The housing market in the Greater Toronto Area is on a tear. With increasing prices, historically low interest rates for buyers, and the approaching spring sale season, you might be considering selling. To get the most money out of your home, it pays to do everything right. Your biggest advantage is that the market is on your side. The latest MarketWatch data from the Toronto Real Estate Board clearly points to a seller’s market. According to the latest report, of the 5,188 properties that were sold in January 2017, on average they were sold at 4% above the list price. With only 19 days of home inventory in the market, homes are selling fast. In spite of the strong market, it is important to be aware of the most common pitfalls so you don’t make costly mistakes in the sale of your largest investment. We’ve put together ten of the most common (and most avoidable) seller mistakes. Learn to identify and eliminate all of these, and you can save yourself thousands – even tens of thousands –of dollars.
Here are the 10 mistakes you must avoid:
1. Misalignment of your motivation and selling strategy
Your motivation to sell is the determining factor in how you will approach the selling process. It affects everything, from what you set your asking price at, to how much time, money and effort you’re willing to invest in order to prepare your home for sale. For example, if your goal is for a quick sale, this would determine one approach. If you want to maximize your profit, the sales process might take longer, thus determining a different approach.
The reason(s) you are selling your home will affect the way you negotiate its sale. It is important that you keep your motivation to yourself and your real estate professional. Don’t disclose your motivation and provide ammunition to your prospective buyers. For example, should they learn that you must move quickly, you could be at a disadvantage during negotiation. When asked, simply say that your housing needs have changed. Remember, the reason(s) you are selling is only for you to know.
2.Mispricing Your HomeOver-pricing or underpricing is a huge money-losing mistake. It’s so critical to know your market and get familiar with comparable homes currently for sale (and those that have recently sold) to understand exactly what price tag your home needs. If your home is overpriced, the market will figure it out. Your house may also be perceived as a “problem” property by both agents and buyers. Your house will not sell and you will waste your valuable time preparing the property for sale and showings. Pricing has a significant impact on the number of showings of your home.
If the house is priced right, it will sell quickly and close to the list price. If priced right, you can negotiate firmly as pricing was systematically developed using market facts. Ask your real estate agent to give you a price range of +/-3%. If you are trying to meet a strict deadline, you may definitely want to list it at the lower range. If you are not in a rush to sell your home then you may list it at the higher range of the price suggested by your agent.
3. Not Hiring the Right Professional to Sell Your Home
No one wants to pay a 5% commission when selling their house. Typically, 2.5% of the commission goes to your agent and the other 2.5% goes to the agent who brings the buyer for your property. But before you make the decision to hire a realtor or sell the house yourself it is important to understand the dynamics of the home selling process. The fact is that you need a buyer to sell your home. Statistically speaking, most potential buyers for your house are likely working with a real estate agent. If you are not offering any commission to these buyer agents, they have little incentive to market your property to their clients. Instead, they will market other properties that are offering ~2.5% commission. To summarize, if you are listing your home without offering commission for the buyer’s agent, you are seriously limiting the marketing opportunities for your property. Your agent advises you on everything from decluttering, staging, getting house issues fixed, taking room measurements, listing your property on MLS®, arranging showings, conducting open houses, negotiating offers, and eventually closing your property. Your agent is doing all this work in the anticipation of getting your property sold. If the agent is not able to sell your house he or she does not get paid. Your agent is also experienced in selling properties. If you want to go through the hassle of all the tasks listed above and are good at entertaining offers and negotiating for the property, then sell the home yourself. If you want a hassle free experience, hire a good agent. The agent will price your home properly, negotiate a better deal, and take the anxiety and hassle away from selling your own home. The numbers also don’t lie: home sellers who try to do it themselves often end up taking longer to sell and sell for far less than homeowners who work with an agent. According to the National Association of Realtors, nearly two-thirds of the people surveyed who sell their own homes say they wouldn’t do it again themselves. Primary reasons included setting a price, marketing handicaps, liability concerns, and time constraints.
When it comes to hiring a professional you should interview at least three agents to see who can do the best job for you. Ask them about their experience of selling the type of home you own, in your neighbourhood. Ask them about their marketing strategy. Some agents market only on a limited channel to either save money or to maximize the chances of attracting a buyer for your property themselves so they can keep both sides of the commission. Such agents are thinking of their own interest first and not yours. In the GTA, ask if the agent shares listings openly with CREA’s DDF (Data Distribution Facility). This listing source is used by thousands of real estate websites, allowing consumers to view listings without registration. Make the agent sign a service guarantee that forces them to keep you up-to-date with the progress of selling your home. Ask for a bi-weekly update. Have a written guarantee to impose commission fines (e.g. $500 per missed weekly update) for any service issues. Also make sure that the realtor is charging you the going market commission and not more. Ask for testimonials from the recent 5 home sales he/she has made. That way the realtor cannot cherry pick the testimonials. Evaluate each candidate carefully on the basis of their experience, qualifications, enthusiasm, and personality. Be sure you choose someone that you trust and feel confident that they will do a good job on your behalf.
4.Neglecting Necessary Repairs & Refusing to Declutter
Don’t forget about basic cleanup and decluttering. It is important to have prospective buyers visualize themselves in your home. You’ll want to have your home in tip-top shape before holding an open house, and clutter eats equity and kills deals. One of the least expensive improvements you can make to your home is to declutter and create a sense of spaciousness throughout, from the kitchen countertops to the overstuffed closets to the trophy-lined shelves in the den. It costs you nothing to get rid of all that ‘stuff,’ yet it reaps big rewards. See the 30 day plan below to get your home ready for sale.
Repairs: You will lose money if you don’t take care of repairs before the house goes on the market. It’s always going to cost you less out of pocket to fix things than to get things fixed when they are identified by the buyer or during home inspection.
Curb Appeal: Make your home look appealing from the street. Fix peeling paint, mangled gutters, and roof and siding issues. Landscaping should be considered. It’s important that homes look inviting from the outside.
Paint, Refinish, and Shine: Once inside, buyers will first notice the walls and flooring, so you’ll want to get them looking nice and neat. One simple trick you can do to freshen up your house is to apply a new coat of paint. Painting is the number one, low-cost fix that a seller can do. A fresh coat of neutral colour paint will do wonders to make the home look cozy and inviting – just don’t go stark white.
If you have hardwood flooring, sand and refinish it to give it a welcoming shine. Replace areas of tile or laminate flooring where it looks damaged, cracked or worn. For carpets, clean and stretch new ones, and making sure they are stain-free. If the stains won’t come out, it’s best to have them replaced.
Update Your Interior: We recommend going through the house and replacing outdated light fixtures, noting it’s an inexpensive solution to give a home a modern look. Don’t forget the bathrooms either—you might need to replace a rusted medicine cabinet or a cracked mirror.
Fix small things like burned out light bulbs, running toilets, broken light switches, leaky faucets, broken window blinds, and loud exhaust fans. Not only will buyers remember these small things, but minor repairs can add up for a buyer, so getting those out of the way early can make your home more appealing. When you have replaced and updated the house to your liking, leave a few pieces of smartly positioned furniture in the house. You don’t need a house full of furniture if the home is vacant, but a few strategically placed pieces can give a buyer perspective.
Some homeowners consider doing upgrades to their home months before listing their home to make their house look attractive to the perspective buyers. Appraisal Institute of Canada has come up with research on what percentage of your renovation cost will likely be recovered when you sell your home after upgrades. Other than painting your house, other upgrades do not provide enough ROI for your investment. For example, if your appliances are outdated but you don’t want to spend the time replacing them, consider offering a credit instead of buying new ones.
5. Selling Your House Empty
Selling an empty house makes buyers feel the same way: empty. Chances are, you have plenty to choose from already. Decluttering may just leave you with the perfect number of furnishings for a simply staged home (space is your friend, after all). If your home is empty, don’t worry, you won’t need to go out and buy new furniture and accessories. We highly recommend making the small (but critical) investment in a local stager to give the for-sale home a new look that will charm potential buyers. Many agents include staging as a part of their service offering.