Avoid These Top 5 Mistakes That Home Sellers Make in the Northern Virginia Real Estate Market
Here are the top five pitfalls that sellers often fall into in the Northern Virginia market:
1) Not making home improvements because a buyer may want different colors/styles
The first pitfall that sellers make is related to doing renovations or fixes and repairs prior to listing. A lot of times I hear comments like:
“We don't want to paint the walls because what if we pick a color that the buyers don't like and they would just want to change it again?”
“We would rather not make the repairs and just give credit to the new buyer so they can do the repairs themselves.”
Both are entirely doable, for the most part, so long as we follow good sound advice about the colors and things like that: The buyers really are not going to be upset about it. A lot of times, they could get upset with the paint colors if we were choosing really bold and outside-the-box such as fluorescent pink or something. If we were choosing neutral, smart colors to use for listing a home they are generally not going to be upset by it. But the other thing is, offering credit in lieu of doing something is certainly a strategy that we can use.
I tell sellers upfront, if that repair or update was going to cost say $2,000, the buyer is not generally going to take a credit for $2,000. Often, buyers apply what I call the pain and suffering tax -- the pain and suffering of making them do the repair themselves. So, it is not going to be just $2,000. There is going to be a 2x or 3x multiplier on that. They may want something closer to $4,000 or even $6,000 for it. It is something to be cognizant of. It is not going to be a dollar for dollar repair.
2) Failing to respond to an offer due to a fear of missing out on other potential offers that have yet to materialize
We do a lot of marketing in advance before we ever officially go live in the MLS (Multiple Listing Service). So, we generate a lot of interest and pent up demand for your property. Often when we finally do go live in the MLS and are officially open for business, we will see an offer come in on the first day or even the second day. I hear sometimes my seller clients say, “Hey, if we got one or two on the first day, what if we wait a whole week? We could have a lot of offers!” But often times, the best offers you are going to get are the ones that come in really quick, right up front.
You got to think about it from the buyer's perspective. The ones who submitted an offer on your home on day one or day two are the folks who are really motivated. They were probably sitting there with baited breath waiting for this listing to come live on market so they could make their offer. These folks are going to be the most motivated buyers. They want your house more than others buyers who are less-urgently looking. If you wait, oftentimes the other offers you get are not going to be quite as good as those first couple. So do not be afraid to accept the first few that come in.
3) Confusing “marketable” updates with “value-adding” updates
This is a big one. I get a calls all the time from a someone who is looking to sell their home. And they say, “We are going to sell for the record price in our neighborhood because we replaced our roof and we have brand new windows!” It almost always causes me heartburn thinking about it because you do not get “bonus points” because you have a roof that works or your windows work and do what they are supposed to do! You do not get extra credit for that from buyers. Functional roof and windows are sort of the expectation! Buyers love to hear that the roof is new and they do not have to worry about it or that you just replaced the windows. But it is one of those things that while that is marketable, buyers would love to see it, they are not going to pay you necessarily more money for that. So the things that they are willing to pay more money for, the good news here, is that oftentimes it is the little things. It is the little things like painting the home: paint is relatively cheap when you start boiling it down. Or the arrangement of the home, how it is set up, the flow, the furniture. Things like that will cause them to pay more money for a property. Oftentimes, it is the little things that matter more than the really, really big ones.
If you ever have questions about where you should be putting your money to net the most money back when you sell your house, we definitely should be in touch. There is a lot of strategy that goes into that and I would love to share them with you.
4) Determining a list price for your home based on a set amount you want to net
The mistake that I hear with some regularity is sellers determining their list price based on the amount of money that they actually want to walk away with. Sellers say, “We owe $400,000 on our home but we want to walk away with $100,000, so therefore we need to sell for $500,000.”
Now, I am a blunt guy. Nobody has ever accused me of not being forthright enough! So, I just tell folks straight up: The market could not care less what you want to walk away with. Sorry…! That is just the truth. I do not set the market value. You do not set the market value. And the list price does not set your market value. The market does. That means that our challenge is not to decide, “Hey, this is where we want the house to sell for!” That is not a superpower that either you nor I have. Our challenge is to determine where the likely market value of your home is going to fall and then be wise enough to listen to what the market tells us when we go on market. For instance, if we think the house is worth $500,000 and we put it up at $500,000 and we get 13 people that reach out on the first day that say they are interested and want to make an offer, then my advice to you might be, “Hey, you know maybe we do not take the first offer that comes along.” Maybe, it would not be smart to wait in that instance. There could be better offers coming in a short time period. But the converse is also true, right? If we put it up at $500,000 and we have nobody reach out who is interested, that is equally as compelling, right? The market is telling us everything we need to know, we just need to be wise enough to listen.
5) Using unlicensed contractors
The last pitfall that sellers fall into is using unlicensed contractors. It is not as big of a deal prior to having a contract in hand with a buyer. If you end up using uncle Freddy or whoever and he is handy, there is nothing necessarily wrong with that in your day-to-day life. But at the point at which we have a buyer that has a contract on your home, everything has to be done by a licensed professional. It is not the time to try to cheap out and go with some random Joe who is not licensed and hope it flies under the radar. You could cause yourself a lot of grief and time, frankly, possibly even money. Once you have a contract with a buyer, but before the house has settled and transferred ownership to that buyer, you must use licensed contractors.
We have a whole list of preferred vendors. They are preferred not because we have ownership interests in their company or because we are getting some kind of kickback. That is not the case at all. We recommend them only because they are just really good at what they do. We have got a whole list of them. There is virtually nothing your home could possibly need that we do not have somebody to talk about it with if need be. So, never hesitate to reach out.