Homeowners want maximum value when selling their house. There are a few misconceptions – among sellers and real estate agents – about how you can make as much as possible. Does listing at a higher price result in higher sale value? Will repairs, renovations, and re-modeling make your house worth more? Does paying 6% commission to a realtor pay off? If you’ve said YES to these questions without weighing the options, you could be throwing away thousands of dollars.
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Listing Above Market Comps: Good Way To Sell For Less
Listing your home for a high sale price rarely will put more cash in your pocket. Home sellers must consider the comparable sales and available inventory. Listing your home above sales is a major turn-off to buyer familiar with the local market (everyone in the digital age). All it takes is cruise around Zillow or Redfin to find the recently sold comps. It’s also a big problem to price above current houses on the market. Why would a seller pay more for what they can already buy for less? Fewer interested buyers means few offers. Reduced offers equate to less competition and interest.
This isn’t just above sale price: a house will never sell when priced too high. Property can sit on the market for years. This delay primarily due to too high listing price. All the while, you continue paying taxes, insurance, utilities, wear-and-tear – eating away at your wallet. The delay creates additional re-sale difficulties. The property is viewed as “damaged goods” since it didn’t sell. All those instant updates on new listings? Your house sitting on the market no longer gets them. Buyers may not even see your house.
Even if you happen to snag a buyer interested at an above market price – your strategy has a high likelihood of back-firing. Real estate purchase and sale agreements have an “appraisal contingency”. Before completing the sale, a licensed appraiser gives his opinion on value. If it’s less than the agreed upon price, not only does the buyer have the right to back but banks regularly reject the mortgage as the house (the banks collateral) is worth too little.
Here’s the better way to play it. List below sales comps and current inventory. Your listing will be instantly flooded with offers from eager home buyers. You then call for “highest and best” – making sure every bidder knows the highest offer. Bidding wars make for the best sales.
Make Repairs Yourself? Know your buyer . . .
HGTV house flipping sounds great! Many home sellers are under the impression that putting thousands into fixing up your home puts extra cash pocket. The answer here is it depends – and you need to understand your property, financial resources, and management.
Houses have different purposes for different buyers. Different buyers have different tastes. Landlords buy single-family and multi-family houses for rental income. Rental property needs to be re-furbished upon tenant transfer, as tenants (since they don’t own the property) tend to take less care of the house since they don’t own it. A new paint job, re-finishing cabinets, maximizing curb appeal. This is 100% irrelevant to the landlord. Landlords also have their own strategies as to how they repair the house. If you have rental real estate, it rarely pays off to make a landlord’s decision for them.
The other end of the spectrum is luxury property. Luxury is very expensive. Granite table tops, tile flooring, top of the line appliances. Luxury buyers, typically have large income and savings, expect a beautiful property. Got limited funds? Not sure how to fix the house to appeal to a richer buyer? Don’t have time to micro-manage contractors to ensure work quality? Think very carefully before making repairs that don’t attract the expected buyer.
This is of heightened importance if you are trying to live in the house during repairs. By the end of months of fixing the property, the earlier re-modeling will have some wear-and-tear due to living in it. A major turn off to a buyer with expensive tastes.
When Do Realtor Commissions Pay-Off?
Realtor commissions pay off the most when selling houses in excellent condition. These houses always qualify for mortgages (houses in poor condition often fail the minimum property standards for bank financing, i.e. leaky roof, broken heating system; mold; terminates). Mortgages are complex with varying interest rates, down-payments, qualifications. A realtor can guide you through understand how to vet financed offers. A real estate agent is also important because there lots of offers on good condition property. Regular home buyers want the property because it’s move in ready. Landlords or real investors will throw out their bid hoping to catch a bargain. Who is going to sort through a landslide of phone calls and e-mail offers? Step in the realtor to earn their hefty commission.
The reverse can be true when property is in poor condition. The buyer pool is very small for two reasons. Only buyers that can handle a “fixer-upper” will bid. Mortgages will be off the table, so bids only come in from prospective buyers that have enough cash in their bank to complete the sale. Many buyers – even if they are lucky enough to have lots of cash to cover the purchase – are looking to move in now. Houses that aren’t turn-key ready will not be a choice for them!
We Buy Houses
Call Us (954) 676-1846 Send Text or Fill Out This Form For Your FAIR Offer.