August 12, 2017
Home Selling Myths you need to Stop Believing!
Many of these home selling myths are regarded as hardcore truth by home sellers!
For whatever reason, most information related to home selling that can be found online (and offline!) is taken at face value, and even though completely unsubstantiated, it is assumed to be correct.
Things couldn’t be further from the truth!
Come on, people!
As you will read below, some of these home selling myths seem to be so taken for granted that one doesn’t even bother to verify the correctness of the information!
Again, we are not talking about selling a 2nd hand smartphone or some old laptop computer here, this is selling one of life’s most expensive assets!
For most of us, it’ll be our only expensive asset we’ll ever possess!
Yet, a lot of decisions these homeowners are making will be based on home selling myths, which is hearsay at best?!
Euh, what? Why?
Whether it is ignorance, temporary indifference, or greed (or any combination thereof) being blamed for not knowing the truth behind some of these home selling myths, the real bottom line is that a home seller cannot afford NOT to do his homework!
After all, the home sales process isn’t some dark medieval mystery: one can perfectly write out the steps involved ahead of time and draw the necessary plan of action!
It’ll be exactly those homeowners mentioned above who will be the ones having a bad home sales experience, or worse, actually being unsuccessful in getting their homes sold.
While there might be many ‘real estate truths’floating around on the internet, there are many, MANY more home selling myths to be found!
Why would you believe whatever a complete stranger says on some internet forum as being truthful?
And where does one draw the line to accept something as ‘truth’?
Your neighbour or uncle trying to regurgitate some classic real estate lines over the weekend barbecue might not make one iota of sense!
Some myths might be quickly explained with some rational thinking, others take a lot more effort in getting debunked!
Even though the list could have been quite extensive, I have limited it to the first 15 home selling myths that came to mind:
Home Selling Myth #1 – The property’s selling price is set by the seller
“I know my house is worth x amount” is something real estate agents hear all the time.
Sure, the home seller will be the one making the final decision as to what level the house sells for!
However, contrary to the home selling myth, the actual selling price will be subject to market conditions, the property’s location, and its size!
Many home sellers might be of the impression that they’re sitting on a gold mine, because “all of their friends and family have said what an incredible value the home offers”.
Whereas they all have the best interest at heart for the home seller, with all due respect, they won’t be the ones buying it, nor are they now suddenly all real estate pricing experts.
And, the home seller is probably least of all suitable for pricing his own property, as he’s too emotionally involved and will obviously hope to get more money out of it than what it’s worth!
This may sound a bit harsh, but unfortunately, those are the facts!
In order to arrive at a successful sale, you don’t want too much of a variation between the initial asking price and final selling price!
Home Selling Myth #2 – Overpricing a home results in higher prices
Would you as a home buyer buy the first home you find online?
I seriously doubt it.
You will comparison shop, where you have a thorough look at all the comparable properties on the market in any particular neighbourhood, and will try to find out how much bang for your buck you get!
And if it turns out that the home is overpriced versus what else is for sale, that property will not make it onto that buyer’s short list and plainly be ignored for potential viewing consideration.
“Let’s see how the market reacts” seems to be a favorite home seller expression throughout the world!
Yet, coming onto the market with an overpriced property will only result in it getting stale.
My colleague once told me, unlike wine that gets better over time, homes are like freshly baked bread. Awesome to consume the first few days, but as time goes, less and less pleasant!
Exactly how the market will react once the property has been advertised longer than average!
Buyers haven’t even seen the property in person, yet they’re wondering what’s wrong with the house? Why is it still on the market after all this time? Why hasn’t it sold? Clearly, something must be wrong with it!
Are those the reactions you as a home seller would like to hear from potential buyers?!
Believing the home selling myth where overpricing a property will result in higher prices, will only result in actually seeing LOWER prices!
Plenty of studies (and personal experience)indicate that selling an overpriced property will eventually result in a lower sales price than what the house may have fetched if it were priced correctly from the beginning!
Home Selling Myth #3 – Overpricing a property leaves extra room for negotiation
The basic premise of negotiating is having two parties present to hopefully arrive at a mutually agreeable outcome. Guess what?
You’re going to seriously struggle to get a (serious) 2nd party to that negotiation table!
By actually believing this home selling myth that overpricing a property is meant to give an extra cushion during negotiations, you will have willingly pushed away any serious buyers.
Why would any home buyer in their right mind be offering anything on a clearly overpriced property, knowing they can put in offers on comparable homes which are already lower in asking price to begin with?!
Home buyers are more read up and researched than ever before!
They’re more than likely to completely walk away from it altogether, rather than trying to negotiate lower!
You will have accomplished the exact opposite by chasing away home buyers instead of attracting them.
Home Selling Myth #4 – The longer the marketing time, the better the offers
“Wow! If the agent is able to bring me an offer within a few days of marketing my house, can you imagine how high the offer will be in a month’s time?!”
“We’re not in a hurry. A better offer will come along. We only need that one buyer.”
Does any of this sound familiar?
The reality of the matter is that the longer a property sits on the market, the more likely lower offers will come in!
Similarly as mentioned in the previous home selling myth, interested home buyers will start asking rather undesirable questions, such as what’s wrong with the house that it hasn’t sold yet.
In other words, time on the market is NOT the home seller’s best friend!
Yet, isn’t that completely the opposite of what this home selling myth said we supposedly do have on our side?
Home Selling Myth #5 – A quick offer means the property’s priced too low
“Getting an offer this soon only tells me that we priced our property too low! Does this agent think we’re going to give our home away?!”
While at first, one can see why this home seller would be upset, it will quickly become obvious that there’s a very good reason as to why offers came in that quickly!
‘Hot buyers’ (and their buyer agent representatives) have been scanning the available properties on the market non-stop for the past weeks/months until something comes along that suits their needs best.
They’ve pretty much seen everything that’s for sale in that particular area already, so when something new comes along, they’ll be the first to enquire and request a viewing!
Isn’t that what you as a home buyer did when you were looking for your current property?
With an effective marketing plan in place by the real estate agent, a correctly-priced home will immediately draw the attention of potential home buyers and depending on the market inventory available, offers can potentially be forthcoming within hours!
Home Selling Myth #6 – Real estate agents don’t purposely overprice properties
“The real estate agent who gives the highest listing price believes in my property the most!”
“After all, the longer it takes the real estate agent to sell the home, the longer it’ll be before he gets paid, right?”
Well, we all know that the first 3-4 weeks of marketing out of the gate are the most crucial when selling a property!
Let’s not forget that you only have one chance to make a first impression.
Real estate agents in dire need of new business will start pricing properties higher during their interviews than what they actually are, in order to secure the mandate!
But unfortunately, it happens all the time!
It’s often referred to as real estate’s dirty little secret when “agents buy the mandate”!
Whereas it might be tempting to go with the agent providing the highest listing price, not only do you need to make sure to interview a number of agents to get a better idea of the ‘true market price‘, you also need to ask proof by means of comparable market analysis report!
That’ll be the only way to avoid falling victim to this ‘popular’ home selling myth!
Good luck to the agent who’s been trying to convince you of those (overpriced) levels to now come up with comparable properties to back up his fables!
Home Selling Myth #7 – The real estate agent with the lowest commission will net the seller more
Along the lines of the previous home selling myth, selecting the right real estate agent will be positively correlated to a successful marketing campaign and the ensuing home sale!
If the going commission rate is 6%, why would any agent be willing to work for a 3% mandate?
Will the home seller score out of this lower commission cost?
However, it might come at a cost elsewhere!
Let’s think of the following few points:
If the agent was so quick in willing to work at a discounted commission rate in order to get the business, imagine how quick he’ll settle on a sale price during negotiations to get a deal!
Less commission for the agent will very likely translate in a lower marketing budget to get your property advertised. Meanwhile, a full commission agent will be able to engage more marketing tools in getting the property exposed to an audience as wide as possible. Both will very likely lead to a lower sale price for you, the home seller!
It might be tempting to follow the advice of this home selling myth, however, be warned that an initial saving in a few commission percentage points might end up costing you +10% in your home sale price!
Penny wise and pound foolish?
Home Selling Myth #8 – You can completely depend on online valuations
There have been ample online articles discussing the effectiveness of automated home value estimates.
Does Zestimates ring a bell?
Some property portals believe that their algorithms can outsmart the traditional real estate agent valuations.
The reality is that they have yet to do that!
In all fairness, it might be a starting point, but it’s definitely not a replacement for what the real estate agent can bring to the table.
Depending on the geographical area, Zillow’s Zestimates prices can be off by as much as 40% and needless to say, remain an ongoing source of conflict over correct home prices!
Heck, some Zestimate accuracy studies even arrived at highest predicted values of 256% of the actual sales price and lowest values of 62.8%?!
Bottom line: their values can be wildly inaccurate and inconsistent, and provide the home sellers with false expectations regarding the valuation of their homes!
Having done some price research on Zillow prior to the real estate agent interview, can you imagine the home seller’s reaction once the agent provides him with the ‘real home value’?!
In the end, there are just too many variables which can affect the valuation, leading the standard models or formulae to provide completely inaccurate values!
After reading this, how much confidence are you willing to place in this home selling myth?
Home Selling Myth #9 – The house sells itself
“This is a gorgeous house, so I’m sure once those interested buyers start viewing it, we’ll be getting offers in no time. The house pretty much sells itself!”
Even though anyone hearing that last sentence might nod their head, we all realize that it takes a heck of a lot more than just announcing to the world that a particular property is for sale!
Isn’t the job of the real estate agent to help the interested buyer make a decision which is in that client’s best interest, all within set parameters put forward by that client?
Wants vs. needs?
Features vs. benefits?
Budget vs. pie in the sky?
Dream home vs. existing inventory?
Objective advice vs. emotional handling?
Thinking out of the box vs. thinking black-and-white?
Going the emotional route by describing the potential lifestyle, decorating opportunities, pointing out the gorgeous views, great entertainment areas etc will definitely assist the interested buyer in arriving at a decision for himself.
The agent will be the one trying to create that new lifestyle for the client and build an emotional connection to the house!
Good real estate agents don’t manipulate their clients, but rather “set them straight” when they deviate from the path towards homeownership.
And if that means that homeownership itself isn’t currently a match for that client for whatever reason, so be it!
But is a house selling itself?
Nah, not really!
Home Selling Myth #10 – Selling a home “For Sale By Owner” saves money
Why wouldn’t anyone want to sell their own home? You’ll save tons of money, right?
There’s a lot more to think about than just taking some nice pictures, putting them online, and having a ‘For Sale‘ sign up!
Sure, one might arrive at a market-related listing price by cheekily interviewing a couple real estate agents, but that’s just the beginning!
Here are a number of reasons why this home selling myth of saving money by going FSBO will fall flat on its face:
Who will be marketing the property to get the maximum exposure? Who will be screening the potential home buyers?
Who will be handling the incoming inquiries throughout the working day? Who will be assisting with the buyer viewings throughout the working day?
Who will be negotiating, filling out of the contract and covering its many contingencies? Who will be dealing with home inspection findings?
Professional real estate agents do the above (and more!) all day, every day!
Did you know that recent NAR studies have shown that the average house sold by the homeowner himself will fetch about 15-20% LESS than what the agent would have managed to get?
Going through all the trouble mentioned above, hopefully getting to a closing stage, and getting paid that much less?
Why bother with those odds?
You might as well try your luck on the Mayweather – McGregor fight!
One of my all-time favorite lines is the following:
If you think it’s expensive to hire a professional, wait until you hire an amateur!
Why do you think barely 10% of homes sales each year are sold by its owners?
Home Selling Myth #11 – Open houses sell houses
Let me ask you something:
Do you have any idea what percentage of homes get sold because of open houses?
What do you think? 10%? 20%? 30%?
Close but no price: according to the National Association of Realtors (NAR), only 2% of homes were sold thanks to an open house!
Just because something is possible does not mean that it is very probable!
If you had a 98% chance of NOT selling at an open house, would you still go ahead and say that open houses sell houses, which is what this home selling myth claims?
Perhaps more home sellers ought to remember this little statistic next time the real estate agent pushes them to hold an open house as part of “getting the house sold”.
And as a general caveat, be sure to ask about the potential drawbacks of an open house!
Home Selling Myth #12 – Unusual marketing leads to higher prices
“I’m not convinced the property portals (or MLS) will give our property enough exposure! Why don’t you advertise in some of the national home leisure magazines?!”
Depending on the price level of the property being marketed, there might be quite a difference in the marketing plan, where the luxury properties will have more tools available, such as drone or video footage, official PR release across (inter)national media, or even TV coverage.
However, some home sellers do wrongly assume all of the properties will be enjoying that type of marketing exposure!
The vast majority of homes will be covered by a substantial marketing plan, which will suffice in getting plenty of traffic of interested home buyers!
Is there any particular reason there hasn’t been any traction on the property thus far?
If the property isn’t attracting the correct pool of home buyers through the traditional marketing methods, there’s nothing a higher level of marketing can do to guarantee the sale of an overpriced home!
Home Selling Myth #13 – Home improvements pay for themselves
“Whatever money spent on home improvements will definitely increase the value of the house by as much or more, right?”
Well, sorry to burst your bubble, but according to Remodeling magazine’s 2016 Remodeling Cost vs. Value Report, you’ll only recoup an average of 64% of the cost of the renovations made to the house!
This most recent report actually points out that there’s only one home improvement which will result in you getting more money than it cost you!
So, unless you have no intentions of selling your property anytime soon, be very careful before you start with those big home improvement projects, as they may not bear the ROI fruits you had hoped for!
Next time you hear your neighbour talking about his next exciting “home investment“, perhaps you may want to bring up this home selling myth!
Home Selling Myth #14 – A home doesn’t need to be prepped for sale
While there are home buyers out there who are looking for a fixer-upper or something in need of some renovations, the reality is that the majority of buyers prefer to buy a home that’s move-in ready!
Even if the home seller is aware of certain aspects that need some attention, it would be in his interest to actually attend to prior to listing the property for the following couple of reasons:
Increase the pool of interested buyers by making it move-in ready; Make the property more presentable to visiting home buyers;
Beneficial to overall marketing by indicating that it’s been recently renovated; Strengthen the position of negotiation for the home seller;
And get an offer accepted quicker!
Bottom line: the home seller cannot afford to give this a miss!
Sure, one could get away by believing this home selling myth, assuming of course that the home seller doesn’t mind forfeiting thousands for something which doesn’t have to cost a lot of money!
It’s amazing to see how a general cleaning, some minor paint jobs, basic staging, and perhaps a pre-listing inspection can positively affect the home sale result!
Home Selling Myth #15 – The best time to sell a house is during the summer
“Can’t we wait until summer before selling our property?”
Is there even such a thing as a ‘best time’ to sell a house?
Yes, even though the spring and summer periods tend to be the most popular times to put the property on the market, statistics indicate that pretty much selling a home in any season will get the job done!
Your agent will know the particulars of your respective market and adjust his marketing plan depending on the current season.
Selling a property in summer does have its advantages, but also comes with a few downsides.
And likewise when selling a home in winter!
With the former, the higher number of available stock will give home buyers more choice to select from, potentially being reflected in prices offered.
Winter or holiday periods might be somewhat slower from an activity point of view, however, depending on the real estate market, that reduced number in inventory is likely to help sustain price levels for the home sellers!
It will be quite a disappointment for the home seller if he actually waited half a year before going on the market, thinking he’ll get a much better price in summer than he would in winter!
Believing the home selling myth that it’s only good to be selling in summer is definitely outdated!
Again, this is where the valuable advice of a good real estate agent comes in very handy!
By now, we know that home selling myths can be found everywhere!
They’re all around us and are almost haunting us!
Whereas many home sellers may have regarded these myths as the truth before reading this article, it was my intention that these home selling myths have now been debunked once and for all!
Knowing the facts will hopefully give home sellers enough ammunition to avoid the pitfalls caused by these myths and arrive at a successful home sale!