lack of knowledge of the real estate process can be costly. For instance, “clean on possession” means more than sweeping the floor before you leave.
Agents take these emotional landmines and related expenses out of the equation.
Mistake No. 6: You don’t vet potential buyers.
An open house is not department store shopping, but Dick and Marian didn’t realize that. People wandered through all day and it wasn’t until the end of the day that Marian discovered one of her designer handbags, worth several thousand dollars, was missing.
Michael and I have gone through FBI background checks. This assures our sellers that we are who we say we are. We also know how to alert our sellers about potential risks, and monitor those risks.
Finally, we have a vetting process to insure that the buyers we put in our cars, and bring into your homes, are not only safe but also legitimate.
As a DIY seller, what is your vetting plan?
To protect our clients’ privacy, anecdotes shared are based on true stories; however, names and specifics have been changed and/or combined into composites.