Common Seller Mistakes
When you make the decision to sell your home and begin doing your research on the market to get an idea of what it's worth, it's very easy (and very human!) to bring your own biases to the results you find. Your home is the way it is because of your taste, your investment, your care. It's "special" to you. The challenge, however, is to understand that the reasons a seller may believe their home is worth what they think it's worth generally have nothing to do with the marketplace. Unfortunately, since it's the buyers who must bring money to the table in order for a sale to take place, it's important to consider market realities when preparing to put your home into that arena. Here are some of the more common mistakes home sellers typically make when preparing to put their home up for sale:
Mistake #1 -- Setting the WRONG Price for your home
Of course every seller wants to get the best price they can for their home! The challenge is to price the home high enough to enable that to happen, yet low enough so as not to scare away the very best prospects. Many sellers believe that if they price their home particularly high, they "can always come down." The truth is you can only do that if you have someone to talk to. If no buyers make an offer, you never get that chance. Pricing a home too high tends to lead buyers into expecting more out of the home than it has to offer. Overpricing also generally leads to longer market time, and longer market time generally leads to much lower final sales price.
Mistake #2 -- An "Appraisal" (even a recent one) is Not "Market Value"
A very common misperception is that an appraisal (for example, done to refinance or get an equity loan) represents "market value". In reality, the two are very different. In a refinance or equity line/loan, there is no change in ownership of the home. The lender ordering the appraisal has a vested interest in getting a "value" high enough to substantiate proceeding with the loan, which, of course, is how they will get their money. Bear in mind that the appraiser in this situation knows before they even look at the house what "value" this financial transaction would require. In other words, such an appraisal may well be "artificially" high. There are also circumstances in which it could be artificially low.
Market Value is something quite different. It's what ready, willing, and able buyers active in the marketplace determine the property to be worth. If those buyers are cash buyers, that would be the end of the discussion. However, since most buyers, having made their determination of market value, must then get a loan, another element gets added to that equation...THEIR lender's appraisal. That lender, though motivated to want to make the loan, must also assess the overall risk of both the property and the borrower. Your best bet is to ask your realtor for the most recent information regarding property sales in your community. This will give you an up-to-date and factually accurate estimate of your property value.
Mistake #3 -- Believing that What a Seller "Needs" Has Anything to do With What a Buyer will Pay
A seller's desire to ask a certain price for their home is generally rooted in this misconception...the notion that what a seller "needs" has anything whatever to do with the market value of a home. So, for the record, Market Value is NOT determined by:
- How much the seller originally paid of the home
- How much the seller owes on the home (the recent glut in "short sale" inventory can certainly attest to that!)
- How much the seller paid for decorating, upgrades, improvements, etc
- How much the seller "needs" in order to be able to make their next purchase
The best way to determine current market value of a home is to have a Comparative Market Analysis (CMA) done by a quality real estate agent. They can provide you with detailed information on similar homes to yours that have recently sold, comparable homes that are currently on the market, and similar homes that have gone off the market without getting a contract. Their analysis will give you a very good idea as to your home's current market value. To receive the full report simply fill in your email address and it will be sent to you immediately!!