7 Things Nobody Ever Tells You to Do When Selling Your Home
Whether you’re looking to hire a Realtor or you are thinking of selling your own home, the following are the things you really need to know to get your home sold for the most money, in the least time (that nobody will ever really tell you).
Step One - Think Like a CEO:
The first step in getting the most money in the least time is to get in the right frame of mind to sell a home.
You’re going to be the CEO of a company that is selling a commodity in an existing marketplace where that commodity, even if housing inventory is low, is an extremely common, well understood, item. You are going into a marketplace that has a world of data, background, history on the item you are selling.
One of the most basic mistakes people make is they think of selling their house as “selling their home”. This is understandable as you only have one home. Your home is unique. It is a singular item; in fact, from your perspective it’s the antitheses of a commodity.
But, as anyone selling anything can tell you, looking at the marketplace from your perspective, and not the market’s perspective, is a recipe for disaster. Remember, while you may be selling your home, what people are looking to buy is a house.
Let me say that again: Buyers are not interested in buying your home, they’re interested in buying their home. And as the CEO of a company with a product to sell, your success is going to be in direct proportion to the degree you can get yourself into the shoes of the potential buyer.
Most sellers either don’t do any thinking about the buyer or, worse yet, think the buyer should get themselves into their world. One of the biggest pieces of my job as a Realtor is to consult my clients and provide insights into how buyers think.
Looking at this from a buyer’s perspective you’ll need to remember that you’re in competition with other people selling their houses as well. Even when the market has low inventory, there will be others competing with you for the sale of their homes.
Never have buyers had more choices – the Multiple Listing Service, Zillow Make Me Move, FSBO.com, Craigslist, rentals, lease to own, on and on. Today’s buyer has a world of options and today’s seller has never had more competition for the eyeballs, and wallets, of those potential buyers. The seller who gets their home in front of the most potential buyer is going to win.
At the end of the day, as a CEO of a company selling a commodity, the game is to come up with a plan to attract the right buyer, and have that buyer open their wallet and spend enough to cover the expenses you will incur by selling your house.
Many people get hung up about “being a salesperson”. If that’s the case for you, know that’s why you are hiring a real estate agent who will cover the marketing and sales plan for you.
As the CEO, your job is to stock your business with the right people. You must, must, MUST, as in it’s critical, interview your agent before hiring them. You cannot hire your friend because you like them. Don’t go with your gut.
Find out the track record of that agent. How much over-asking price do the get consistently for selling homes in the area? How many days on market are their homes on market? How does that compare to market average? How many homes do they sell a year? How do they get most of their business?
Remember that you’re in control. You’re the CEO of a company that’s competing in a market place.
Once you’re in that mindset, you’ll be ready to price your home.
Step Two: Price is King
The second step in getting the most amount of money in the least amount of time is simply about price.
No matter what you’re selling, price is one of the, if not THE, most important thing.
You need to figure out from the buyers perspective, how much one will be willing to spend for your house.
What is it worth in the marketplace?
Warning: No matter how tempting do not use Zillow. Zestimates are terribly inaccurate, and are designed to force you to talk to an actual real estate agent. They are neither reliably too high or too low. They are reliably wildly inaccurate. And bad data is worse than no data.
Instead, do your homework.
You should go aheand and attend open houses in your neighborhood before you list your home.
What are other homes in your area listed at? What have they sold for? Remember: people can ask any amount they want for their house – so asking price is not all that useful. Sold price is the standard you must use – what has the marketplace actually paid for houses comparable to yours?
The other way to go about this is to call a few Realtors. Ask for a comparative market analysis.
Almost all of them will provide you a detailed report of what your home is worth. Ask several so you get something to compare. I recommend you do this as part of your interview process in hiring an agent.
This will now give you an idea of what your home is worth.
That said, there is one caveat. At the end of the day, it’s up to the buyer to determine how much they’ll pay for your home. Neither you, nor your Realtor, determine the value of your home. In any marketplace the only one who gets to say is the buyer.
Once you’ve got price figured out, you’ll be ready to move on to the next steps.
Step 2A: Start Low to Go High
So, you’ve tracked the sale prices of homes in your area, and have received a few comparative market analysis of what your home is worth.
Let’s say that the average home in your neighborhood is $500,000 and you determine that people are going to be willing to pay $500,000 for your house.
Most people think that if they want to get to $500,000 they should price their home at $520,000 and let someone come and bargain them down. They don’t want to lose any money and they think if they start at the amount they want to get they will wind up getting less.
It’s a logic for sure but I think it’s a faulty one. It fails to grasp several key aspects of the way people, and therefore the market, behave.
Think about what your end game is. You have a commodity to sell. It is not unique (I know this is killing some of you but it’s the truth!). You are selling something that is a known commodity in a marketplace that is open, established and fairly well ordered.
If your end game is to sell for the most money, in the least time, you are going to have to attract more attention, more potential buyers, than all the other comparable homes around you. You need to STAND OUT from the competition.
How to do that? Well one way is to offer your home at a bargain price. Notice I didn’t say SELL your home at a bargain price, I said OFFER your home at a bargain price.
Why? Because you want to attract the most buyers. People want a bargain! If you price it under the asking price, you’ll have a better chance of receiving multiple offers and selling quickly.
Look at how this plays out:
Let’s say you determine that the market value of your house is $500,000 (and please realize that this determination is more art than science).
Suppose you offer it at $520,000. First of all, every buyer with a max price in their search of $500,000 will not even see your home. You have just eliminated a large segment of potential buyers from every seeing that your home is for sale.
Second, those that do see it have done their homework and they know it isn’t worth $520,000 so some of them decide to hold off on seeing it, or decide not to write an offer right away, in hopes that it will come down in price.
Might you get an offer at $510,000? Sure you might. But you might not, and then your house sits for a week, or two, or three. So you start lowering the price. And now people start wondering what’s wrong with the house that it hasn’t sold yet, so it sits for another week. Now you have another mortgage payment due and you are now asking $500,000 for the house so all those $500,000 price point buyers finally see it – but of course now it looks to them as a “stale” listing and they are going to think you might be desperate and offer below $500,000.
All in all you can see you have started a downward spiral that is likely to end in you getting less than you want.
Now let’s look at pricing it as a bargain. Same house. Same $500,000 market value. But this time we price the house at $483,000.
What happens now? Well, first, all those buyers with a $500,000 max see your house. And they have done their homework and they know it’s a bargain at $483,000 so they rush to see it and they want to get their offers in to try and steal that bargain!
But you don’t take offers as they come. Nope, you tell them you will be collecting offers and looking at them in a week. And everyone who inquires you tell them that there have already been X number of showings and X number of offers and X amount of interest, so on the day of offer review now you have 5, 6, 7 or more people who have submitted offers on your house.
These offers all start at $483,000 but how many of the 7 families that you attracted are willing to go over $483,000? And how many are willing to go over $500,000? Don’t know for sure but my experience is at least one! And that’s all you need.
So now you collect your offers, pull off the highest and best offer and call the other, lower offers, and tell them you really appreciate their offer but it's not the highest or best offer so if they’d like the house they’ll need to come up. And what do you think happens? Some of them will come up and some will drop out.
Just lather, rinse repeat this process until you are left with the highest and best offer.
This plays right into people’s human nature – they are attracted to the bargain and then they get themselves emotionally committed and are willing to spend more than they intended in the auction you created.
I think the best we’ve done is 37% over asking price and we generally average about 5% over list price.
But suppose you don’t get any offers at $483,000? That’s a valid question and I get it all the time. And my answer is this: If you didn’t get $483,000 it’s because the market doesn’t think it’s worth $483,000 and wouldn’t have given you the $520,000 you were going to ask in the first scenario either. It’s a market place. Every home finds it’s right price in the market place. All we are doing is looking to take advantage of human nature in the midst of it.
If you have any further questions about pricing your home, give me a call or shoot me an email.
Step 3: Getting your home ready for sale
Remember, you’re selling a house, not your home.
People don’t want to buy your home. They want a house they can turn into their home. Don’t remind them that this isn’t their home.
Get rid of as much of your personal stuff as you can. If it looks like YOU get it gone. Declutter, work with a stager, get it professionally cleaned, and make it look like it could become the dream home of your future buyer.
People make a snap decision when it comes to buying a home, so make that first impression a good one.
One of the questions I get regularly is whether or not they should re-model. The answer is no. You won’t see a return in your investment. Do not remodel a house that you intend to sell. The most you should do is paint. Create a clean slate so that the future homeowner can make it theirs, but do not remodel.
One of the things I do recommend paying for is a home inspection before putting your home on the market. This will point out any flaws, any damage, and anything the buyer is going to find out about anyway. It gives you a chance to not only get ahead of the game, but this could encourage a potential buyer to waive the inspection contingency which could save you thousands of dollars.
Showing potential buyers the inspection report also lets them know up front what you’ve already repaired and what you don’t intend to repair – it says “This is the house you are buying and we aren’t doing anything else. What you see is what you get.”
Bottom line is you’ll know the condition of your home before putting it on the market, and price the home accordingly, based on its actual condition.
If you have any questions about putting your home on the market, give me a call or shoot me an email.
Part 4: Marketing Your Home
“Marketing your home” includes every aspect of announcing to the market your house is available for purchase.
This generally includes putting “for sale” sign in the yard and putting on the Multiple Listing Service. It could include advertising on Facebook, craigslist, Zillow, Redfin, Trulia and any number of other websites. We also door knock and flyer the neighborhood, phone prospect for buyers and post to the International Multiple Listing Service.
If you’ve already hired a reliable agent with a good track record, they’ll have all of that handled – that’s undoubtedly how they got their track record.
Keep in mind that is you are going the “for sale by owner” route you are going to not only do the same level of marketing that a high performing agent does, if you are expecting to get top dollar, but you also have to fight against the perception that you are selling your house at a “yard sale”.
Basically, a house being sold by owner is viewed by buyers as being sold at a discount – after all the buyer knows you are saving the commission so they expect to get the house at price under market value.
The problem is, obviously, if you’re selling the house on your own you want that money you are saving so there is something of a conflict as both you and the buyer can’t save the same money. Statistically, homes that sell by owner get 17% less than homes sold by Realtors so I am not sure why people do it, but if you are committed to it, good luck.
Ultimately, the one thing you shouldn’t spend marketing money on is for print media, as it’s reserved for agentas looking to promote themselves – seriously, when was the last time you looked in the newspaper to see what homes were for sale? The only reason Realtors still use the paper is to further imprint their brand in your brain – it has nothing to do with the houses they are advertising.
Let’s talk prospecting. This is entirely different than marketing.
Marketing is advertising that has people come to you. Prospecting is you going out and finding people who might be interested in your home. Door knocking in your neighborhood and phoning the homes in a particular area are forms of prospecting. If you want the most money in the least time then you will need to be prospecting.
Go ahead and give your neighbor the opportunity to choose next person that lives next to them.
If you’ve hired an agent, ask them to show you what they do that works.
If you have any questions about marketing or prospecting, give me a call or shoot me an email.
Step 5: Showing your home
You’ve done all the marketing and all the right prospecting and now the goal is to get people into the house to see it.
Open houses are a valuable way for people to see your home. You’ll want to host an open house for the first, Saturday, and Sunday that the house is on the market. This is where your previous prospecting comes in handy! Those same people you spoke to in the area are the same ones that will attend your open house.
The most effective strategy is the one that builds the most excitement and interest.
I generally like to get everything ready and listed by a Thursday – get the sign up, the listing into the MLS and all online portals on Thursday. Then I spend Friday prospecting. I usually will door knock about 100 houses in the neighborhood and call between 200-500 more. If you’d like my scripts and flyers for this give me a call and I'll send them over.
I’ll start my hyper targeted Facebook ads on Thursday as well.
All this promotion is geared toward the weekend open houses. I don’t show anyone the home until Saturday at 1:00.
If you do this right you’ll get a ton of calls and interest from people who want to see it sooner but find some story to use that will keep them out until Saturday. You want as big of a crowd all weekend as possible.
The whole point here is to create a demand – imagine you are a buyer and you are touring the house with 20 other families – it looks like this house is special – it looks like it is in high demand – it looks like they better move quickly if they want it.
That’s exactly what you want.
Assuming you are using a Realtor you won’t be there for this and that’s the best – it’s better for everyone if you don’t meet the buyer.
First of all, buyers tend to feel uncomfortable if the seller is there – nobody likes to say bad things about someone else’s house so you’re being there will only suppress their willingness to discuss the home with each other.
Second, like I’ve said before, nobody wants to buy your home. They want a house they will turn into their home. Your being there just reminds them it’s your home.
And third, whether you all in love with a particular buyer or you really don’t mesh well with a potential buyer, you will wind up with more money by letting the offers speak for themselves.
Finally, make sure everything is clean! First impressions are everything, and nobody wants to tour (or even think about buying) a dirty home.
Be prepared to show all the time during the week it's on the market - another great reason to use a real estate agent as you cannot really get top dollar without getting the most demand and you won't get the most demand if you need to schedule showings around your schedule.
If you have any questions about showing your home, give me a call or shoot me an email.
Step 6: Negotiating the price
YAY! You have an interested buyer!
You’ve done everything up to this point, and now you have offers to negotiate. What’s next?
Layout the conditions to compare offers, and pick your favorite. I use a spreadsheet of 22 different aspects of the offer I want to compare (if you'd like a copy just shoot me an email or call me).
Use this to negotiate with the other potential buyers. You'll now call each buyer that is below the best offer and tell them they are not the highest. Ask if that's their highest and best or f you should wait for another offer from them. From there, they’ll either drop out of the running, or up their offer.
You will repeat this until everyone has told you that you have their highest and best offer.
If negotiating isn’t your forte, hire an agent that will negotiate on your behalf. This is where it’s important that you have representation that has a proven track record of success.
Getting multiple offers is ideal, and even if you have just one offer at full price, that’s great too.
Remember: if the offer is under asking price, you don’t have to sell the house. You'll need a walk-away point so that you don’t find yourself in a weak position.
If you have any questions about negotiating a home sale, give me a call or shoot me an email.
Step 7: Navigating the sale to close
Congrats! You’ve negotiated the sale and have a signed contract. Now what?
The earnest money from the buyer needs to be deposited in the escrow account you set up before you put the house on the market.
The buyers job is to handle the financing, which will between 30-40 days. The only thing for you to do is make sure it goes through the inspection period, which is between 5-10 days. They’ll complete the home inspection, and they’ll have to sign a document that they are willing to take the house as-is.
There may be instances in which the buyer comes back for a second negotiation, which will put you in a weakened position. That’s why I always recommend my clients have the inspection up front, can spot any deficiencies you are going to handle, and let all potential buyers know what deficiencies you will not be handling.
Navigating the contingencies to completion is a crucial part of closing.
This is the time to keep the deal together, making sure that each item is taken care of. As the CEO, you’re in charge of making sure everything gets done. Much of my job, as a Realtor, is to simply keep the deal from falling apart during this phase. If the buyer has their own Realtor you might let them handle it (but of course that has it's own risks as that agent works for the buyer and not you).
If you have any questions about the home selling process, feel free to give me a call or send me an email.