7 Myths You Should Know About Before You Sell Your Next Home!
There is a lot of talk about the real estate market today.
A lot of people are saying that the housing market recovery is moving full steam ahead.
Others warn that we're getting into another housing bubble and that could lead to another disaster.
Still others say this market is being driven by investors and another housing slowdown is imminent.
It's clear much remains to be seen, but many MYTHS have emerged and they aren't necessarily true.
This is my first of 3 articles in which I will present common seller, buyer and lending myths, which are prevalent in the marketplace.
Many of these will surely hit home, however, I will help you navigate through the tricky nuances of what you should know to successfully navigate our current Real Estate market.
Ready?? Here we go! Seller Myth #1 - "I can always reduce my price later" - Many sellers often price their home high for a few weeks just to test the market.
However, buyers shop by putting homes in a "Good Deal" basket or a "Bad Deal" basket.
So if you happen to price your home high, causing buyers to put you in a "Bad Deal" basket, they will rarely come back to call on your sign the 2nd time to find out if you reduced your price.
Remember, that even if you end up in the "Good Deal" basket, buyers are only interested in the very best value, the #1 home in that "Good Deal" basket.
So it's not only important to be realistic about your price, condition, presentation and access will assure you the most offers, which is really what you want, right? Seller Myth #2 - "I put $15,000 in upgrades so I should be able to ask $15,000 more for my home" - I think this Myth is made popular by all the renovation shows on TV.
Remember, that a home is expected to have exterior as well as interior appeal in order to compete with other homes in your price range.
Just because you added granite countertops or a new roof doesn't mean you'll be able to add the cost of your improvements to the selling price of the home.
The truth is some improvements only increase the appeal of the home.
In other words, buyers will like your home because of the upgrade, but they won't pay any more for your house.
Other improvements that fall into the "repair" category, like roofs, windows, worn carpeting, need to be done just so your home qualifies for a loan so a buyer can buy it.
Finally some improvements will increase the value of your home, but before you sink $15,000 into your home improvements, you may want to talk to an experienced agent to determine what improvements will increase your price and what improvements won't.
Seller Myth #3 - "My home price shows at $350,000 in XYZ.
com website.
If it's there, it's obviously true" - Many online sites can give you a general indication of what your home may be worth.
But if you really want to know what your home is truly worth, you probably won't get that from the tax assessment or some general website.
You should get an official Broker Price Opinion on your home, which will include adjustments for location, condition and what other homes in your area have just sold for.
If you are interested in having a Broker Price Opinion, call Sheri Drake at 951-544-7285.
Seller Myth #4 - "The first offer is never the best offer" - The reality of selling a home is that you need to consider the buyers price, terms and ability to close the transaction.
Banks have learned this the hard way and because they want to sell homes to families who occupy the homes, banks have been plagued by buyers who outbid each other simply to wipe out the competition.
Because these buyers are typically getting a loan, the amount they can pay is largely dependent on what their lender's appraiser says the home is worth.
So although the buyer agreed to pay $30,000 over full price, when the low appraisal comes in, a request for a price reduction to the "appraised value" is sure to follow.
Obviously if an appraiser said this is all the home is worth, and they are not part of the transaction, then it must be true.
So take a minute to think about how this may affect your ability to sell the next time you get a buyer willing to pay you over full price if they barely have enough money to close.
You'll see that what they offered, and what they can actually buy the home for may be two different prices altogether.
Seller Myth #5 - "This is a great / bad time to sell" - This really depends on your personal situation.
Here are two examples.
Seller #1 just found out they got a promotion increasing their pay by $50,000 a year and need to move to Austin to take advantage of this wonderful opportunity.
They bought their home at a really low price three years ago, and they'll be able to buy a home in Austin twice the size of what they currently live in.
The answer is YES, it's the RIGHT TIME TO MOVE.
Seller #2 - They bought a home five years ago, have very little equity, but need a bigger home in the area.
For this seller, it may not be the best time to move, however, if they can come up with the additional cash they need to buy the bigger home, today's super low interest rates should entice them to make the move.
So again, it depends on your individual situation.
Seller Myth #6 - "Foreclosures and Short Sales are all great deals" - The reality is that banks also keep up with market values, and because they sell so many homes, they may understand your local market much better than you think.
Freddie Mac and Fannie Mae routinely price their homes 5-10% above the Broker Price Opinion in this market.
Most short sale banks are requiring updated BPOs nearly every month, just to keep up with the month to month changes in the market.
So if you are listening to those who tell you "I got a great deal on a repo", be sure to ask them when they bought it.
Today, the banks are trying to get every penny they can from these properties.
Seller Myth #7 - "The less commission you pay to sell, the more you'll make" - Many sellers are drawn by flat commissions, heavily discounted commissions or even selling on their own to not pay any commission.
Getting a buyer in this market may seem easy, so why pay more, right?? It should be as easy as Eeny, Meeny, Miny, Moe!! Finding a buyer is many times the easiest part of your transaction.
Your goal should be to get the RIGHT buyer, and to make that choice up front.
You'll know what I mean, the last week of an escrow where you are completely packed, stressed out about the delays and all of a sudden you hear your buyer is not returning phone calls anymore.
More often, the buyer's agent isn't returning phone calls.
The reality is that a top Realtor who has sold thousands of homes throughout their careers, will ALWAYS do a better job negotiating and handling all the nuances at the closing.
I personally try to avoid cutting corners on large transactions; it always seems to bite me in the end.
I hope you find these seller myths helpful in navigating today's aggressive real estate market.
Next week we'll be discussing the top buyer myths.
Interestingly enough, buyer and seller myths go hand in hand, because most sellers immediately become buyers.
A lot of people are saying that the housing market recovery is moving full steam ahead.
Others warn that we're getting into another housing bubble and that could lead to another disaster.
Still others say this market is being driven by investors and another housing slowdown is imminent.
It's clear much remains to be seen, but many MYTHS have emerged and they aren't necessarily true.
This is my first of 3 articles in which I will present common seller, buyer and lending myths, which are prevalent in the marketplace.
Many of these will surely hit home, however, I will help you navigate through the tricky nuances of what you should know to successfully navigate our current Real Estate market.
Ready?? Here we go! Seller Myth #1 - "I can always reduce my price later" - Many sellers often price their home high for a few weeks just to test the market.
However, buyers shop by putting homes in a "Good Deal" basket or a "Bad Deal" basket.
So if you happen to price your home high, causing buyers to put you in a "Bad Deal" basket, they will rarely come back to call on your sign the 2nd time to find out if you reduced your price.
Remember, that even if you end up in the "Good Deal" basket, buyers are only interested in the very best value, the #1 home in that "Good Deal" basket.
So it's not only important to be realistic about your price, condition, presentation and access will assure you the most offers, which is really what you want, right? Seller Myth #2 - "I put $15,000 in upgrades so I should be able to ask $15,000 more for my home" - I think this Myth is made popular by all the renovation shows on TV.
Remember, that a home is expected to have exterior as well as interior appeal in order to compete with other homes in your price range.
Just because you added granite countertops or a new roof doesn't mean you'll be able to add the cost of your improvements to the selling price of the home.
The truth is some improvements only increase the appeal of the home.
In other words, buyers will like your home because of the upgrade, but they won't pay any more for your house.
Other improvements that fall into the "repair" category, like roofs, windows, worn carpeting, need to be done just so your home qualifies for a loan so a buyer can buy it.
Finally some improvements will increase the value of your home, but before you sink $15,000 into your home improvements, you may want to talk to an experienced agent to determine what improvements will increase your price and what improvements won't.
Seller Myth #3 - "My home price shows at $350,000 in XYZ.
com website.
If it's there, it's obviously true" - Many online sites can give you a general indication of what your home may be worth.
But if you really want to know what your home is truly worth, you probably won't get that from the tax assessment or some general website.
You should get an official Broker Price Opinion on your home, which will include adjustments for location, condition and what other homes in your area have just sold for.
If you are interested in having a Broker Price Opinion, call Sheri Drake at 951-544-7285.
Seller Myth #4 - "The first offer is never the best offer" - The reality of selling a home is that you need to consider the buyers price, terms and ability to close the transaction.
Banks have learned this the hard way and because they want to sell homes to families who occupy the homes, banks have been plagued by buyers who outbid each other simply to wipe out the competition.
Because these buyers are typically getting a loan, the amount they can pay is largely dependent on what their lender's appraiser says the home is worth.
So although the buyer agreed to pay $30,000 over full price, when the low appraisal comes in, a request for a price reduction to the "appraised value" is sure to follow.
Obviously if an appraiser said this is all the home is worth, and they are not part of the transaction, then it must be true.
So take a minute to think about how this may affect your ability to sell the next time you get a buyer willing to pay you over full price if they barely have enough money to close.
You'll see that what they offered, and what they can actually buy the home for may be two different prices altogether.
Seller Myth #5 - "This is a great / bad time to sell" - This really depends on your personal situation.
Here are two examples.
Seller #1 just found out they got a promotion increasing their pay by $50,000 a year and need to move to Austin to take advantage of this wonderful opportunity.
They bought their home at a really low price three years ago, and they'll be able to buy a home in Austin twice the size of what they currently live in.
The answer is YES, it's the RIGHT TIME TO MOVE.
Seller #2 - They bought a home five years ago, have very little equity, but need a bigger home in the area.
For this seller, it may not be the best time to move, however, if they can come up with the additional cash they need to buy the bigger home, today's super low interest rates should entice them to make the move.
So again, it depends on your individual situation.
Seller Myth #6 - "Foreclosures and Short Sales are all great deals" - The reality is that banks also keep up with market values, and because they sell so many homes, they may understand your local market much better than you think.
Freddie Mac and Fannie Mae routinely price their homes 5-10% above the Broker Price Opinion in this market.
Most short sale banks are requiring updated BPOs nearly every month, just to keep up with the month to month changes in the market.
So if you are listening to those who tell you "I got a great deal on a repo", be sure to ask them when they bought it.
Today, the banks are trying to get every penny they can from these properties.
Seller Myth #7 - "The less commission you pay to sell, the more you'll make" - Many sellers are drawn by flat commissions, heavily discounted commissions or even selling on their own to not pay any commission.
Getting a buyer in this market may seem easy, so why pay more, right?? It should be as easy as Eeny, Meeny, Miny, Moe!! Finding a buyer is many times the easiest part of your transaction.
Your goal should be to get the RIGHT buyer, and to make that choice up front.
You'll know what I mean, the last week of an escrow where you are completely packed, stressed out about the delays and all of a sudden you hear your buyer is not returning phone calls anymore.
More often, the buyer's agent isn't returning phone calls.
The reality is that a top Realtor who has sold thousands of homes throughout their careers, will ALWAYS do a better job negotiating and handling all the nuances at the closing.
I personally try to avoid cutting corners on large transactions; it always seems to bite me in the end.
I hope you find these seller myths helpful in navigating today's aggressive real estate market.
Next week we'll be discussing the top buyer myths.
Interestingly enough, buyer and seller myths go hand in hand, because most sellers immediately become buyers.