This tells me that many sellers don't know how much their home is worth or even how much they owe. If they don't know these two basic fundamentals, they might not know how to save money when selling. There are many ways to not lose money when selling a home.
A Good Listing Agent Helps Save Money When Home Selling
I can't stress enough how important it is to hire the right listing agent to help you squeeze every dime possible out of selling that home. Sometimes sellers want to hire a cheap agent to save money, and that's often the wrong approach. Say the difference between two agents is 1% of the sales price. If an experienced agent who offers you more marketing and better service charges 1% more than a competitor but brings you, say, 10% more in profit, you're further ahead. You might, in fact, lose money if you hire a cheaper agent who offers you less.
Pricing Your Home Right Can Save Money When Home Selling
The longer your home sits on the market, the less it is worth in a buyer's eyes. Don't try to test the market or you could end up losing money. If you price the home in line with the comparable sales, you will get buyers interested enough to see it. If you don't get them inside the home, they can't buy it. Here are few things that will help you to not lose money:
- Compare the prices of sold homes within the past 3 months with homes presently on the market. Are prices going up or down? Who is your competition? If you were a buyer, which home would you buy? Consider prices buyers see and price your home accordingly, but keep the price in line with the sold sales.
- Ask your bank for a beneficiary demand. This will give you an accurate payoff figure. You can't use the unpaid balance from your mortgage statement because it does not include per diem interest nor a reconveyance fee, wire charges or prepayment penalties. Subtract this amount, plus 30 days of interest, to determine gross equity.
- Go tour open houses in your neighborhood. Look for trends. Note what makes one home more appealing than another. If you can drive desire in a buyer, a buyer will make an emotional decision, not necessarily a practical nor affordable decision. And that can result in more money for you.
Preparing Your Home for Sale is Another Way to Not Lose Money
It might cost a little bit of money to get your home ready for market, but the return should far outweigh the expense. Some recent clients hired professional landscapers and went so far as to reglaze all the tubs in their home. It was spotless from top to bottom and sold over list price in one day.
- You can sell your home on a budget. Set aside an amount you can afford for repairs and for sprucing up the place, and ask your agent to help you determine which to tackle.
- Don't spend a lot of money in the bath. Most buyers poke their heads in and don't spend any time in the bath. But keep the room extremely clean and sparkly. Drop $20 on hand towels and tie ribbons around them. If the room is a dark color, paint it white.
- If you can't afford to hire a home stager, buy books on staging a house and study them from cover to cover. Again, your real estate agent can help you with home staging. The most practical advice is to clear out about 50% of the furniture in every room.
Carefully Examine Fees in the Offer During Negotiations
Buried in the paperwork in your 10- to 20-page offer will be a list of fees the buyers and sellers will pay. In addition, the buyer might ask for additional inspection reports or even a seller concession toward closing costs. All of this is negotiable. If the buyer asks for 3% toward closing costs, consider increasing the sales price to compensate.
- When it comes time to respond to an offer, negotiate the fees. Even if it's customary for the seller to pay certain fees in your area, you can always the ask buyer to pay them in a counter offer.
- If you can get away with it, don't automatically agree to pay for a buyer's home warranty. If a buyer asks for certain reports such as a pest report or a roof inspection, put a cap on the repair costs such a report might obligate you to pay.
- Close closer to the first of the month and not toward the end of the month, and you could save big time on interest charges. FHA loans are excluded from this practice.
Finally, if you can't afford to sell your home, don't. Don't clog the inventory with an overpriced home hoping some fool will pay that amount. Instead, wait for the market to catch up to your dreams before putting your home on the market.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.
