I love my job. I really do. I have the pleasure of working with sellers all over the city and from all walks of life. Just this week I will be consulting with seller clients in Raymore, Roeland Park, Prairie Village and Waldo. And just this quarter we have listed and sold homes in values ranging from $109,900 to $875,000. Although each home and seller is different, there are some common misconceptions that come up quite often. I thought that I would share a few of them with you this week.
Misconception 1: “We purchased our home for $X and we have put $Y into it, so we need to sell it for $X+Y”
The definition of fair market value for a home is a selling price to which a buyer and seller can agree. Although a seller may have a goal number in mind when it comes to sales price, the buyer must also see that the sales price is in line with the pending and sold comparable homes in the area. Coming out of the down market, buyers are still very concerned with making a smart investment. So even if a seller has put $80,000 into home improvements, most buyers are aware that at best a seller will receive 60 percent of that investment back in the sales price. And what a seller paid for a home is no more relevant to market value than what a stockholder paid for a share of stock three years ago. A share of stock and a home’s value are completely based on today’s market and the effects of supply and demand.
Misconception 2: “It only takes one buyer. We just need the right one.”
Yes, it only takes one buyer. But wouldn’t you like the opportunity to pick which one? When your home is at a price or in a condition that only one buyer has an interest in purchasing it, you have to work with that particular buyer. Conversely, when your home is at a price or in a condition that multiple buyers have an interest in purchasing it, you get to pick the best one. Isn’t that really what you want? Usually, “It only takes one buyer” is the battle cry of a seller who is overpriced or has a home with some condition challenges. Maybe the decor is a bit “personal” or the home is outdated compared to the competition. Waiting for one buyer to come along puts the buyer in the driver’s seat. Pricing a home competitively in line with the current condition will keep the seller in the driver’s seat and attract the largest number of potential buyers.
Misconception 3: “We just want to try to sell our home. If it doesn’t sell, no big deal. What’s the harm?”
What’s the harm? The harm is that how you show a home and how you live in a home are different scenarios altogether. To position a home for sale requires thinning, staging, de-personalizing, and allowing access to the market for showings. It is not easy. However, to the motivated seller it is worth it. It may not be worth it to a “trier.” The real estate market is really intended for those who NEED to sell and those who HAVE to sell. Sellers who need or have to sell will do everything it takes to attract a buyer including a competitive price and presenting their home in great condition. In return, they will attract buyers. I find that motivated sellers attract motivated buyers. The opposite also applies. Unmotivated sellers (triers) attract unmotivated buyers (triers). This is why many of the FSBO’s that eventually hire us to sell their home will share that they encountered a lot of “looky loos” during their time as a FSBO. Because a home listed with a Realtor cannot be shown without either the listing agent or a buyer’s agent allowing access, “looky loos” tend to stick to properties that they themselves can access.
Next week we will touch on common buyer misconceptions. Please remember that if you have a specific topic that you would like to see us cover in our column, please email us. We are here to help!