3 Common Mistakes Homesellers Make
Homes are a wonderful asset. They provide a valuable tax deduction and, assuming the equity isn't extracted through second and third liens, serve as a forced repository of savings. Indeed, if you were looking for reasons to buy a home, as opposed to renting one, these would be it.
But it would be (small-f) foolish to deny that there are downsides. Notably, when it's time to sell, your asset can quickly transform into a burdensome albatross -- particularly when the housing market is struggling, as it still is today.
With this in mind, it's important to do everything in your power to stack the deck in your favor. To help in this regard, I asked two highly recommended real estate agents to share the three most common mistakes they see homesellers make.
1. Pricing it wrong
Both agents I spoke with agreed that the typical seller's biggest mistake boils down to pricing. "This is always at the top of the list when talking about seller mistakes," Dave Ness of Denver's Thrive Real Estate Group told me.
But while Hilary Bourassa of Portland's Oregon First Real Estate says the problem lies in overpricing -- as this can lead to "missing your target market of willing and qualified buyers" -- Ness was careful to point out that the pricing issue "goes both ways."
"Some sellers price their homes too low, and therefore don't maximize the value," says Ness. "Others will price it too high, causing it to sit on the market for months and months."
The solution? "The best way to get an accurate price for your home is to consult a local realtor who knows your market. Be sure to have them take you to at least three homes that are currently on the market in your area so you can assess your competition with your own eyes."
2. Ignoring interest rates
The significance of interest rates was a point Ness brought up in a piece I wrote last week about five things homebuyers should know, but don't. "When you buy a home, you're actually making two purchases," he told me. "You're buying the home, and you're buying the money to buy the home."
Because the interest rate is the price of money, it makes sense that homebuyers care deeply about it. What's less obvious -- though it's simply a corollary of this point -- is that sellers should care about this as well.
"The interest rate is one of the most powerful drivers (or dampeners) of demand in the marketplace," Ness explained. "So, as a seller, you should track the trend of interest rates as best you can, and sell when they are at their lowest. By doing that, you will sell into a buyer pool that has high demand."
3. Getting too emotional
After living in a house for years, and particularly one you raised a family in, it's hard not to get subjectively attached to all of its invisible, intrinsic qualities. But this simply isn't how others see your home.
"Once your house is on the market, it becomes a commodity, which can be a tough pill to swallow," says Bourassa. And this gets truer and truer by the day, as buyers turn to online marketplaces such as Zillow and Trulia to identify prospective targets.
To help, Bourassa encourages sellers to "Try your best to think of your property as a beautiful hotel that you are staying in for a short while. The more that you can detach yourself, the better off you'll be when the time comes to give the keys to the next owner."
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