Mistakes that will cost you money, even in a hot market
1. Selling directly to a Buyer / Cash Buyer without kisting your home in the MLS
Buyers want a deal, they don’t want to compete with other buyers. Especially in a hot market, where demand is high and supply of homes is low, buyers will naturally want to find Off market deals so that they don’t have to compete for the highest bid. In a Seller’s market you will oftem see the letters sent by buyers or Realtors. Never get tricked by Realtor letters on your front porch that say: “I have a buyer for your home”. They may, but why would you want to sell to a buyer without getting your home in front of many buyers, in order to get Top Dollar?
Your best interest is to create competition among buyers by having your Strong Experienced Realtor, market your property to all potential buyers looking in your area, creating a bidding war and driving the price higher.
Working with Cash Buyers. Yes! The ones who advertise “We buy ugly houses” or “We will buy your home All cash in 7 days”. Cash buyers are naturally looking for the best deal in town. Cash Buyers have been prudent enough to save, and they think that they deserve a bargain because they have the ability to close quickly. Here is a great example. I know of a home in beautiful Woodland Hills, that had multiple offers in a hot market. The seller had offers way above the asking price. One of the offers was from an all cash buyer, which was off course on the low side. Now due to the seller’s circumstances, which the seller was honest enough to disclose to the cash buyer(this is why its never a good idea for a seller to talk to the buyer or their agent directly), the cash buyer never raised his bid, because he simply knew the sellers weakness. The highest offer the seller had was $15,000 over that cash buyer.
Even though the Seller’s Agent advised the seller to go with the highest well-qualified offer, the sellers chose to go with the cash buyer, because they had the ability to close in 7 days, and he needed the money. At the end, the seller ended up fixing every little thing the Cash buyer demanded, promising to close in the next two days, only for this drama to drag on, the transaction took 33 days to close. A learning experience for the sellers and a great deal to the buyer. As a Seller you may not want to sell to a cash buyer unless, they have competed with other buyers to give you the highest reasonable price. As a seller always know that you are getting the best buyer at the best price possible.
2. Hiring an agent who also represents the buyer, as a dual agent, to help you save commissions
3. Not Pricing your property correctly
Take a lesson from the Ebay, Amazon, or even the big banks who sell their foreclosure property for TOP DOLLARS. They start a bit below the market value to attract more buyers and create a bidding war, while presenting a remodeled product, selling for much higher than the Market Value. Trust me, there is no such thing as if I price my home lower, I will sell for lower in a hot sellers market.
The higher the price above the market value, the longer the property sits on the market. That is just the law of Economics. I have seen so many properties not getting sold in a hot market, because the sellers have an unrealistic expectation of what they want and the prices have not reached that point yet. Let’s assume a miracle of unthinkable happens and you are able to sell thousands of dollars above the already high price. An appraiser will have an impact on what the buyer’s lender can lend so you may not get that value anyway. Pricing your property correctly is very important.
Bottom line, if you are not priced right, you are actually leaving money on the table.
4. Not Marketing the property to its strengths
Just because your home is on the MLS does not mean it will sell. So many times I come across homes on the MLS listed for more than 30 days in a hot market. Bottom line, your agent is not doing enough marketing. Let me unlock a secret for you. Did you know, that according to National Association of Realtors, Open house was one of the least likely marketing strategies to sell a home? Most Realtors will not tell you this, that an open house is for Realtors to build their own database and pick up clients, to whom they may sell other homes.
I tell my sellers, I don’t need to do an open house and put them through inconvenience, then to have unknown people walk freely into your homes during the open house, which to me is a scary proposition. With the advent of the internet, open houses are not necessary. On my listings, my videos and my pictures do an amazing job of having the buyer walk through the home virtually. Remember, an open house is mostly for the agent to get more business. To me, this is the least likely advertising to benefit the seller.
There is so much more to Marketing today than the old school, Newspaper Add, Open Houses, and Sign in your yard. These are some of the least likely strategies to sell your home. Great agents like myself, use the internet to the best advantage. Today the world is at the click of a button. Make sure your agent is using the correct strategies to get you Top Dollar.
5. Not knowing what to disclose to the buyer!
This to me is the one, that has come to haunt many sellers in a hot market. Imagine having a great close, happy buyer, only for the buyer to move in, hear something from somewhere that you forgot to disclose. Oops, you have a lawsuit on your hand. A very common occurrence in Los Angeles Real Estate. Disclose everything (even if it is negative) using the right disclosures and forms.
There are so many Forms, so many disclosures, that an average homeowner has no clue what forms to use, what to disclose. This is the most dangerous part of selling a home. Did you know that you should provide reports like the TDS, SPQ, Natural Hazard Disclosure Reports, 9A reports, Abstract of Title, FIRPTA and many others in a real estate transaction to protect yourself?
All those sellers who fix the home themselves without using a licensed Contractor for repairs, to save money. You will set yourselves to be personally liable if something were to go wrong. It’s much better to spend the money and use a 3rd party licensed company to repair any fixes, than to be vulnerable to lawsuits. Trust me on this one. This is perhaps the most important common things sellers get sued on, trying to save money.
Hiring a weak agent will absolutely, positively cost you money. Most sellers are focused on two things when they interview an agent, Price and commissions. Sure, those two are two important things, and who doesn’t like to save money right? The right price will cause your home to sell in multiple offers in a hot market making you more money, a great agent who works hard for his sellers and does the best will stand up for the commission they make. Truth is that great agents deserve what they get paid for. A great CPA will not take a less than what he deserves because he knows he will deliver more money to you at the end. Most sellers will end up with weak agents and will never know what a Great Agent’s service, ethics and results look like. I see this every day. Ever wondered why a great looking home sat on the market for over 30 days in a hot Los Angeles Market, while the home in lesser condition down the street sold for Top Dollars in few days?
At the end of the day, there are some awesome Agents around who will give you an unforgettable experience. Your job as a seller is to find them. Your best interest is to interview few chosen agents before you decide to hire one. Demand nothing but the best, because you simply deserve it.
Disclaimer: Pebble Singha is not an Attorney or a Financial advisor. These are independent views and opinions of Pebble Singha and how he sees life in Real Estate. This blog is not to discredit or devalue anyone or their name. Information deemed reliable but not guaranteed. CA DRE Lic 01458748.