9 Factors That Can Torpedo Your Home's Selling Price
When you put your house on the market, it goes without saying that you want the best price when it sells.
But many sellers shoot themselves in the foot, doing things that will torpedo their home's selling price and net them less money. Plus, there are certain home and neighborhood characteristics that all the staging in the world can't overcome, once again dragging down the price.
In a really hot market, or in certain desirable areas, as Redfin Chief Economist Nela Richardson puts it, "any house standing upright can get a bid." But she also notes that Redfin's new Housing Demand Index shows that home sales are slowing.
%VIRTUAL-pullquote-What we've seen is that the market has changed dramatically in the last two months. Prices are slowing considerably.%"What we've seen is that the market has changed dramatically in the last two months," Richardson says. "Prices are slowing considerably."
While inventory of homes for sale is still low and many buyers are still looking for homes, they're not willing to pay just any price. "They're making more conservative decisions," Richardson says. "What our agents are telling a lot of buyers is just wait."
The latest Case-Shiller index found that housing price growth is slowing, with prices up 4.4 percent in May 2015 compared to a year ago. That's essentially flat compared with April's 4.3 percent annual increase, and once season adjustments were factored in, the national index showed no change from April to May.
"Sellers are still firmly in control, but they're not getting a free pass," Richardson says.
Here are nine factors that can keep you from getting the best price for your home.
Overpricing. By far, the biggest mistake sellers make is to set their home price too high, thinking would-be buyers will offer a lower price and they can use that as the starting point for negotiations. "If you misprice it in the beginning, it can tend to languish, and you may end up selling it for less than you would have if you had priced it correctly to begin with," says Kevin Brown Jr., president of Praedium Real Estate Services in Pittsburgh and a regional director of the National Association of Exclusive Buyer Agents. Houses that are overpriced tend to stay on the market longer, which makes buyers suspicious that there is something wrong with the home. "Right now, people are expecting they will receive multiple offers, and their house will sell for over asking price, no matter what," says Sabrina Booth, an agent with Redfin in Seattle. "They tend to shy away from houses that come on the market overpriced. We're seeing less competition at this time."
Bad pictures. Nearly all home shoppers these days start their searches online, and they decide which homes they want to see based on the photos posted with the listing. Not surprisingly, blurry cellphone shots don't draw much interest. "People just skip over it," says Matt Francis, branch manager of Better Homes and Gardens Mason-McDuffie Real Estate in the San Francisco Bay Area. "The millennial buyer is not interested in what it can become."
Difficulty showing the house. In these days of instant gratification, home shoppers want to see homes as soon as possible and at their convenience. If you make your home difficult to show, fewer prospects will see it, and it can take you longer to find a buyer. "If you don't show it, you can't sell it," Francis says.
Messy neighbors. The proverbial neighbors with the unkempt lawn, couch on the porch and junk cars in the yard do indeed bring down property values. If your neighbors' houses and yards look bad, home shoppers are likely to put a lower value on your home. You could try to reason with these neighbors and ask them to clean up, or even do the work for them. But your success rate will vary by neighbor, and some may be opposed.
In bad company. If the most recent sales of homes like yours in your neighborhood have been at low prices, that is likely to hurt the price of your home. That's because real estate agents and appraisers base their view of home value on the sales of comparable homes nearby.
Bad location. If your house is next to an apartment building, a busy street, a school or otherwise is in an area that is considered less desirable, it will sell for less than a comparable home in a quieter area. In family areas, being in a bad school district also hurts home values significantly. In cities that rely heavily on mass transit, being too far from transit stops may be a detriment. If your home is near a noisy road, you may also have trouble getting full value for it.
Compartmentalized rooms or a dark first floor. "People these days want bright, airy, open," Francis says. If your home is dark or has a lot of small rooms rather than a larger open space, that makes it less desirable and therefore likely to sell at a lower price.
Structural defects. No amount of granite or stainless steel can compensate for structural issues such as foundation problems. Buyers are wary of homes that need these kinds of repairs because it's difficult to estimate how much they will really cost to solve.
Dirt and grime. If your house is messy, your yard is unkempt and the windows are grimy, it isn't going to put its best foot forward. Most buyers will have a hard time getting past that initial negative first impression, and failing to clean up your home could cost you a lot of money.