Brett Stratton's Real Estate Blog

1. Pricing Your Home Incorrectly

Every home seller wants to sell their home for the highest possible price, which makes complete sense.  Pricing a home correctly for the market and your marketing strategies is extremely important.  I have seen home sellers price their home based on what they want to make or have to make to pay off bills.  Do you think the buyer cares about the seller’s bills?  I don’t think so!  Pricing a home based on gut instinct isn’t a good idea either.  Buyer are smart and getting smarter by the minute due to all the information that is just a click away on the internet, which brings me to my next pricing strategy.  When pricing a home that will be marketed on the internet it is wise to fit in as many search categories as possible. Most internet searches are categorized in $50,000 increments. So when a home buyer searches for a home for $175,000 they will select a range of $150,000 to $200,000.  If you price your home in the conventional way you might be tempted to price your home at $149,999 thinking the $1 less pricing that is used in departments stores will work for home pricing as well.  It doesn’t.  The home buyer looking from $150,000 – $200,000 wouldn’t see your home.  If you price your home on the $50,000 increments you are doubling your appearance in search results by being at the over lapping price point.  Pricing at $150,000 will give you exposure to all the buyers searching a range of $100,000 – $150,000 and a range of $150,000 – $200,000. 

2. Failing To Prepare Your Home For Sale

When working with a seller I frequently have to remind them that just selling a home for the highest price is only half of the battle you also want to think about how to end up with the most money in your pocket as possible.  The techniques I use include preparing the home seller and the house to meet the buyers’ needs and to prevent giving away money once an offer has been accepted.  Have you ever heard about a seller accepting an offer only to have the buyer come back to the seller and ask for thousands of dollars after completing a home inspection?  Everyone will agree that preparing a home for sale by doing things like painting and clearing are part of the prepping process before selling a home, however it takes a little convincing when I ask the seller to complete a home inspection and  other inspections such as a roof, termite, and so on.  I hear responses like, “Isn’t that the buyer’s responsibility?” I say why yes it is and then it is their responsibility to ask you to pay to fix everything.  The Buyer will be very nervous when they buy a home.  They do not want surprises that will make them even more nervous.  Doing inspections in advance gives the buyer peace of mind that you have told them everything great about the home and everything not so great.  Buyers understand that no home is in perfect condition.  They just want to know all of the facts.  Once a buyer agrees to a price it is based on what they know.  If you have left something out, even if not on purpose and even if you didn’t know will not matter, the buyer will want the seller to pay for the new items discover during an inspection.  The smallest amount I have seen a buyer ask for is about $3,000.  The average home inspection will cost about $500.   I think spending $500 to save $3,000 and save a lot of grief and the potential loss of a buyer is well worth it.

3. Using Hard Selling Techniques During Home Showings

Buyer’s these days do not respond well the hard sales techniques.  They can smell them a mile away and will do anything to avoid them.  If you hard sell a buyer you might lose them just by making them feel uncomfortable. A buyer wants to feel relaxed and get the warm and fuzzy feeling when they find the home they want to buy and make their own home. Being push might just scare them off and they will discover the warm and fuzzy feeling at the house for sales down the street with the polite sales person that baked chocolate chip cookies and offered them to the buyers when they walked in the front door.

4. Mistaking “Lookie-Loos” For Real Buyers

Not every person that walks in the door is a potential buyer.  Some people just like to look at homes for sale because they are curious or because they are looking for decorating ideas, they could also soon be your competition.  Home sellers will frequently check out the homes in their neighborhood before they put their home up for sale.  If you have your home listed by a Realtor© it might be a good idea to refer all interested buyers to your Realtor© so he or she can prescreen them for you and make sure they are ready, willing and able buyers.  There is also safety and negotiation power to consider.  Someone coming to your door may not have the best intentions in mind or they might be feeling you out to see if they can get your home for a lower price or more favorable terms.  If the buyer knows you have to move in 30 – 45 days due to a job transfer they may offer you less because you are under pressure to sell.

5. Not Knowing Your Rights and Obligations

A real estate purchase agreement is a legal contract which comes with certain rights and obligations being well informed about your obligations and rights can keep you out of trouble.  In addition to the obligations in the purchase agreement there could be obligations imposed by local ordinances or laws.  Violating your obligations could land you in a lawsuit with punitive damages.  Any ordinances or obligations that will be a requirement upon the sale of your home should be addressed in advance of accepting an offer.  Repairs to your home could cost thousands of dollars and could affect your decision to sell.  Some states do not require you to sell your home if you get a full priced offer but change your mind, in other states you might have a legal issue if you refuse to sell your home to a buyer who has offered you full price.

6. Choosing The Wrong Marketing Plan For Your Home

Homes in different markets will require different forms of marketing.  A home in a rural area may not do well with a marketing strategy that targets urban socialites and a condo in an urban city would not be marketed in the same manner as horse property.  Hiring a Realtor© that knows the market and is experienced in selling the type of home you are selling is a key factor in your success. A knowledgeable Realtor© will employ a wide variety of marketing techniques customized to your home’s benefits and features. 

7. Choosing The Wrong Realtor© Or Choosing Your Realtor© For The Wrong Reasons

It is likely that you have not sold many homes in your lifetime and you may not be experienced in interviewing and determining which real estate agent is the right one for the job.  Most people hire the first person they talk to about selling their home.  Very few sellers interview multiple agents before choosing the best person for the job.  Ask important questions to find out the whether or not the Realtor© has the experience you are looking for and whether there is a personality fit.  You will be working with your Realtor© for a few months and they will be helping you with what could be the most expensive financial transaction in your life time.

A big mistake home sellers make is to hire the agent who will give them a lower commission rate.  It is true commission rates are not set and are negotiable.  Selecting an agent that will sell your home for 1% less than their competition might sound like a good deal however their inexperience could cost you double the 15 or even more.  Don’t forget your sale price is only half of the battle, the amount of money you walk away with in your pocket is even more important.  Select an agent that will drop their commission without a fight will probably negotiate for you in the same manner.

1. Not getting prequalified

What you think you can afford as a buyer might be completely different than what a bank might be willing to lend especially if you have poor credit or unstable income.  When you make an offer on a house you will be required to make a good faith deposit that could be equal to 3% of the purchase price.  You don’t want to waste the sellers time or your time in negotiating a purchase that you will not be able to complete and to make matters worse you might not be able to get your deposit back if it is not stipulated in the purchase agreement that you get your deposit returned in the even you are unable to qualify for a mortgage.

2. Failing to Consider the “Cost of Ownership”

When you buy a house don’t make the mistake of getting caught up in only thinking only about what your monthly payment will be or the final sales price, you might want to consider the cost of ownership.  Does the house need a lot of repairs that will have to be performed in the immediate future?  If the roof needs to be replaced and it is summer time no worries but when winter comes and it starts to leak will you have the funds to replace the roof?  A new roof will cost you around $5,000 and up.  There are many other expenses to consider as well such as special assessments, heating and cooling costs, commute costs and so on, don’t over extend yourself by not doing your homework.

3. No Home Inspection

It is tempting to trust the seller when they are telling you that everything in the house is in perfect working order.  Sellers have a tendency to downplay any problems with their homes because they are trying to sell it and do not want to scare you away.  Spending a little money up front can save you a lot of headaches and expenses in the future.  The average home inspection will cost you about $300-800 depending on the size of the home.  Isn’t it better to spend $300 and prevent yourself from buying a home that needs thousands of dollars in repairs that you can’t see?

4. The Future is important

Many first-time home buyers get so excited about buying their first home that they do not make a decision based on where they will be or what their needs will be in the next 7 years.  Most people stay in their first home about 7 years.  That is the time frame you should be considering when you buy a house.  You will most likely not be retiring there but you want to think in broader terms than just one to two years.  You might not want to buy a two bedroom house if you are a couple with two kids and your mother -in-law is moving in with you.  You also might not want to buy a 5 bedroom house that is at the top of your budget if you are single.

5. Not Hiring a Buyer’s Agent

As a home buyer you don’t have to pay the Realtor© who represents you in the purchase of your new home.  The seller typically pays both their agent and the buyer’s agent.  It is free so why would you choose to not do a little research and choose someone who will represent your best interests and protect you from making a mistake with the potential of devastating financial consequences? Many people think using the seller’s agent will help them get a better deal and ensure their offer is accepted over other buyers’ offers.  It could be true but you might want to consider the ethics of a real estate agent that would be more concerned about making more money than giving quality service to the buyer and seller.

1. Reputation.  When you are selecting a new brokerage to hang your real estate license it is important to consider the reputation of the brokerage in your geographic area.  While large brokerage firms such as Coldwell Banker and Re/Max have great national reputations they might not have a great local presence or reputation.  In Albany California, the local Re/Max office closed recently giving the local residents the impression that Re/Max isn’t a successful real estate firm.  In other areas Re/Max is doing quite well.  I just opened Real World Green Living in El Cerrito California right across the street from a former Coldwell Banker office that closed about a year ago.  The office still sits vacant.  The Coldwell Banker in Berkeley California remains very successful with a great reputation. Find out what the locals citizens think of the brokerage office you are considering before you decide to move to that firm.  A little research beforehand could save you a lot of time, money and grief.
2. Training & Support.  Probably the biggest complaint from Realtor© Associates is that they do not get enough training or support from their brokerage.  In small companies there might not be enough resources to provide all of the training the agents might need so they have to get the support from other sources such as seminars and public speakers.  In large companies the training might be too organized and ridged to meet the needs of the individual real estate associate to get the most benefit for their time and energy.  Try to find a company that provides a good network of corporate training both in person and via the web as well as great leadership in the form of one on one training and coaching to help you meet and exceed you goals. A company with a full scale corporate training gives you the ability to study on your own terms and at your own pace, adding to that personal coaching and you will have a well-rounded training system.
3. Market Area. Many real estate companies and agents think in a global scale.  Understandably, real estate agents think that the larger the territory they cover the more business they will do.  That is not true however.  The narrower your focus the better you will understand the market and the customer.  The customer will begin to see you as the local expert and will not seriously consider anyone else when buying or selling a home in your territory.  Don’t pick a market that is too big.  It is not wise to try to be everything to all markets.  You will have to spend a lot more money trying to develop you name and a lot more time trying to become a member of the multiple communities.  The trick is to pick a market area where someone doesn’t already have a market share over 20%, a market area that isn’t too big or too small, and is likely to have a good turnover rate.  If a brokerage has a 60% market share of the territory you want to represent and there are 4 brokerages in the area it means that one company gets over half of the business and the other three split the remaining 40% market share.  Choose the company with the highest market share and leverage that brokerages success into your own.  If you choose a company that is competing with a dominate company it will cost you greatly in time and resources with little to no impact. 

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