Top 10 Ways Home Owners Cost Themselves Money When Selling Their Home

If you’re a Perth home owner who’s been considering selling their home, unit or land in the last year or so, you’ve probably been scared off by all the negative press out there about low market performance.

Sales have been down, prices have been down and according to REIWA’s 25 April 2017 stats, 54% of sellers have had to discount their original listing price to get the deal done!

And the average discount was 6.5%!

On a fairly average $500,000 home, that’s $32,500 lost in final sale price compared to the original listing price…

So, while it’s difficult to control the market, perhaps more importantly, there are 10 things that many sellers are doing that are costing them extra profits (over and above those influenced by the market) when trying to sell their home.

1) Over-pricing

Probably the #1 reason for homes selling for less than their owner/s want is that they went to market overpriced in the first place.

There’s a raft of reasons why home owners would do this (including needing to pay off a big mortgage, over-inflated estimate of their home’s value, greed, etc.) but at the end of the day, the market does NOT care what you want for your home.

They’re only interested in paying what THEY think it’s worth, and that value is largely formed by comparing your property to the other homes available for sale.

If yours has less bedrooms, is in poorer condition, in a worse location (etc.) than most other similar homes, they’re just not going to pay the asking price you want.

Unlike going into a retail store and buying a product off the shelf which is priced with a RRP (recommended retail price), home prices are totally market driven and that value could be higher or lower than you want at any one time for any number of reasons.

One of the most important things you can do before selling is start to CLOSELY examine the market of homes similar to yours that have sold in the last 3-6 months (the less time from now, the more accurate, as markets can easily fluctuate over a 6+ month period).

Jump on sites like REIWA, Real Estate, Domain, etc and look at past sales history for your area and your type of house. Note the price they sold for, how long it took to sell them, and how their home differed from yours.

Even go and LOOK at the other homes on sale in your area (and nearby) and see how they compare to your place on price, location, finish, number of rooms, etc.

That will help you be more realistic as to the value your home might expect to sell for in the current market.

AND, doing this will also help you make sure your real estate agent is not deliberately claiming they can sell your home for a lot more than the market seems to imply, just as a way to get you to list your home with them.

2) Needing to sell in a hurry

When a home owner is forced to sell in a hurry (moving home, relationship breakdown, illness, etc.) it doesn’t give them the luxury of time.

Time to negotiate for a better deal.

Time to wait for a better deal.

Time to say no to the poor deals.

While life sometimes throws us a curve ball and we don’t always get to choose our circumstances, where ever possible, always try to have the flexibility of time when it comes to selling your home. That way you won’t have to accept the lowest offer simply because it was the only one provided within your time frame.

3) Poor performing Real Estate agent

According to Roy Morgan’s annual Image of Professions Survey , Real Estate agents are the 3rd least trusted and liked professionals, just in front of used car salesmen and advertising people! 🙂

AND, because the “barrier of entry” to becoming a real estate agent is really low, compared to most professional occupations, the industry does attract some dishonest slackers (NOTE: I am absolutely NOT saying this is any more common in real estate than other industries, because it’s not. It’s just that property transactions are such high $ value that any bad experiences are blown out of proportion compared to most other transactions.)

If your agent is one of these types &/or just poorly skilled and trained in negotiation, chances are high they won’t be able to get the job done of selling your home for a good price.

Your agent is potentially the biggest influencer on the success of your home sale, so if you’ve discovered that they are not up to scratch, you might need to consider changing agents once your contract with them runs out.

4) Financial difficulties

When you are in a tough place financially, it forces you to make decisions you normally wouldn’t make.

When selling your home, this could mean you HAVE to accept a lower price than you want for your home because you just don’t have the luxury of waiting for a better offer.

Or, it could mean you just don’t have the spare funds needed to improve your home’s condition (for example, repairs and maintenance, a new paint job, etc.), which is definitely going to have an impact on the final selling price you will have to settle for.

Either way, a lack of finances can and does impact on how much you can sell your home for.

If things are really bad here, you might want to seek some professional help. I recommend you start by reading ASIC’s MoneySmart information on seeking financial counselling.

5) Relationship breakdowns

Similar to #2 above (needing to sell in a hurry), relationship breakdowns bring all sorts of additional unwanted pressures into the home selling process.

In particular, if it’s an acrimonious breakdown, one (or both) partners may be trying to sabotage the sale as punishment to the other partner.

If things are not looking good for you, you may want to get some help, whether legal or counselling, to get through this. Don’t let your situation get you down – there ARE options available to help you.

The Australian Govt has a range of services available that you can check out here: Services To Support Families

6) Bad neighbourhood

A bad neighbourhood can include being in a noisy area (loud road/airport/trainline nearby, etc.), obnoxious neighbours, untidy street appeal, etc.

Over the many years that properties have been brought and sold, the surrounding neighbourhood has ABSOLUTELY had a negative or downward impact on the final sale price.

Who wants to live in a rough area with car wrecks on peoples front verge, poorly maintained houses, overgrown lawns and gardens and so forth?

And if your neighbours include a bikie club house with loud Harleys come and going at all hours of the day and night, then you’re in REAL trouble! 🙂

Sadly, if you’re unfortunate enough to be in this situation, there’s not a lot you can do about it, so in most cases you’ll just have to grin and bear it!

If your main issue is that you’re in a noisy neighbourhood, then you can often tackle that by adding sound insulation to your home such as double glazed windows, thick heavy doors that reduce the noise getting in, etc.

There’s some good additional tips here, if this is your challenge: How To Reduce Ambient Noise at Home, Inside and Out

7) Poor marketing

A *BIG* key to selling any property is the marketing of that property. The more people that know about your home when it is up for sale, the better chance you have of getting multiple buyers excited about your property and starting to compete against each other to buy it, pushing up the price offered.

Most agents will at least recommend you put a sign board up out the front of your property when it’s on the market. More importantly, they’ll also usually recommend you have at least a basic listing on 1 or more of the popular real estate portal sites like REIWA, or Domain, since that’s where most home buyers go when looking for real estate.

However, the biggest problem here is that in most cases, your home is one of maybe 10K+ homes and units listed for sale in your city at any one time, and that means there are a LOT of competitors also listed on those sites.

When there’s lots of competition, people skim through the listings because they’re time poor.

They also judge your property on its price, main photo and statistics like number of bedrooms and bathrooms.

Remember, they’re skimming through the listings AND they’re in a hurry, so it’s really easy to miss a gem (like your home) because it does not appear to tick all the OBVIOUS boxes.

You know your home better than anyone else. You know your neighbourhood better than anyone else, and you know why buyers would love your home if they only took the time to look more closely at it.

HOWEVER, because you skimped on marketing, your home doesn’t stand out in the crowd and less people come to see it and therefore, there is less competition between buyers, which reduces the price you get!

Long story short: Don’t skimp on your marketing!

Get better quality photos taken for your online listings.

Even get a video shot and published on YouTube & Facebook.

Upgrade your property portal listing to a higher level to get more exposure.

Consider advertising on Facebook & Google (not just the main property portal sites) and even have a property listing website built to help tell your home’s story better.

Think of your marketing as an investment in getting a HIGHER price, not a cost of selling.

If you were to spend (for example) an extra $500, $1000, even $2000 on improving your marketing and it brought you in an extra $5,000, $10,000, even $20,000 in the final sale price, do you think that would be a good investment or not?

Of course it’s a good investment!

Heck, it’s a GREAT investment (your bank sure won’t give you a deal like that!) and one you should definitely think about making when selling your home.

8) Too much competition.

We just talked about poor marketing making it difficult for you to stand out against the competition, but the truth may well be that there is not only an over-supply of properties similar to yours in the local market, but they may all be better quality and value than yours as well.

When you’re in this situation, your only choices are to either take your home off the market until the competition reduces sufficiently or make more significant improvements to your property (more maintenance, maybe even some renovations, improving the street front presentation, etc.) so that it becomes more competitive.

Remember, when buyers are looking at properties, they are COMPARING them against each other with the goal of quickly DISQUALIFYING all those homes that DON’T meet their needs, wants and desires.

So, if there’s a lot of competition, and your home doesn’t measure up well against it, you’ll either not get any offers OR you’ll get offers well below your asking price.

9) For Sale By Owner

Above, we talked about how the choice of real estate agent can have a big impact on the final sale price of your home.

Possibly an even riskier option is when the owner tries to sell their home themselves.

Termed For Sale By Owner (FSBO – pronounced fizzbo), this is where the owner has decided to not engage the services of a real estate agent and is attempting to sell the home on their own.

In almost all cases, this is done as a way of avoiding having to pay sales commissions to an agent. It’s essentially a cost-cutting exercise.

Now, while this is perfectly legal in Australia, the biggest challenge here is that MOST home owners have never sold a home before and they have no idea just how many complex “moving parts” are involved in the process.

Whether it’s legal requirements they might not be aware of, or the time inconvenience involved in showing people through your home at all times of the day and night, as a home owner, you’re taking on a job role that is far more complex and stressful than you can begin to imagine.

Furthermore, when you’re selling your own home, chances are good that you don’t have the skills to correctly appraise your home’s price. This may see you either overprice the property (as mentioned above) and scare off potential buyers, or under-price it and receive a lower than market value sale price.

In addition, probably the biggest issue is discussed in this article on Investopedia, which says:

[Negotiating ability] may be the most oft-overlooked part of the do-it-yourself (DIY) process, and one that should not be considered lightly. Do you possess the skill set necessary to successfully negotiate the sale of one of your most valuable possessions? Can you effectively manage the process through to a close against a seasoned broker or real estate lawyer?

Remember that you may be up against professionals who are skilled negotiators and know the property sale process very well. As such, they may suggest all sorts of terms and conditions that sound reasonable but really aren’t in your best interest. Even an unseasoned real estate agent is likely to be aware of the implications of various terms and conditions – will you?

If you have never been involved in serious negotiations with savvy professionals, you are at a serious disadvantage. Your lack of experience could negate any of the benefits of having done it yourself.

In most cases, people who sell their own home tend to get less for it than a skilled real estate agent would, simply due to a lack of experience in all the aspects involved in selling real estate.

Yes, it’s an option, but a risky one, and if getting the highest price possible for your home is your goal AND you don’t have the skills necessary to achieve this goal, you’re far better off choosing a great agent and letting them do the job you are paying them to do: Sell your home for as high a price as possible.

Remember: A real estate agent sells homes for a living. They do this 5-6 days a week and they know all the legal, marketing, negotiating and property preparation requirements. You almost certainly don’t know all of these or you would be a real estate agent yourself, in which case, go for it if you want to sell your own home!

10) Poor Presentation

Last, but by no means the least, an area where home owners end up costing themselves money is in the presentation of their property.

Does your house & land look fabulous, or does it look scruffy?

If it’s the latter, you could be easily costing yourself $50K – $100K or more in offers, simply because you didn’t make an extra effort to tidy the place up, clean up the yard and make it looks as attractive as possible.

Imagine if you walked into a car dealership to buy a brand new car. If the dealer showed you a dirty, dusty, smelly car and quoted you the full retail price, you’d laugh at them and either walk out OR you’d start negotiating hard, to bring the price down to a level suitable for the current condition of the car.

Your property is no different. If it doesn’t look clean, tidy, and (as much as possible) beautiful, it absolutely WILL cost you lots of money.

Remember, buyers are always comparing one house to another, and if your house needs a fair bit of work cleaning it up, perhaps some painting and maybe even some new carpet, they’re automatically going to deduct from the price they’re prepared to offer you.

And what’s even worse is that in most cases, they will OVER-estimate the cost to themselves to fix these items.

Under the circumstances, that’s probably fair, because they not only want to be compensated for the physical cost of fixing the issues, BUT also their time wasted having to fix things.

If you’ve ever renovated a house before, it’s a hard job. Often back-breaking work AND lots of wasted time chasing quotes, tradies, products and scheduling it in around a day job and the kids going to school, etc.

In the buyer’s mind, they see themselves face the same horrible task and it just puts them off. Why pay too much when 9 out of 10 of the next houses they look at will be in much better shape than yours (if yours doesn’t look immaculate)!

So, step back and take a good hard look at your place. What needs fixing, repairing, replacing and touching up? By investing some time and money in that upfront, you remove one BIG reason that buyers have (and use) to make you a low ball offer for your home!

AND, that obviously helps raise the offers you’ll get for your home, which is the whole name of the game, right?

How To Sell Your Home For Maximum Profits

So, you’ve read the top 10 ways home owners cost themselves money when selling.

Now, your #1 question should be: How do I sell my home for market value or higher?

After 32 years of selling real estate in Perth, I’ve seen it all.

The highs, the lows and the crazy times!

Almost nothing gets people more emotional and stressed than property. Whether they’re buying it, selling or trying to rent it, it evokes more powerful emotions than a bunch of football fanatics screaming for their team at the local derby!

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