Step 7: Price Your Home to Sell
I believe that any home on the market can sell, and that it is just a factor of price, condition and location (marketing is the 4th “X” factor).
There are a few strategies I utilize when pricing a home that I review extensively in the book (chapter 7), but I just want to give you some actionable information here.
#1 Mistake Home Sellers Make
The top mistake homeowners make when pricing their home is listing it too high.
I once met a seller who had his house on the market for over two years! He had been through a couple of Realtors® and yet it had not sold. The home was a great size, it was dated from the 90’s, but all-in-all, in good shape.
He told me that during the first time he listed the home, he had an offer in the first 30 days. It was close to his listing price in the $500’s, but he declined it expecting a better one to come along. Unfortunately, the market started to trend downward, and his listing price never caught up to the market.
When we began working together, the seller made a few changes to the property, but he still wanted to list his home in the upper $400’s. We tried for a few months and had an increase in tours, but still no offers.
I finally convinced him to list it closer to where I thought the market value was, and within two weeks we had two offers around my estimated market value. Had the owner accepted the first offer he would have taken home $100,000 more.
I have story after story with homeowners over-pricing their home initially and eventually having to sell for much less than if they would have priced it correctly to begin with.
Know The Market
Your real estate agent will give you an idea of where the market is heading. In an upward trending market, you might be able to get away with a little higher starting price. In a slow or downward trending market, it is vital to price your home at the market price.
Check out the pricing pyramid (triangle actually, but pyramid sounds cooler). The “pyramid” represents the percentage of buyers that could consider your home as an option. If you price your home at market value, you have between 30% to 60% of buyers that may tour and consider an offer because of the value.
As you go higher in price, your pool of potential buyers dwindles to a much smaller percentage.
The lower you drop the price the greater number of buyers will consider making an offer and you could find yourself with a multiple offer situation.
Some properties already have a small pool of buyers due to a remote location, strange layout or just being an “odd ball” listing in the neighborhood. This makes pricing all the more important and relying on your professional agent’s advice.
Best Time to Sell?
People ask me all the time, “when is the best time to sell a home?” My answer is “whenever you need to move.”
Even in the slow home selling months, Houston we will sell over 4,000 single family homes. The Number of Single Family Homes Sold graph shows the homes that were sold in 2017 & 2018. There was a dramatic drop in August of 2017 due to Hurricane Harvey but you can see the trend of more homes selling in the summer season.
Peak summer months will sell up to 8,500 homes, so naturally it makes sense to list the home in the spring and summer, right?
Obviously, there is a season in which more people are buying and selling homes and thus a greater likelihood of selling quickly. So, if you can, I recommend listing in the spring to early summer if that works well for you and your family, but a great home can sell quickly during peak months as well as the slower months.
From September to December, Houston sold between 6,000 and 7,000 homes. That’s a lot of buyers moving and it only takes one to fall in love with your house.
Before listing your home, it is a good idea to take a look at the current home inventory. Home inventory is the number of active homes on the market. January of 2018 had just over 33,000 single family homes for sale, whereas last June & July saw around 43,000 active homes. There may have been more buyers during the summer months, but there were 10,000 more options for them to choose from.
When you put your home on the market is important, but it is just one piece to the puzzle. Pricing your home correctly is the top thing you can do to get your home sold fast and for the most money. Next, let’s talk about what to do when your home is on the market.
Step 8: Make Your Home Available to Buyers
The entire purpose of our work is to attract the right buyer to tour your home. It does you no good if they can’t schedule a convenient time to see it.
Make sure you work with the buyer’s agents to allow tours of your home. No one will buy a home they are not able to tour unless its for a steep, steep discount.
How Showing Your Home Works
Sometimes your agent will receive a request from a buyer asking to see your house, but typically the buyer’s agent will request a tour and show their buyers around your home.
When a buyer wants to see your home, they will ask their Realtor® to schedule a showing. We work with a service (Centralized Showing Service) that coordinates with the agents and sellers like yourself, to make the scheduling process as smooth as possible.
Let’s say for example that the buyer wants to tour tomorrow at 4:30, they will place the request online and you can accept, deny or ask for them to reschedule at 5:15 or whenever works for you.
The company will email and call the agent to work out the new time. If they accept, then you as a homeowner need to be away from the home for the duration of the tour. It usually is set up for an hour, but I will often make the showing window smaller to limit your time away.
Blocks and Restrictions on Home Tours
A great way to keep your sanity during the process of selling your home is to put blocks and restrictions on when buyers can tour your home. I always suggest at least a two-hour notice of a showing be provided to you when a buyer wants to see your home. This way, you have some time to prepare your home for the tour and to determine where you will be for the duration of the showing.
The two-hour restriction can be changed to four, six, eight, twelve hours or more.
This is a similar balance when it comes to showing blocks. Showing blocks are times in which buyers are not able to tour because they are permanently blocked off the schedule. I recommend this when home sellers have a crazy night on one particular day of the week, every week.
Lilly goes to volleyball practice Tuesday evening, Mom has workout, Dad takes John to basketball then picks up Lilly and John and takes them both to club swimming practice. It is hard enough to figure out what to eat for dinner much less have the home “show ready.”
Block off that one evening every week to keep your sanity.
Showing Your Home with Kids & Pets
Allowing buyers to tour can be a hassle, no doubt, especially when the buyers and their agent come late or not at all, and you just spent the afternoon cleaning up. To help make the process of getting ready for a home tour easier, especially when working with pets and kids, I have a few recommendations:
- Keep the Showing Window Short – Allowing a maximum of a 30 to 45 minute showing window when the average is an hour, makes the buyers have to focus on your home and to be there on time. This is especially true when they are seeing multiple homes one right after another.
- Wait Until the Last Minute – With the shorter showing window you can wait until the buyers and their agent arrive at your house and hustle the kids and the pets into the car or take them on a walk to the park.
- Give Every Family Member a Job Responsibility – To help keep the house clean, divide and conquer the cleaning tasks so that you are not the only one getting the home ready. If you have kids that are older, you can provide them with a list of jobs they need to do prior to leaving for school that day or even the night before. Teach them what it looks like for it to be clean and up to showing standards, and when it’s not clean enough. Make it a competition by giving points to the family members that kept their area clean or make it a group effort in which everyone gets a big reward once an offer is accepted.
- Storage Bins are Your Friend – Your home should already be decluttered, and the excess items removed, so try to keep just the basics of what you and your family need. Instead of a million toys, keep it to a storage bin or two for each kid. After playing with it, they know that it all goes back in the bin and gets stored away for showings.
- Stack Showings – Sometimes it is just impossible to have a home always ready to go with just a 2 hour notice, so it can be beneficial for some people to have set times during the week for tours: Tuesday 3-7 pm, Thursdays all day, Friday 4:00 – 7:30 pm, and Saturday 10-4 pm. With a schedule like this, you know the times buyers could request a tour and you will be better prepared.
Safety Tips When Selling Your Home
Unfortunately, not every person walking through your home has the best of intentions. To protect your family and your belongings, here are a few tips:
- Never Personally Give a Buyer a Tour – If a buyer knocks on your door, don’t give them a tour. Call your agent and have them schedule a tour with them. I won’t scare you with any stories we hear in the industry so just don’t do it.
- Remove Valuables – Prescription pills, jewelry, cash, priceless paintings and collectibles, firearms and so forth need to be removed from your home or locked away in a safe.
- Check Windows and Doors – If you are able, after each tour do a quick walk around your first floor to make sure all the windows are locked properly, and the doors have not been tampered with. If anything is missing or is out of place, call your agent immediately.
I use an electronic lockbox so I have record of anyone who accesses the lockbox. If something were to happen to the home, we can go back and review the records.
The buyer’s agent is responsible for having the buyers stay together and keeping an eye on them. So, there are various levels of protection but keeping valuables out of plain sight is the best strategy.
Allowing your home to be as available as possible for home tours is crucial to selling your house quickly. If you are occupying the house, you need to find a balance of making it available and still keeping a normal family life. Always keep safety in mind.
In the next step, I’ll cover what it takes to market your home to generate even more interest from great buyers.
Step 9: Market Like Crazy
My job as a real estate agent is to market your home like crazy to get buyers in for tours. Your job as the homeowner is to get the home in its best condition and price it well so that it will sell. It is a relationship that both sides need to pull their weight.
The number one marketing tool we have as real estate professionals is the multiple listing service (MLS). This is where your home is syndicated out to hundreds of different websites where buyers are looking for homes to purchase. With over 93% of buyers using the internet to find their next home, this becomes critical for maximizing the exposure of your home.
Not only do you get more exposure, but buyers who are looking on the MLS tend to pay the most for homes. Let me explain.
Think about a homeowner who tries to sell a home on their own. As an American, we have the wonderful ability to do with our own property as we please and being able to sell it yourself is an option. A homeowner can put their home on a few websites for sale, but they won’t get the hundreds of websites available.
Also, buyers that look for homes being sold by owner are usually looking for a deal or they frequently have problems with getting a loan. So, they don’t attract buyers who are willing to pay top dollar and they don’t get as much exposure.
Top 5 Home Marketing Tactics
In addition to the MLS, here are my top 5 marketing tactics to get you even more traffic:
- Pretty Homes Sell Themselves – Do the work to get the home ready: staging, professional HDR pictures, and allow home tours. Having a great product is the best way to sell quickly.
- Maximize Your Detailed Description – Some buyers have set up their online searches with very specific parameters, so it is best to make sure your agent fills in all the applicable fields in your MLS. Some fringe buyers are looking for something very specific in their new home, which could include a media room, mother-in-law suite, workshop or other features and adding that info will help your home show up in their search. Also, the copy for your listing is very important, so don’t skip out on it.
- Create a Mega Open House – Open houses have lost some of their effectiveness. In 2003, 16% of buyers said they found their home through a yard sign or an open house. In 2017, that number dropped to 7%. While it isn’t as effective for getting a buyer to seal the deal, it can be effective for creating urgency. If an interested buyer walks in and sees other buyers talking positively about the house, it reinforces their feelings and helps them justify their purchase.
- Social Media – Don’t neglect to share your listing on your social media platforms. More often than not, a friend or family member wants to move into a neighborhood and a quick message can activate a dormant buyer. Also, it can be effective marketing for an open house.
- Other Agents – The old broker only open house is dead, but marketing to other agents who live and sell in the area is a great idea. They often have buyers or dormant buyers looking in the area, so talk with your agent about marketing to them.
Doing these extra marketing tactics will help to increase traffic to your house. You and your agent’s job is to get as much traffic through your house to generate lots of interest that leads to quick offers.
With all your traffic, one of the best things you can do is monitor the feedback of every interested buyer. If you constantly receive feedback like the carpet is in bad shape, then you can replace it or place a sign in the room letting the buyer know you are open to providing a credit so they can pick the flooring of their choice.
Unfortunately, we found that less than 40% of agents provide feedback after a tour. It is incredibly frustrating after you made your home available and they won’t even take two minutes to provide a quick response.
We make it a point to call, email and text each agent multiple times until they respond. We see a response rate 70% or higher and it helps tremendously when feeling out the market for a home.
Another simple thing we do that is uncommon is that we provide a weekly update on how the sale of your house is going. We send out an email or call (usually on Tuesdays) each homeowner selling their property with the marketing activities, a feedback report on all the tours and what kind of online traffic their website is receiving.
It is a simple thing, but hardly any agents do it and it just helps keep everyone up to date and responsive to the market.
I dive deeper into marketing in The Real Estate Game Plan if you’d like some outside the box ideas on marketing. To get the biggest bang for the buck, I focus on where the majority of buyers are looking and work to maximize exposure through those channels.
Correctly marketing your home can have a huge impact with reaching the right buyers. Make sure your professional real estate agent is communicating with you their marketing efforts and providing current feedback. For the final step, I’ll review what to do once you receive an offer.
Step 10: Negotiate & Accept the Best Offer
You have an offer, now what? Well, negotiate of course!
First Step to Negotiating in Real Estate
Review the contract fully so that you know the terms. Be sure to discuss with your agent the major requirements for you and what contingencies you are allowing the buyer to have.
In Texas, the 1-4 Family Residential Contract otherwise known as the contract, it is very slanted toward the buyer. Once an offer is accepted and valid, it can be difficult for a seller to back out. However, the buyer often times has multiple contingencies to get out of the contract: option period (the inspection time frame), credit approval, appraisal contingency, HOA contingency and so forth.
You need to know the major deadlines in the real estate contract and up until which dates your buyer can back out.
We provide a document with all the major contract deadlines to our clients and you can get a free copy of that here.
Know Your Buyer (and Their Agent)
There are usually four different people in a real estate transaction (buyer, buyer’s agent, seller and seller’s agent) and everyone has a little different negotiating style. This can obviously make things tough especially when the negotiations get heated.
Get as much info about the buyer and the agent as you can. Know why the buyer is moving, where they are coming from, if they are in a hurry and any other info you can gather will give you a better picture of what is important to them and if you can find any leverage.
A home buyer that is relocating for work and has one weekend to find a home is going to negotiate differently than the retired couple looking for a new home to retire to.
Have your Realtor® gather as much info from them as possible and be aware that you can have a ready and willing buyer, but the buyer’s agent (or your agent) can get their ego in the middle of the negotiations and ruin the deal.
If you want a great resource on negotiating, check out the book, Never Split the Difference by Chris Voss. It is absolutely amazing! Chris is a former hostage negotiator and really gives you practical advice for getting the best deal possible. This is my favorite negotiating book by far.
Know the Market
Real estate will cycle from a seller’s market, to an even market, to a buyers’ market and so on and so on. In a seller’s market, you will often have the upper hand in negotiating as there will likely be other interested buyers. The reverse is true for a buyer’s market with ample home inventory.
Clients of mine had a beautiful home we listed in a seller’s market but unfortunately, their little neighborhood had tons of listings and nothing was moving. Within a few weeks, we had a decent offer but from the beginning were very tense. I’m talking “losing sleep” tense.
I had the precarious job of negotiating the best deal for my clients with a buyer that wanted pretty much everything on the inspection report fixed or they said they would just go buy one of the many other similar homes.
I knew that we probably wouldn’t have another offer for an extended time, so they had good leverage on us. Luckily, after a week of quotes and stressful negotiations, we were able to negotiate for the sellers to fix only a few items and they moved forward.
Negotiate: Sometimes its How You Say Something
The national average for the sales price compared to the listing price has historically been around 97%. This means homeowners normally accept a price 3% lower than their starting price. This doesn’t mean you can list your home at 103% of market value in hopes of agreeing to your original 100% goal.
One seller told me that his listing price was non-negotiable and that he didn’t play those “games” that most buyers play. After multiple lower offers and a few months on the market, he changed his tune and we were able to negotiate a contract with only a slight drop in price.
Another thing I find important in negotiations is how you and your agent respond to offers is just as important to what you say. One client of mine was presented an offer that was low, very low actually, but they sent a list of repairs that needed to be made to the house to justify their offer. It offended the seller so much that she wouldn’t talk with the buyer afterward.
Beware of the Lender
We have a form promulgated form in Texas called the Third Party Finance Addendum. It is another form that provides contingencies for the buyer to escape out of the contract. It basically says that if they can’t get credit approval by a specific time frame, then they are able to back out and receive their earnest money back (Earnest Money is held at the title company to show a seller that the buyer earnestly wants to buy their house. It is usually 1-2% of the purchase price but it is negotiable).
It is aptly named Third Party because the lender is are very much apart of the contract and yet no one really has control over them, not even the buyer. If the bank or your lender needs another week to close the loan, you pretty much have to work with them or start all over with a new lender.
I don’t want to scare you as most lenders I have worked with do a wonderful job of servicing their clients and closing the loan on time. There is a small portion that are flat out terrible and will ruin your home selling experience.
Negotiate with your buyer to create a contract in which their contingencies are limited. Talk with your real estate professional about their experience with the particular bank or lender the buyer has selected as it can dramatically affect your home selling experience.
Selling a home doesn’t have to be difficult. It can be a lot of work but if you follow the 10 Steps to Selling a Home Fast (and get the most money for it), then you will be ahead of most of your competition and well on your way to a fast sale.
The biggest two keys to getting a home sold quickly is 1) working with the right professionals and 2) doing the right prep work when getting the home ready for market.
Good luck on a fast sale!