In a quiet suburban neighborhood of Salisbury, Maryland, there’s a white, 3-bedroom Colonial that simply won’t sell.
It’s easy to guess why.
The owners have consistently overpriced the property, have alternated between leasing it to tenants and trying to sell it without a real estate agent, and have allowed the lawn to become a desert of compacted soil dotted with weeds.
All told, thanks to these mistakes (and others) the house has been on the market for years. By comparison, according to recent Redfin data, a typical house sells in 10 to 70 days.
An analysis of data from Realtor.com suggests that the median home takes 65 days to sell.
Even if you don’t need to sell your house fast – say, because your employer is having you relocate – nobody wants their home to stay on the market for months … or years.
The longer your house takes to sell, the longer you’ll have to pay utilities, property taxes and the mortgage, instead putting that money into a new home (and moving expenses).
And homes that stay on the market too long can be “tough sells.” Many buyers will view a listing only once. If the house doesn’t attract a buyer relatively fast, the listing will grow “stale” and the pool of prospects may shrink to a handful of bargain hunters.
This guide will help ensure that you don’t end up like the owners of that Maryland house.
In addition to discussing some obvious and not-so-obvious home-selling Do’s and Don’ts, we’ll examine sales strategies that are proven to minimize the length of the process and maximize the proceeds from a home sale.
When is the Right Time for You to Sell?
The answer depends on your personal finances, local market conditions, and the economic (and literal) climate in your region of the country.
To start, calculate how much equity you have in your home. Then, determine if a reasonable sale price would be enough to:
- Pay off the current mortgage.
- Cover the closing costs (including a real estate agent’s commission).
- Make a down payment and first mortgage payment on your new residence.
- Finance your moving expenses, any new furniture, etc. (Moving expenses could easily equal $1,000 or more.)
If you owe more on the mortgage than your house is currently worth (an “underwater mortgage”), now is not the right time to sell. The same is true whenever the costs of selling and moving are likely to be higher than the sale proceeds + any savings you may have.
Does the property need repairs? If so, are they major or minor, and how much will they cost?
Before putting your home on the market, you’ll want to complete any unfinished repair and maintenance projects.
To sell your home fast, and for top dollar, you absolutely must make a good first impression on prospective buyers. That means making sure your property is both attractive and functional.
Peeling wallpaper, a discolored roof and a creaky HVAC system will earn instant demerits with potential buyers, causing them to walk away or reduce the size of their offers.
Next, hire a good realtor or thoroughly research the local housing market to learn whether the environment is favorable or unfavorable for sellers.
Are home prices rising or falling? What have houses comparable to yours (“comps”) sold for recently? Are you living in a “seller’s market” – where home sellers have the upper hand because there are more buyers than homes for sale – or a “buyer’s market” (the reverse)?
Even if you want to sell your home quickly, it’s best if you don’t have to sell ASAP. Otherwise, in a buyer’s market, you may have to make a “Sophie’s choice.” Sell the home quickly for less than you could get in a better market, or wait until home prices start appreciating again.
(Even if you must sell fast, never share that information with prospective buyers. It will give them leverage over you when it comes to negotiating price and other contract terms.)
When is the Best Time for Anyone to Sell?
“To everything there is a season…” This is especially true for real estate.
Unless you live in a region where the climate is usually warm, like California or Florida, the best time of year to sell a home is spring and summer. This is the conventional wisdom, and the conventional wisdom is right.
People like to go home-shopping when the weather is sunny and pleasant. Families with children like to move before the new school year begins.
In addition, the grass is green and flowers are blooming, which tends to make properties look more appealing. And because the sun shines longer, buyers have more time to visit properties during daylight hours, including after work.
As a rule, May through August is the “peak season” in most parts of the U.S. And the very best month, according to a study by Zillow, is May.
Zillow researchers found that homes listed from May 1 through May 15 sold, on average, 18.5 days faster than homes that weren’t listed during that period. They were also purchased for about 1% more than the average listing, which translates into an extra $1,700.
If you plan to sell your home during the off-season (winter), the only advantage may be the type of buyer you encounter.
You’re more likely to meet highly motivated prospects once the weather turns frosty. A higher percentage of buyers will need to move right away, so they’ll probably be more flexible about price and any contingencies in their offers (e.g., requests for repairs).
Hire an Agent or Go FSBO?
Should you hire a real estate agent? Most expert opinion ranges from “it’s a very good idea” to “you’d be crazy not to.”
Roughly 93% of home sales involve an agent – and for good reasons.
Agent-assisted home sales generate significantly higher returns than homes for sale by owner (FSBOs). According to the National Association of Realtors (NAR), in 2013 the average FSBO sold for $184,000 compared to $230,000 for agent-assisted sales.
Other benefits of hiring a good agent include:
Putting a local real estate expert in your corner. A qualified agent will know the local market inside and out, and prepare an analysis of recent comparable sales to help you “price to sell.” He or she knows which advertising outlets generate the best results, and plug you into their network of attorneys, contractors, home appraisers, photographers, home stagers, etc.
Saving you time and paperwork. A good agent will act as your trusted “consigliere.” He or she will handle much of the paperwork, making sure the process adheres to all legal and ethical guidelines. The agent will also direct your marketing efforts and manage tours of your home.
Acting as lead negotiator. A good agent will bring something to the table that you can’t – a detached, unemotional approach to the transaction. Unlike you, the agent will have no attachment to the home and its memories. Instead, the agent’s only interest will be maximizing your profits and cutting through delays. With dozens or hundreds of deals under her belt, a good agent is an expert at recognizing and negotiating good offers.
The main reason that some sellers exclude agents from the process is money. By cutting the agent out of the process, they don’t have to pay 5% to 7% of the sale price in commissions.
If your home were to sell for $250,000, that would translate to an extra $12,500 to $17,500. You could either keep that money or use it to sweeten the deal, e.g., by lowering your asking price or offering to pay some/all of the buyer’s closing costs.
In a buyer’s market, deal sweeteners like these could spell the difference between a house that sells in days instead of months. On the other hand, a FSBO requires a lot more work on your part.
(Note: most FSBOs still offer a commission to the buyer’s agent. The amount you propose is your call, but offering to pay zero will force the buyer to make up the slack. This could negate any other incentives you use to attract potential buyers. And some buyer’s agents might avoid your home.)
To find a great agent, don’t just ask friends and neighbors for references. Search for professionals with the best reputations as seller’s agents. You can read reviews of local agents on sites such as Trulia, Zillow and Yelp.
Before hiring, you can screen candidates by asking questions such as:
- How many houses have you sold for more than the original list price? What is your list-price-to-sales-price ratio?
- How will you market my home? Which marketing platforms will you use – e.g., local newspapers, social media, email, etc.?
- Do you have references, especially from former clients?
- Do you carry Errors and Omissions Insurance?
- How many homes are you currently selling? (You don’t want an agent who is too busy to give you the attention you deserve.)
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Setting the Price
The #1 Reason why homes don’t sell fast (or at all) is overpricing. And the most common reason for overpricing is that the owner really wants or needs to get that asking price.
Unfortunately, your needs are irrelevant to buyers.
If you need $300,000 for a house that the market (or an appraiser) values at $270,000 because that’s what you still owe on the mortgage, now is not the right time to sell.
Before setting a price, establish your priorities. Is it more important to maximize your profits or minimize the time needed to sell?
Pick one. It’s very difficult to maximize your profits and sell a home in record time.
The next step is to get a comparative market analysis (CMA) – the “comps” – of what similar homes in your area have sold for. Your real estate agent should provide you with a CMA.
If you go FSBO, you’ll need to gather this information yourself. If you have an agent, it’s still a good idea to tour a few comps in person.
For one thing, even the most detailed CMA is no substitute for viewing the location, size and condition of comps.
For example: although some houses will qualify as comps because they contain the same number of bedrooms, some may be larger or smaller than yours in terms of square footage. That could have a big impact on sale price, but might not show up in the CMA.
In other cases, comp prices might be skewed too low or high. This is common in up-and-coming neighborhoods located near rundown neighborhoods or high-crime areas.
While your block may be as safe as Fort Knox, and all the homes recently restored to their Victorian splendor, if some of the “comps” are across the tracks in Muggertown, pricing your house “by the book” could shave tens of thousands of dollars from a fair asking price.
A more exact method of setting a price is to hire a professional appraiser to determine the market value of the home. Just be sure that the appraiser is familiar with houses in your area, and consults with your realtor beforehand. (The realtor can highlight major selling points that some appraisers might overlook or downplay.)
Typically, an appraiser’s fee will set you back $300 to $400.
To help you calculate a good listing price, you and your realtor can also hold an open house for other realtors, as well as friends and family. This is a no-risk way to solicit feedback on your property and asking price.
Finally, there are two pricing “rules of thumb” that you may want to consider:
- Rule of Thumb #1 says you should avoid a sale price that ends in a zero. The thinking behind this rule is that when buyers see zeroes, it’s an open invitation to negotiate because (“obviously”) you picked that number out of a hat. If you set your asking price at $349,000 instead of $350,000, some careful calculations “must” have gone into that number.
- Rule of Thumb #2 states that zeroes are your friends. The reasoning here is that zeroes will give your house more visibility in internet searches. For example, if you list the home at $300,000, it will appear in search for homes priced between $300,000 and $400,000. If you price it at $299,000, it will only appear in searches for homes priced at less than $300,000.
Both rules seem equally intuitive, but can both be right?
For better or worse, there’s only one way to find out.
Preparing Your Home to Sell
This author once attended an open house that broke every rule of home selling. The front yard was a dog-poop minefield, the kitchen smelled like a halibut had married a litter box, the furniture was bathed in dust, and the living room had a foot-wide crater in the wall.
There are many tips and tricks to make your home more appealing to buyers, but the “Prime Directive” is: At least clean up the place! If you do nothing else before showing your home, make sure the house sparkles – inside and out, top to bottom!
Dust, vacuum, and mop the floors and baseboards. Scrub the countertops, sinks, toilets and bathtubs. Windex the windows and the windowsills. If you can imagine a nook or cranny that a nosey buyer might investigate, some of them probably will. Make everything shine!
Pay special attention to odors. Have a friend or family member visit for a smell analysis. (You’re probably so accustomed to these odors that you won’t notice them.) Use scented candles or plug-ins to cover up unpleasant aromas. Some realtors and home stagers even bake cookies or bread before open houses to soothe visitors’ nostrils.
Outside, be sure to mow the lawn, whack weeds and power wash the siding and the roof (if need be). You may also want to plant flowers to add a splash of color.
Although your exterior options are limited in the winter, at least keep the walkways clear of snow and ice.
Home staging – presenting a home in its best light – is premised on getting prospective buyers to visualize themselves living in your house. A 2015 study by NAR found that 81% of homebuyers find it easier to visualize a property as their future home when it’s staged.
To that end, a thorough cleaning is the absolute minimum you can do.
If you’re really serious about selling your home fast, then consider some (or all) of these basic home-staging techniques:
- Strategic painting. Where chipped or peeling paint is visible, it should be painted over. Even when there’s nothing wrong with the condition of the paint, it’s a good idea to “neutralize” the color schemes of key rooms (living room, kitchen, master bedroom) to avoid offending anyone’s taste. Pale yellows and beige are traditional replacement colors. (Note: some professional home stagers now deploy bright and vibrant colors for certain regions and demographics, but these people are experts. Don’t try this yourself.)
- Declutter and Depersonalize. To help potential buyers imagine their new lives in your home, they’ll need to imagine what they could do with the space. You can assist their imaginations by decluttering. Remove extra furniture, especially worn-out furniture, from rooms to make them seem more spacious. To depersonalize, pack up your fixtures, collections and “objets d’art.” You know that your taste is exquisite, but why risk losing a sale because some philistine doesn’t like your display of antique farm tools?
- Make repairs. Even if your state doesn’t mandate that you disclose certain problems with the property, it’s still a good (and ethical) idea to disclose them to prospects. Most buyers hire a home inspector, so attempts to conceal problems will be discovered – and may wreck the deal. It’s best to simply make the repairs before listing the house. This includes items as small as squeaky doors, tiny divots in the wall, stained carpets, scratched hardwood floors and outdated or broken light fixtures. Clean the carpets. Refinish the floors. Buy new light fixtures. Yes, these fixes will cost money, but they could also make the difference between a good outcome and a home that repels buyers.
- Avoid major renovations and new furniture purchases. With very few exceptions, you will not recoup the costs of major renovations when you sell the house. Not even close. And again, because taste is a personal matter, your new kitchen cabinets could turn off more buyers than they impress. The same holds true of new furniture. While you don’t want to showcase a cat-scratched sofa, don’t replace it just yet. Throw it away or put it in storage.
- Hide the children and pets! Your cat is adorable, as are your kids. But you never know what one of them might do when guests arrive. Many realtors, and most home stagers, will advise you to escort them somewhere else when visitors arrive – or even sequester them (the pets, most likely) in a well-labeled room. You don’t want to deal with the liability issues that might ensue if, say, your pet bites a visitor.
Should you hire a professional home stager to avoid some of this work? Maybe.
Prelisted staged homes spend 90% less time on the market than non-staged homes, according to a 2016 report by the Real Estate Staging Association. Another survey, by the International Association of Home Staging Professionals and StagedHomes.com, found that staged homes sell for an average of 17% more than non-staged ones.
On the other hand, professional home stagers charge fees of $500 to $5,000+, depending on the home’s square footage and the number of rooms staged.
How to Attract More Buyers
Open houses, newspaper and craigslist ads, social media posts and email blasts can all contribute to increasing your home’s visibility.
But by far the most important marketing tool is a posting in the MLS (multiple listing service).
If you hire a realtor, he or she will list your house in the MLS, a network of roughly 700 regional databases that lets agents exchange information about properties for sale.
If you sell the house yourself, you can’t list your home directly on the MLS. Access is limited to licensed agents and brokers, who usually pay for membership.
As an FSBO, you can advertise your home on a site like ForSaleByOwner.com and the FSBO sections of sites such as Zillow.
Once the marketing media are selected, craft a compelling message. Descriptions should include not just the basics – square footage, number of bedrooms and baths – but any features likely to attract more buyers.
Even more important are the photos of your property. Because many buyers decide whether to visit a home based solely on the pictures, you may find it worthwhile to hire a professional photographer to showcase the most appealing views and rooms.
A basic shoot by a professional will cost anywhere from $110 to $300, but you could easily generate 10 times that amount in added revenues.
One survey found that homes listed with professional, high-quality images can sell for an average of $3,400 more (and up to three weeks faster) than those featuring lower-quality photography.
Finally, it’s imperative that you make your home easy to visit.
At the very least, your listing should say “call first, lockbox.” “Call first” lets you know that a buyer or agent is on the way. The lockbox allows guests to enter if you’re not home. If you restrict showings to “appointment-only,” you could drastically reduce the number of visits.
How to Negotiate (and Recognize) a Good Offer
If you receive multiple offers for your home, keep two things in mind:
- The offer featuring the highest price isn’t necessarily the best deal.
- Although “bidding wars” are normally a good thing, reviewing offers and making counteroffers takes time, which will delay the closing.
When fielding multiple offers, always look beyond dollar amounts.
For example, many buyers put contingencies in their offers – conditions that, if not met, allow them to cancel the deal. These may include a requirement that the home pass an inspection, that you make certain repairs, or that the buyer gets approved for a mortgage.
All things being equal, an offer with fewer contingencies is a better offer. If one buyer’s price is marginally higher than a competitor’s, but includes a laundry list of conditions, while the other offer has no contingencies, you may want to accept the lower offer.
The same holds true if one buyer makes a higher offer, but will need mortgage financing, while another buyer offers to pay less – but will use more cash.
For a seller, an all-cash offer (with few or no contingencies) is a dream come true, provided the price is reasonable. You won’t have to worry that the deal will fall apart at the last minute if the buyer doesn’t secure a loan.
To prevent unpleasant surprises, you may even want to include a few your own contingencies in a counteroffer.
As long as you’re bargaining from a position of relative strength, you could put a limit on the number of days a buyer has to secure a mortgage or have a home inspection done, insist that bidders be preapproved for a mortgage, or even ask buyers to pay some of your closing costs.
As a rule, you should always make a counteroffer, even if the buyer’s offer was somewhat insulting. (But first consult with your real estate agent.) It’s important to show respect for every prospect. You never know what a second offer might look like.
And if a home inspection uncovers a defect in need of repair, drop the price by enough to cover the repair, or offer to make the repair yourself.
A genuine negotiation involves a certain amount of give and take by both parties. Sticking to your guns is fine if an initial offer is absurd, but a reasonable offer should prompt a counteroffer that contains some concessions on your part.
When it comes to negotiating, you should always be thinking, “What more do I need – if anything – to achieve my biggest goals?” Once your main goals are achieved, everything else is gravy.
Top 7 Mistakes to Avoid
- Waiting for the full asking price. Some homes go above asking price, some go below. Don’t get wedded to a particular price. Your home may sell, but it could take a long time.
- Not hiring a good agent (or using one when you don’t have to). Good agents are powerful allies. They can get your home sold quickly and for the right price. On the other hand, hiring a bad agent is worse than selling the house yourself because you’ll pay for the “privilege.” Research and interview the best agents in your area before hiring anyone.
- Failing to clean and prep your home. Remember, buyers want to imagine themselves living in your house. Few people will do that if the place looks like one of the hovels featured on those TV shows about hoarders.
- Selling in the wrong season. Winter is the slowest season, but home buyers are out in force during spring and summer. The only advantage to winter is that you may attract a higher percentage of motivated buyers – people who need to move in a hurry.
- Getting emotional. It’s a house, not your child. It has blemishes, and may even need repairs. If you refuse to acknowledge this and get emotionally invested, you’ll probably pass up good offers and assume that better offers are on the way. That might not happen.
- Failing to disclose problems. Most buyers will insist on a home inspection, so if you conceal defects, the odds are very high that you will get caught. Even if you “get away” with selling the house without full disclosure, hiding certain problems could expose you to a lawsuit after the fact.
- Correcting your mistakes after the house fails to sell. It’s not a good idea to list your house, and then wait 30 or 60 days before following the advice in this guide. By the time it becomes obvious that your home isn’t attracting buyers, it may be too late to turn things around. Most buyers will look at a listing once. If you later relist the house, even at a lower price, many buyers will assume that something is seriously wrong with it (or you) and look elsewhere. Remember: you get only one chance to make a good first impression.
