Getting into the sweet spot of the asking price for your home is the short way to success. Having your home sit on the market and getting stale from setting your price too high will set you up for failure, as you will undoubtedly need to do multiple price cuts and accept offers from less-than-stellar buyer prospects.
Here are some common pitfalls to avoid when selling your home:
Pitfall # 1: Using the price you paid for your home as a basis for your asking price
Many homeowners often overshoot the value of their home simply because they think that there is a big profit to be made when selling. The reality is, most buyers don’t really care what you paid for the home and often get turned off when the price is much higher than what the home last sold for. Getting a good deal on a home is at the top of the buyer’s list and hearing from the seller “well I paid X amount X years ago” doesn’t invoke any sympathy.
Pitfall # 2: Expect to be rewarded for all the renovations
So you overhauled the kitchen or put a swimming pool out back, and it cost you a bundle. It’s logical to think that you can pass that entire expense along to buyers who’ll be enjoying the fruits of your labors. Right? Well, not exactly. Remodeling projects offer an average 62% return on investment, according to Remodeling magazine, which is why it’s a good idea to skip major cosmetic remodels right before a sale. This is particularly true if you’ve got wild or exorbitant tastes that buyers might not share.
Pitfall # 3: Leaving too much room to negotiate down
The days of extreme lowball offers have gone the way of fax machines, Atkins diet plans, and jeggings. So pricing your property too high—thinking you’ll leave prospects with plenty of room to negotiate—may quickly scare away legitimate offers. Plus, buyers who search for homes online (translation: pretty much all of them) often screen by price, so they may not even see an overpriced property.
Instead, aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.
Pitfall # 4: Not shopping your competition
While you might assume your home is more or less the same as others on your block, small differences can add up to big discrepancies in price. That extra half-bath in the home next door or that fireplace in your living room should all be taken into account. So spend some time perusing local listings and attending open houses to figure out how your home stacks up.
Pitfall # 5: Basing your home on a neighbor’s asking price
Just because your neighbor is asking for a certain price on his property doesn’t mean he’s going to get it. And it may not be due to delusion, either.
“Your neighbor may not really need to sell and may be less motivated,” says Danielle Moy, a real estate agent with Coldwell Banker in Chicago. “Those properties may sit on the market for a long time.”
A far better benchmark if you want to sell your home is to look at the prices on recently closed sales. These are available through a comparative market analysis from a Realtor® and will give you a better picture of where home values are going in your neighborhood.
Pitfall # 6: Getting emotionally involved
All sellers think their home is worth more than it is. All of them. Just because you raised a beautiful family in your house doesn’t mean potential buyers will see themselves doing the same, or that they’ll pay a premium for the opportunity to do so.
Pitfall # 7: Failing to quickly and decisively reduce
If your home goes several weeks without an offer, it’s likely priced too high, particularly if homes in your area have a relatively short average days on market. Rather than making a small price cut and risking having to do it again in a subsequent month (while your listing gets older and staler), make a large and decisive price cut—$10,000 or more—that will attract buyer attention and show you’re serious about selling.