Every home owner wants to obtain the maximum they can when they sell their homes. This usually translates to setting the price as high as they reasonably can, fixing up the home before they sell and paying the real estate commission to the realtor who will list their home for sale. Is this the right approach for everyone? Will those repairs and upgrades which cost thousands of dollars net you more money? Will the money you spend paying the real estate agent their commission really help you obtain a higher price?
The real question that every homeowner should ask themselves is how can I maximize the amount of money in my pocket after all of the expenses are paid. This includes the money they spent fixing up the home, the commission, the showings, cleaning costs, closing fees and anything else related to selling their homes. Sometimes, depending on the situation it might be better to just sell their house in any condition to a professional home buyer. We will look at three areas that sellers should carefully consider before making a decision on how to sell their home and for what price.
Three Areas to Consider when Maximizing Sale Price
It is common knowledge that every seller should spruce up their home before listing it on the market. If you have kept your home up over the years, then the cost to do a little painting, declutter etc. will be minimal. Your home will show well and usually do well against the competition.
But what if your home needs major repairs and renovations? On the repair side of the equation, older roofs and furnaces and AC units that need to be replaced come to mind. Maybe there is a mold problem, carpets that are warn and tired looking and you have not painted the walls in years. The appliances are very old. Lots of potential money to spend just on the repair side. We have not mentioned any structural items such as cracked foundations.
Then you look at the renovations that might be needed just to bring your home up to those comparable homes that you have been looking at. Your old bathrooms, kitchen and laundry areas just do not measure up. These are large dollar items.
Homeowners in this situation could be easily looking at over $100,000 if they were to do everything on this list and at least six months in delays to get all of the work completed. Will their home be worth $100,000 more? Probably not depending on the actual work that is completed and the quality of the work. This is one major reason why many sellers sell house for cash to companies such as We Buy Houses.
Listing over Market Comps
Another common strategy that often fails is listing a home for sale above the surrounding comparable homes that have either sold recently or are currently on the market. Unless your home is spectacular, sellers risk the home remaining on the market for many months. After awhile realtors and buyers begin to feel that there is something wrong with the home and ignore it. The homeowner ends up lowering the price just to get some action.
Another approach which sometimes works, particularly in a hot market is to list the home slightly below market value. This sometimes creates a lot of interest and a bidding war erupts driving the sale price higher.
Paying 6% Real Estate Commission
In a hot market with a home that is in good to excellent condition, and properly marketed sellers should expect to receive lots of interest with many offers. Realtors can be very helpful in these situations to sort through the phone calls, the offers and the negotiations. Even in a slow market the marketing program they initiate is definitively worth the commission you will pay.
But a home that needs a lot of work in terms of repairs and renovations will appeal to a very small number of buyers. Those that are willing to take on fixer uppers and investors. Eliminating the real estate commission by selling your house fast to an investor may be the right approach and could net you the most money. Sellers can sell quickly to an investor and move on to whatever their plans include.
Before making a decision to list your home with a realtor, examine realistically what you can expect to receive for your home and all of the costs for several scenarios. Then make your decision to sell. Investors will often purchase a home in any condition.