In some cases, homes are selling for more than asking price. After years of a sluggish buyers' market, many real estate agents are trying to get would-be sellers to list their homes now.
It seems like a great time to sell. But how can you know for sure if it's a great time for you to sell?
If you experience buyer's remorse, you can usually get out of a contract through contingencies or other out clauses. If you start to feel seller's remorse, you don't have that luxury. So you must be certain you're ready to sell before you sign the contract -or, better yet, before you list the property.
To avoid seller's remorse, and to make the sales process go as smoothly as possible, keep these strategies in mind.
Develop a solid pricing strategy
Agents often encourage their sellers to list their homes competitively, so that the market receives it well. Sometimes sellers see that as the agent pushing for a quick sale. But often, it's truly the agent looking out for the seller's best interests.
Whatever the scenario, pricing is the most important discussion a seller can have with an agent. When there's a disconnect on price, raise it as a red flag from the get-go. If you find yourself resisting your agent's suggested price, talk through the options or get a second opinion.
You might try starting out with a higher number. This might be against your agent's better judgment, but it can be worth a shot. If there's no activity in the first few weeks, you can always reduce the price.
Alternatively, sellers who increase their asking price after the home has gone on the market are often seen as frenetic, lacking a strategy and having a clear disconnect with their agent.
Bottom line: If you haven't had a serious pricing discussion with your agent or you aren't sold on your list price, don't go on the market.
Have a clear post-sale plan
The sellers of an Essex, CT home heard the market there was hot and that they could get the price they had tried but failed to get just six months earlier. They'd already done the appropriate clearing out, painting, and fix-it work, and even had the property inspected. So, for them, going on the market was easy.
However, they didn't expect to receive three offers, all of them above the asking price, within hours of their first open house. The buyers they chose wanted to close in 30 days.
The problem: The sellers had nowhere to go. They didn't have a plan. Like many sellers today, they heard the market was healthy again. And after dreaming for years of finally getting what their home is worth, they jumped in while "the getting is good" without thinking it all the way through.
Be ready to negotiate with buyers
Feeling strong and in the driver's seat, the Essex homeowners decided to wait and see if they could get terms that would suit them better. The sellers' listing agent negotiated a quick close with a 30-day-free rent-back and another 30 days rent, in which the sellers would pay the new buyer's PITI (Principal, Interest, Taxes and Insurance). It was a win-win for all.
While this couple in Essex had the luxury of a competitive bidding situation, it may not always be the case. That's why having a clear plan in place for all conceivable outcomes and a willingness to negotiate can help you get through the sale process successfully.
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Listing your home? How to avoid seller's remorse
1. Cut Out the Middleman
Real estate agents typically charge a 5 percent to 6 percent commission on a home sale — which is split in half if both the buyer and seller have agents, McGillivray said. If you sell your home on your own, you will save at least the 2.5 percent to 3 percent that the seller’s agent would have charged. If you sell your home for $350,000, you will save more than $8,000 by cutting out the middleman.
Additionally, you can save the full 5 percent to 6 percent if a buyer comes to you without representation. Without agents, you’ll save more than $16,000 on a $350,000 home sale, McGillivray said.
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2. Get Your Home Listed on the MLS
“It’s tremendously important that you get on a platform that gives you exposure to buyers and agents,” McGillivray said. That platform is the Multiple Listing Service, or MLS, which is the database of homes for sale in a market. Homebuyers can see properties on the MLS through websites such as Realtor.com, Zillow.com and Trulia.com.
In the past, only real estate agents could have homes listed through this service. However, today's homeowners can list their own properties on the MLS by paying a flat fee to various sites. McGillivray recommends using Owners.com, which places homes on the MLS and gives homeowners access to advisors who can help with the sales process, including the closing. The basic MLS listing package is $395 for six months.
If you don’t get your home listed on the MLS, you’ll have to rely on classified newspaper ads, online sources such as Craigslist.org or luck to find a buyer.
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3. Use Professional Signage
Listing your house on the MLS is the best way to get your property noticed by potential buyers. However, you also want to market your home well. According to McGillivray, posting a skimpy “For Sale” sign with a spot to add a phone number in your yard is “a recipe for disaster."
Instead, the real estate pro recommends having a sign professionally made. Online services such as Owners.com and ForSaleByOwner.com provide each home seller with a sturdy sign as part of the MLS listing package.
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4. Get an Appraisal
McGillivray suggests hiring an appraiser to evaluate your home before putting it on the market. Doing this will help you avoid any surprises when the buyer’s lender has the house appraised to determine how much to loan. Appraisers typically charge $300 to $400, according to Realtor.com, and the price is well worth it.
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5. Don't Overprice Your Home
One of the biggest mistakes home sellers make is overpricing their homes. “Everybody thinks their house is worth more than it is,” McGillivray said. “Your house is only worth what someone is willing to pay for it.”
If you set the price too high, you won’t get enough traffic. On the other hand, listing your house at a realistic value means you will get more offers sooner, according to McGillivray. Ultimately, pricing your home accurately will help you sell for a better rate.
In addition to securing an appraisal, you can take advantage of information that’s available for free from online real estate listing sites. Check the list prices of comparable homes in your area and see how long they’ve been on the market. Then, consider whether your home offers more or fewer amenities than competing properties.
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6. Look for Anchor Properties in Your Neighborhood
When someone posts a house for sale and lists it too high, the home becomes what McGillivray calls an anchor property. Sellers will assume that other properties in the neighborhood are better deals, if they’re listed for less.
Not only can an anchor property drive more traffic to your home, but it can also allow you to list your home at a higher price than it is actually worth. For example, if your neighbor puts his house up for sale at $600,000, and you know your property is worth $525,000, you can list it for more because it will still look like a deal next to your neighbor’s house.
So, look for overpriced homes in your area and then list your house for less.
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7. Depersonalize Your Home
Before you open your doors to potential buyers, you need to depersonalize your home so someone can see himself or herself living there. For best results, remove those family photos and collectibles that might be dear to you but a turnoff to others.
“You don’t want a picture of you and your dog wearing a tuxedo hanging on the wall,” said McGillivray, who actually saw this image in a house that was for sale. “Strip it down and make it appeal to 90 percent of the population, 90 percent of the time."
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8. Make Minor Repairs
You don’t have to spend a lot of money to remodel your home before you sell. However, you should at least clean the space thoroughly, make small repairs, replace worn carpets and add a fresh coat of paint to walls.
You want people to walk into a house that looks well maintained. If buyers see that you can’t take care of minor details, they’re going to assume you’ve let bigger problems escape your attention, too, McGillivray said.
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9. Improve Curb Appeal
McGillivray revealed that some of the best deals he's found were properties that looked bad from the road. “People do judge a book by the cover when it comes to real estate,” he said.
By the time potential buyers reach your front door, they’ve already formed opinions about your house. For best results, spend a day — and a few hundred dollars — painting your front door, hanging new house numbers and installing updated fixtures, he said. Additionally, sellers should clean up their yards by pulling weeds and trimming shrubs.
You can stage your house on your own to make it look more appealing by searching for tips on sites such as HGTV.com. However, if you’re in a competitive housing market or selling a high-end property, you should consider spending some money to have your home staged by experts.
Professional stagers have been trained to make houses appeal to buyers by removing clutter, depersonalizing rooms, rearranging furniture and creating a "model home" feel. You can use the savings on real estate commissions to help pay for a stager so your home sells for more, faster.
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11. Disclose Problems to Potential Buyers
Most states require sellers to disclose all of the home problems they're aware of. These issues include past problems, like plumbing leaks that resulted in mold growth.
Don’t try to hide anything, or you could face a lawsuit if an issue is detected after the home is sold.
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12. Be Ready to Negotiate
A home's list price is a suggestion, not a rule. Said McGillivray, you shouldn’t be afraid to negotiate with buyers when they make offers on your home.
Because real estate negotiations are conducted on paper, sellers don't have to worry about confronting buyers directly. You can also negotiate on both price and terms. If you don’t want to come down much in your asking price, be flexible with your terms, such as the closing date or appliances you are willing to leave in the home for the new owner.
Owners.com and other listing services of for-sale-by-owner properties connect home sellers with licensed real estate agents who can guide them through the negotiation process.
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13. Don't Make a Misstep at Closing
When you and your buyer are ready to sign on the dotted line, a mortgage lender will typically be involved. He or she will likely provide you with an escrow officer to walk you through the final steps of your home sale.
However, McGillivray recommends taking the time to understand the legal requirements of your home sale. You might want to hire a real estate attorney or, if you used a flat-fee listing service, request assistance for your closing.
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When in doubt, stay out
Home selling is happening quickly in many parts of the country. While this is great news for the housing market and most homeowners, sellers need to plan for the sale months in advance. Hooking up with a good local agent early on in the process and staying engaged is the best way to approach this new market.
If you have any doubts about your physical or financial situation, hold off on listing. Watch from the sidelines, and only jump in when you're truly ready. The biggest mistake a seller can make is to go on the market and fail to sell - at a time when everything else is selling.