There is a wide variety of information available today about selling your home. From the internet to TV shows, the home selling process has been broken down into easily digestible chunks that unfortunately do not paint an accurate picture of the intricacies involved. This has led to numerous misconceptions about home selling. I sat down with Realtors Peggy Orf and Narce Peña to discuss 5 common misconceptions that they encounter on a regular basis.
Misconception: It's better to set the asking price as high as possible.
Many sellers think that pricing their home as high as possible will give them room to negotiate and will net them a higher sold price in the long run. The truth is that incorrect pricing will lead to longer days on market and, most likely, lower offers overall. When buyers and their agents are looking at homes, they will look at the home's price in comparison to others in the area. If your home is priced significantly higher, they are more likely to pass yours up in favor of more reasonably priced homes. Remember, we are emotionally attached to our homes, but to a buyer, it is just a house. Overpricing indicates to them you aren't serious about selling yet or will be unreasonable in the negotiation process, it does not say that your home is fantastic and worth a higher price point.
Overpricing will also cause your house to sit longer on the market. This, in turn, will lead to low ball offers by buyers who assume you are nearing desperation and will accept them. It is best to have a discussion with your Realtor about the current market value of your home and price competitively. You will be more likely to receive a good offer and will not scare away potential buyers with sticker shock. "Pricing the home right, to begin with, will actually sell the house faster and ensure an appraisal," explained Peggy Orf, Realtor. "I use the absorption rate to discuss the market and how important it is that you look at your particular market and price it competitively to sell quickly."
Misconception: I will make more money if I sell my home myself, rather than use a Realtor.
In this age of DIY, it can be tempting to think you can save money by selling your home yourself. But, as with many other DIY projects, it's better just to hire a professional. Hiring a Realtor to represent you and list your home has numerous benefits. The first benefit is exposure. Realtors have a built-in network through their brokerage to offer maximum visibility to buyers. They are directly connected to all other Realtors in your area through their local Multiple Listing Service (MLS) which allows them to search all available homes at once. They will also have the ability to give your home an online presence across multiple sites and platforms that is vital to reaching the modern home searcher, in addition to having a comprehensive plan in place as to how to market your home for best results. Without a Realtor, all of this exposure will be very time consuming and expensive as you will have to set up each individually. Many "for sale by owner" (FSBO) properties end up languishing on the market for a long time due to lack of exposure.
Secondly, selling a home is a complicated legal process and having an experienced and educated partner in the transaction will ensure that you are not making any mistakes that could cost you in the long run. From listing to closing, a Realtor will be able to guide you through everything from the paperwork to option period to the closing process, answering questions and removing obstacles along the way to get you to a successful sale. Going it alone will mean a significant amount of research on your part and will still open you up to the threat of possible future litigation due to mistakes you didn't even know you were making. Rather than taking on all that headache, and possible heartache, hire a Realtor and let them do the work for you.
Misconception: Realtor commissions have to be paid upfront
There are a number of misconceptions around Realtor commissions, the most prevalent of which is the belief that Realtor commissions must be paid up front. This is not the case. A Realtor's commission, whether sellers or buyers agent, is paid out of the sale of the home once the transaction is closed and funded. The total commission will be split between the selling and buying brokerages through a separate written agreement outside of the purchase contract and is typically settled at closing and funding by the title company. It's also important to note that most agents, at their own expense, typically pay all marketing costs and are reimbursed through their commission when earned. When you are looking to hire a Realtor, be sure to hire one that can properly budget for and execute their marketing plan.
Misconception: My home is fine the way it is, I don't need to make adjustments
As mentioned earlier, almost every seller has an emotional attachment to the home they are selling. It has been the center of life for a number of years and is most likely filled with mementos and personal items. While these items may make your home feel like home, they also can hinder potential buyers from seeing it as their home. The best course of action is to talk with your Realtor about staging your home for maximum effect. Home staging involves removing many personal effects such as family photos, collections and knick knacks to create a "blank slate" atmosphere that buyers can project their own life onto. It can also involve rearranging or removing furniture to show off all assets of your home to their best advantage. While these adjustments might make your house feel less homey, they will help to sell it faster so you can start setting up your new home just the way you like it.
Misconception: I know how much my home is worth because I looked it up online
There are quite a few free home valuation tools online today. While it can be tempting to play with them to see what your home might be worth, take each home valuation with a measure of doubt. Often times, these tools utilize outdated data, or have access to limited data due to your state's Real Estate disclosure laws. This can lead to home valuations that are wildly off the mark. As Narce Peña, Realtor, explained people who only use online home valuation tools "face being disappointed as those tools may not be directly from a reliable source. The MLS is the best source. It is the same source appraisers use to gather information to determine the appraised value." If you want to know your home's true market value, contact a Realtor to do a Comparative Market Analysis (CMA). Realtors have access to all of the correct data, including potentially restricted sold data, and will be up to date on the current real estate market, resulting in an accurate home valuation.
Selling your home is a complicated process, but it doesn't have to be confusing or frustrating. With the right advocate at your side, selling your home can be both pleasant and highly successful. A licensed Realtor will take on the hardest parts of the process for you and help you through each step. They are there to represent you and advocate for you. Each Realtor has a different style and method, so take time to choose a Realtor that best fits your personality and needs. With the right Realtor, you will be on your way to enjoying a new home in no time. If you do not have a Realtor yet, we have many seasoned agents who would love to assist you.