Purchasing your first home is always an education process – you learn about the local market, mortgages, housing codes and zoning and negotiation. Depending on how quickly you have to move to be able to snap up a home, the purchasing process can be a bit of a whirlwind.
Then, a few years down the road, you’re ready to move to a new home that’s bigger, closer to work or has all the extra features you’ve been dreaming of. And while buying again is a whole re-education process with new market trends and regulations, this time you’ll also need to learn the ins and outs of being a first-time seller.
Again, it’s an education process, which is why you’ll want to enlist the help of a real estate agent you feel comfortable taking advice and instruction from to get your home ready.
While the housing market may appear to be ideal for sellers, with bidding wars common and many markets reporting all-time low inventories of properties on the market, sellers should keep perspective when it comes to sale prices. Just because your home’s value has increased doesn’t mean your home will go for millions when it was worth $700,000 a couple years ago.
To better prepare yourself for putting your property on the market, follow these six do’s and don’ts for first-time home sellers:
Do establish an offer due date. The key to selling your property for the price you want is positioning it so the right buyers get a chance to see it and mull it over.
For that reason, a strategy that’s proven effective, is to price a home slightly below expected value and place the property on the market, but don’t accept bids right away.
Hold off offers for approximately seven days, group show it and do a couple open houses, and that’s the best way to maximize your money.
By waiting, a successful purchase isn’t dependent on who’s able to make an offer first, but who’s serious about purchasing the property and able to put together the most appealing bid, whether that includes a flexible timeline or even an all-cash offer in addition to the right price.
It helps drive your price up and keeps everyone honest.
Don’t price too high from the start. Even in a hot seller’s market, an asking price that’s too high can keep buyers from even looking at your property. Overpricing your home from the get-go will cause the property to lose momentum, which can be the biggest killer for real estate sales success.
You don’t want the market to hesitate.
Of course, real estate agents are aware that it can be nerve-wracking for sellers to concede to a lower asking price than they want to see in the end. This is where hiring a real estate agent you trust is key.
It’s not natural for sellers to accept listing their property for a little bit less, but that whole less-is-more strategy works in today’s market.
Do what’s best in the current market. Your real estate agent will likely have a strategic plan for the sale of your home based on what works best in the market for achieving top dollar. Depending of the right price range for your home, that could mean anything from hosting multiple open houses to presenting it as a pocket listing.
As the market changes, caused by additional inventory or a drop in the number of active buyers, for example, agents and brokerage firms will adjust their strategy to fit demand and buyer preference.
Don’t assume you can only sell in spring. If you’re on a tight moving schedule or you have an eye on buying a home currently on the market, you don’t have to hold off until the traditional selling season in spring and summer.
Especially if you’re in a market where buyers are still outnumbering homes on the market, a sale for the price you want is still feasible.
The buyer-to-new-listing ratio is actually better over wintertime than it is during the spring and summer.
Because markets are strapped for listings particularly in fall and winter, active buyers will be eager to see the newest property for sale. All the energy is about the new listing coming on the market.
Do listen to your agent for home prep. Curb appeal, clutter and room updates are all things most sellers are going to hear about from their real estate agent – and they shouldn’t be taken lightly. Regardless of how fast homes are receiving offers, your home needs to look stellar to get the price you want.
Don’t lead with contingencies. Tight seller’s markets throughout the U.S. mean it may be hard for you to find a new house to buy without getting stuck in a bidding war of your own, so you may need some extra time if your house sells fast.
You should not make the sale contingent on the purchase of a new home for you. It actually devalues the property, and this is the best way to avoid that.
Instead, you can include a 60-day use and occupancy clause. The limited leaseback option gives you the option of an extra 60 days to find a house, and the period also helps avoid any potential problems with the buyer’s mortgage approval.
A buffer of 60 days should be enough to let you find your own next home, or at least establish a plan for other temporary housing while you continue your search.
Director, Luxury Homes Division
Professional Financial Planner
Keller Williams, Santa Barbara