Avoid These Costly Mistakes Before Selling a Home
You’ve decided to sell your home. You have advertisements paid for and buyers lined up at your door. You are ready to accept an offer and sell your home today! A piece of cake, right? Not so fast. You could end up losing the sale or even worse, get sued by an angry buyer who misunderstood what was advertised or what was said.
1. Don’t Sell Before You Get Qualified to Buy Your New Home
If you signed a contract to sell your house before you were qualified to buy another, you’re asking for trouble. Here’s why: Your financial circumstances may have changed since your last purchase, and you might not be able to qualify for a loan, or you might not be able to sell at a price that allows you to buy the type of replacement house you want. You could end up renting or buying something that was far from ideal.
Before you decide to sell the house, get pre-approved by a lender you trust and research the housing market in the area where you wish to live so that you have a good idea how much it will take to buy a replacement. Make plans in case you have to move right away.
2. Don’t Guess Your Loan Payoff
Check your mortgage payoff. Call your lender to check the payoff for your current home mortgage. Make sure there are no penalties written in your contract for early payoff. Some lenders have a pre-payment penalty for paying off your loan to soon!
3. Don’t Guess on the Sale Price of Your Home
Determine your home’s fair market value. Real estate agents will usually help you determine value as a courtesy, but you might take it a step further and order a fair market appraisal. Not an appraisal for the purpose of a full loan amount, but an appraisal for the true market value. There is a difference!
Nothing loses potential buyers faster than an overpriced home. Then, when you lower the price it makes it look like you are getting desperate to sell. On the flip side, you don’t want to lose money by selling too cheap. It might get you a fast sale, but you might miss out on several thousands of dollars, too. Learn how to price your house for sale the right way.
4. Don’t Underestimate Your Closing Costs to Sell
Don’t forget to calculate the following items:
•Real estate commission, if you use an agency to sell.
•Advertising costs, signs, other fees, if you plan to sell by owner.
•Attorney, closing agent and other professional fees.
•Excise/Gains tax for the sale, if applicable.
•Prorated costs for your share of annual expenses, such as property taxes, home owner association fees, and utilities.
•Any other fees sometimes paid by the seller (appraisals, inspections, buyer’s closing costs, etc.).
Real estate agents deal with transactions every day and can give you a very close estimate of seller closing costs.
5. Don’t Spend Earnest Money Given to You
Don’t assume the earnest money deposit is yours until the deal has closed and recorded. Also give the buyer a receipt. There are many stories about sellers who spent the deposit money prior to closing. When the transactions didn’t take place for valid reasons — such as financing or repair issues — the buyers had to fight or sue for a refund.
Whenever possible, give the money to your broker or a neutral party who will hold the deposit for you until closing day and make sure your contract dictates what happens to the funds if the transaction doesn’t close.
6. Don’t Let Your Emotions Take Over
Keep a cool head during the entire selling process, especially during and after a home inspection. Be realistic and assume there will be issues. No home is perfect, especially older homes. It’s not unusual to have to take care of some repairs yourself. Don’t let the buyer’s demand to do a small repair could kill the deal.
On the other hand, don’t commit to fixing anything in advance, unless you’re sure you can handle it emotionally and financially. Decide what type of repairs you can realistically tackle, then stick with the decision. Some repairs can get out of hand and end up costing you big money.
7. Don’t Forget to Cancel or Switch Utilities & Insurance
That sounds simple, but you’d be surprised how many people forget to tell utilities they are moving or apply for utility service at their new home. Call the utilities and your insurance company as soon as you have a contract. Find out how many days lead time they need to switch or cancel, then get back with them when you have a firm closing date.
8. Don’t Become Best Friends with the Buyer
It’s great to be friendly, but don’t get into too many long discussions with the buyers, because personality conflicts often cloud judgments.
Remember, this could be their new home. You’re no doubt excited about moving. But buyers will start second guessing–everyone does. A casual statement about “gettin’ out while the gettin’s good” might be enough innocent chatter to kill the deal.
9. Don’t Panic if the Appraisal Comes in Low
At least not at first. There are some things you (and your agent) can do to correct the problem. Study your options.
10. Don’t Go It Alone
Selling a home can be one of the most stressful things in your life. Answering calls, setting appointments, cleaning house, boxing up memories can be overwhelming for most. If you’re working with an agent, it’s the agent’s duty to track many of the day-to-day details that involve the buyers and taking phone calls. The paperwork required in a sale alone is enough to drive anyone over the edge.
11. Don’t Ignore Inspection Requirements
Know what is expected of you and take care of it. For instance, a buyer getting an FHA loan will have an FHA inspector who may require some repairs to process the loan. That’s something you may have to handle yourself if the buyer can’t manage it. Answer inspector questions and provide required paperwork as quickly as possible–selling your home depends on it.
12. Don’t Go to Closing Unprepared
Do not go to closing without your “Estimate” which is provided by your title company. It will outline your costs and will give you a good idea of how much money you will be getting or will need to bring at closing. Also, make certain you speak with your agent and/or title officer to get a more exact figure and to make sure no surprises have risen. Its always a good idea to choose your own title company, and get some quotes since title insurance is a large part of closing costs.
13. Don’t Write an Offer For the Buyer
With the exception of YOUR Agent, do not write an offer for the buyer. The buyer should write the offer themselves or with the help of their agent. Hire your own agent whenever possible to protect your interests. Remember, a listing agent WORKS FOR YOU. So avoid letting your listing agent act as a limited broker who will become neutral to both sides.
14. Don’t Show Your Home Unprepared
Get everything ready in advance, especially “eye-sores” or any repairs that may scare buyers away. Get rid of any water leaks, stains, broken windows/doors, bad smells, etc. You don’t want to lose a potential buyer. I’ve often sold a home to the first buyer on the first day!
15. Don’t Follow Buyers Around When Showing
Whenever possible, don’t be home when showing. If you’re listing with a real estate agent, they’ll often ask you to leave when the house is shown. Why? Because lurking sellers make buyers nervous–they don’t feel comfortable inspecting the house when they feel they are intruding. It’s easier for buyers to visualize the home being theirs when they have a chance to critique and discuss the home among themselves. If you must be home, try to stay out of the way and answer questions only if asked.
Unless there’s a real reason for it, don’t ask your agent to be present for all showings either. That’s the kiss of death for showing activity. Other agents want privacy with their buyers and they don’t usually have time to work around your agent’s schedule.
16. Don’t Waste Your Time With Non-Qualified Buyers
Nothing wastes time worse than showing your home to someone who can’t even buy it! I had a friend who spent two weeks preparing his home for a co-worker who wanted to buy his home. He spent over $1,000 removing a storage shed and met with the guy 2-3 more times discussing the price only to find out 3 weeks later that he could not qualify for a loan!