The services of real estate agents can be invaluable, but it seems that most sellers know how to sell their homes. And when it comes to home improvements before putting their houses on the market, agents and sellers mostly agree on what is the best course of action, according to a recent survey conducted by Realtor.com.
The real estate site asked 450 Realtors about what type of projects and investments they would recommend, and what they see as the mistakes that homebuyers make. Realtor.com also asked 1,660 homeowners about the types of improvements that they made or plan to make before selling their home and their budget for those renovations. Generally, the answers were aligned.
Recognizing the Value of Small Renovations
Among Realtors there is almost no doubt how small renovations can affect a sale. Nearly 90 percent believe such improvements would help the house sell faster, while 72 percent believe it would help sellers receive a higher offer. Nevertheless, 70 percent of Realtors think a common mistake of sellers is that they underestimate the power of simple home improvements.
"Home improvements do not have to be expensive, yet most sellers do not realize they will significantly reduce their (houses') time on the market," says Theresa Friend, a Realtor with RE/MAX in Melbourne, Fla.
Despite what Realtors believe, homeowners recognize the value of small improvement projects. Only 30 percent of respondents say they do not plan any improvements. The rest hope their home improvement projects would help sell their home faster or even achieve a higher selling price. Moreover, about 24percent of sellers plan to keep their home improvement budget between $2,000 and $5,000, some 22 percent plan to spend $5,000 to $10,000, and nearly 17percent plan to spend $10,000 to $20,000, according to the survey.
Pitfalls Home Sellers Should Avoid
Home Sellers and Realtors: Where They Agree and Don't About Marketing a Property
Often, homeowners come and go through the garage and rarely use the front door. If you pay little attention to the front door, you probably won't notice the leaves, cobwebs and other gunk building up outside, Edwards says. But you can be sure that buyers will.
"Go stand at your front door and look around," Edwards advises. If you see chipped paint and cobwebs, get a broom and a paint can and freshen the area up.
Your family may love your cooking -- but potential buyers may think it stinks.
Be careful with foods that have particularly strong smells or the scents could drive off would-be bidders on your home. Same goes for potpourri, air fresheners and oil-burning candles.
"Too much of that can be a bad thing," Edwards says. "Try fresh flowers: Their scent is slight and not overwhelming."
Do you have a beautiful collection of artwork or an impressive assortment of porcelain dolls and antique furniture? Put them away.
"It could hurt a buyer's ability to see themselves in the home," Edwards says.
If it's personal to you, it's probably not to the buyer. And if they see something that they would never want in their own home, they probably won't be back to make an offer.
You may think that cramming cabinets full of stuff will convey to the buyer how much storage space can hold. But it could actually give them the opposite impression.
"It looks to the buyer like you actually don't have enough space and are forced to use every bit you have," Edwards says.
You're inadvertently telling the buyer that you're hurting for storage space -- and they might, too.
"Don't say things like, 'Another showing but no buyer,'" Edwards says. "You never know if that [comment] will show up on friends' profiles."
Blowing off steam on social media about your troubled listing gets the word out that you're having a problem selling the home -- and potential buyers will wonder why.
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The Right Home Improvements
Once again, most Realtors -- about 66 percent -- say another common mistake among sellers is not making the right home improvements. Yet the renovations they recommend and the ones sellers are doing are generally the same. The top three areas that house sellers focus the most of their time and budget on are the kitchen, bathrooms and the exterior of the home. These are same three areas of the house that Realtors recommend improving.
When it comes to low-cost projects, the top three areas agents recommend are decluttering, painting and landscaping projects that cost less than $500. "Keep it clean and organized. Paint it. One-hundred dollars of paint can add thousands to your net," emphasizes Roxy Van Bockel, a Realtor with Century 21 in Kona, Hawaii. "Think of it as makeup for your house."
Sellers, it seems, agree wholeheartedly. While painting is the top low-cost project sellers plan, decluttering is a close second and taking care of the exterior is third.
Agents and sellers also generally agree on what is definitely not important. Only about 8 percent of Realtors recommend spending time on the closets, and only about 5 percent recommend spending time on the garage. Similarly, less than 10 percent of sellers spend time on the closets, while less than 12 percent spend time on the garage. In addition, Realtors selected custom closets, hardscaping (landscaping for paved surfaces such as driveways) and installing new windows as the three least important projects, with all three of those projects in the bottom four of seller priorities.
13 Ways to Sell Your Home in 2012
Home Sellers and Realtors: Where They Agree and Don't About Marketing a Property
Real estate experts agree that homes have to be priced to sell. Sellers are frequently tempted to list their house at a price that is based on what they paid for the home or what they hope to gain from their investment. But if homeowners want to sell their home, they should base the price on current market condition. If a price is set too high, it may have to be reduced several times before it is sold.
A real estate agent can help a seller set a price that reflects the market by using the price of "comps," or comparable homes in the area that have sold recently - ideally similar in size, design and acreage.
However, these lists should not be taken at face value, according to Michael Corbett, a real estate and lifestyle expert at Trulia, an online real estate resource. It is important for the comps to be current. Because the market is volatile, only homes that sold less than 60 days ago should be included. The price that foreclosed homes sold for also has to be taken into account because they may be priced well below homes not in foreclosure. Banks will take the prices of these homes into account when they appraise the home for the buyer's mortgage. Finally, the comps should include the final sale prices, and not what homeowners originally asked for their houses. In the current market, home prices can be reduced two or three times before a home is sold.
Selling your home alone as a "for sale by owner" is generally a bad idea, all of the experts we spoke to agreed. According to Trulia's Corbett, who is also the author of three real estate books, only an agent can ensure your home has the maximum exposure to the widest range of potential buyers as quickly as possible. "The longer your house sits on the market unsold, the more it becomes stale and a target for low-ball, bargain hunter buyers," according to Corbett. "Home sellers who do it themselves end up selling for far less," he told 24/7 Wall St. in a phone interview. The data support Corbett's statement. According to the National Association of Realtors 2011 Profile of home buyers and sellers, "the typical FSBO homes sold for $150,000 in 2011 compared to $215,000 among agent-assisted homes sales."
While there are exceptions, hiring the right agent is the first and most important part of the sales process. Of course, finding the best broker is not always easy. Many people rely on friends' recommendations only to end up disappointed with the results. Another approach is to look for brokers with a lot of listings, which may mean that they are successful. But it could also mean that they have so many clients that your home gets lost in the shuffle.
According to all of the experts we spoke to, it is important to do your research. Ask for recommendations from friends, but also go over online agent reviews and recommendations. Cynthia Nowak, a representative for Zillow.com, online housing resource for consumers, added a few pointers. "Make sure to interview at least three agents before making a final decision," she told us in a phone interview. Find out how long they have worked in the area, how many listings they have and how quickly their homes sell. Finally, make sure it is a good fit. While you do not have to be friends with your broker, you have to feel confident that he or she is the best person for you and for the job.
Finding a buyer for your home is crucial, of course, but ensuring a smooth selling process come closing date is no small matter either. Sales can fall apart on closing, and one of the most frequently cited causes is when the buyers are denied a mortgage. This often happens when the sale price - the price the buyer is using to apply for a loan - exceeds the bank's appraisal.
When the value of residential real estate rose consistently from 2000 to 2006, it was rare that mortgages were worth more than the appraisal on a house. With home prices still falling, in some markets by as much as 10% a year, an appraisal can be obsolete in a matter of a few months.
According to Trulia's Corbett, it is not necessary to pay for an appraisal if the agent has reliable comparables and the home is priced to sell. However, if sellers are not confident, or there are no recent comps, they should get an appraisal. Appraisers and banks price more conservatively than they did five years ago. For a few hundred dollars, an appraiser can give you a safe price that will not present a possible hurdle when the buyers try to get a mortgage.
When the market was booming, the rule was that the seller pays 6 percent of the purchase price for broker's fees -- 3 percent to the buyer's broker and 3 percent to the seller's. But in a market where brokers are desperate for business, there's room for negotiation and sellers should try to press for a lower fee. The savings from the lower fees can allow sellers to lower the price of their homes, while still walking away with a profit.
However, real estate experts warn that pressing brokers for a fee that is too low may hurt the seller's chances. Trulia's real estate expert Corbett suggests caution when it comes to lowering the buyer's agent fees. Sellers can ask their brokers for a discount in their fees, but they should leave the buyer's agent fee untouched. While you can provide other incentives to your broker, you want the buying agent to have an incentive to show your home over others.
To offer your broker an incentive, set a time limit on the sale of the home - say, two months. If the house is sold within 5 percent of the asking price during that period, offer the broker a lump sum bonus.
The environmentally friendly home may not appeal to all buyers, but there is a growing portion of the population that is conscious of energy consumption and the use of fossil fuels. Recycled bamboo flooring might not be a selling-point to everyone, but having a home that conserves energy -- or even produces it - will not turn off buyers.
Jennifer DuBois, a director at Realtor.com, recommends that sellers point out features that are green and could save buyers money. People shy away from expensive heating system for example, but appreciate the savings they can generate over regular systems, especially if they did not have to install them. Does the home include new energy-efficient windows? Are the appliances and HVAC system "green?" If so, make sure the buyer knows too.
Some cities and states offer tax incentives for installing and producing solar and wind energy. If you do not advertise these opportunities to prospective buyers, they might not know they are available.
If your house is not selling, research what the market thinks of it. A spokesperson for S&P advises to take it off the market and find out whether any major flaws pushed buyers away. Fix the flaw, if you can, and relist it. Your broker can talk to potential buyers who turned the house down. If there is a consensus among buyers about why the home was not attractive, a specific change can mean the difference between a sale and a home that sits on the market for months after a price reduction or a relisting. Buyers who rejected your house may be the best "focus group" you have to find out what appropriate adjustments you need to make.
Web appeal is the new curb appeal, according to Cynthia Nowak of Zillow.com. Before house hunting became an online affair, a manicured lawn and a freshly painted fence was the best way to attract homebuyers and make your house sell. Today, it is just as important that your home looks good online. And looking good online means having good-looking photos.
All of the experts agreed that photos are critical to capturing buyers' interest. In March, Realtor.com had more than 370 million pageviews in searches and real estate listings. Meanwhile, on the site's mobile app alone, which it counts separately, over 272 million photos were viewed last month. That's more than 6,300 photos viewed per minute. Like other online sites, Realtor allows sellers to post as many as 25 photos per listing. According to director Jennifer DuBois, a typical buyer will look at as many photos as are posted.
It's not uncommon for sellers to hire professional photographers. While it could cost several hundred dollars, Corbett of Trulia warns, "if your photos are bad, your buyer will move on to the next house with the click of a mouse." With the abundance of listings, it is that easy for buyers to pass over yours if it is not attractive enough to capture their attention.
A well-maintained home that is priced right will sell quickly, says DuBois at Realtor.com. While a seller should be cautious about installing new granite countertops or bathroom tiles, they should take fixes seriously.
Corbett recommends making as many obvious repairs as practical. Water stains, doors that creak and windows that do not shut should be fixed. They distract potential buyers from the best parts of your home. If they are not fixed before the sale, buyers' estimates for the cost of the fixes likely will be far more than their real cost, forcing a lower sale price.
DuBois warns that the stricter lending environment means that buyers have less money for renovation. As a result, buyers want homes to be move-in ready. While not always cheap, new carpets, new floors and a fresh coat of paint may be the difference between selling the home or not.
All of our experts encourage sellers to clean house, which means removing personal items and personal tastes. The more neutral the home is the more likely a buyer can picture themselves in the home. Family photos remind a buyer that you are still living there. Antique hutches that display collectibles and keepsakes should be stored. Large pieces of furniture make rooms feel smaller, and collectibles do not hold the same memories for everyone.
The same goes for your faith and your politics. Corbett recommends removing anything that is polarizing. He warns that buyers have "strong emotional reactions to religious artifacts and political mementos. Don't give your buyer a chance to prejudge your home because of your beliefs."
And take the pets to the park. All of the experts agree that pets should go on a holiday. Just like family photos and keepsakes, animals remind buyers they are in your home. Even worse, pets could ruin a sale with a perfect buyer if they have allergies. Be sure to get rid of all traces of fluffy. Similarly, be sure to air the house to allow buyers a clean and fresh environment.
Despite the similar thought processes, Realtors and sellers had a few disagreements. The agents generally agree that home improvements should be done close to selling time. About 25 percent of Realtors recommend making improvements less than a month before the house goes on the market, while about 56 percent say touch-ups should start one to three months before the house hits the market. However, nearly 30 percent of homeowners are planning to do the improvements more than a year before the house goes on the market.
There are some small low-cost projects that Realtors recommend doing that sellers are not prioritizing. About 72 percent of Realtors recommend steam cleaning the carpet, but only about 30 percent of soon-to-be sellers have it in the works. Same goes for a professional house clean -- only about 20 percent of sellers plan to have this done despite more than half (53 percent) of Realtors recommending it.
Finally, agents and sellers differ on whether the front yard or backyard is more important to spruce up. Far more Realtors recommend spending time on the front yard compared to the back (64 percent to 31 percent). However, more sellers are focusing on the backyard compared to the front (33 percent to 28 percent).
"Buyers get a good feeling within the first 30 seconds, that means from the curb," says Ron Bentley, principal broker for HOMEnet Real Estate in Salt Lake City. "Front yard is critical."
The heated debate over real estate agents' commissions and the industry as a whole will no doubt continue. While a good agent is certainly worth his or her fee, it seems that in many areas sellers already know what agents are going to advise. So among the most important things sellers can do, as agents themselves recommend, is choose an agent they are comfortable with and that they feel gives them that extra edge. In this market, every bit counts.
This place is so shocking, you can't stop looking at it -- and that's exactly the point. In exchange for turning your home into a billboard for the company, marketing firm Brainiacs from Mars will pay your mortgage. Looks like the owners of this home took the deal. Maybe the place looks better from Mars.