A nagging concern that is often expressed by many home sellers is that they are leaving money on the table; in other words selling for too little. The dilemma often presented to a home seller is that if the home is priced too high, then there is risk eliminating potential home buyers; while at a lower price, there is risk selling at a less than desirable price.
Pricing a home is both a science and art. Skilled agents employ mathematical formulas as a foundation upon which to build a case for a range of sale price (the science); as well as demonstrating their ability of making price adjustments for variations in improvements, updates, as well as intangibles (the art).
But it may not necessarily be your home’s list price that can set you up to leave money on the table. Examining how your home is marketed, as well as your motivations and reasons for selling may reveal a weakness in your negotiation position as a result of convenience.
Selling a home can be disruptive to your daily life; and the prospect of having people, whom you’ve never met, traipse through your home can be unsettling. The typically limited and highly targeted private placement or pre-listing marketing may offer the convenience of limiting buyer traffic to your home, but its appeal is sometimes promoted to increase the potential of the agent receiving both sides of the commission.
Before you agree to a marketing plan that promises exclusive home buyer targeting; consider that many experts make the argument that you can leave money on the table when limiting your home’s exposure to potential buyers. In a world where everything and everyone seems electronically connected, you can increase the buyer pool by taking advantage of every reasonable marketing opportunity (including the internet and local listservs, and electronic bulletin boards, and other acceptable marketing tactics).
The process of selling a home can also be emotional and time consuming; more so if you’re divorcing and selling marital property, or selling your parents’ or grandparents’ home (sometimes because of a move to an assisted living facility or to settle an estate). The convenience of a quick sale can be very tempting; but can also set you up for selling for too little. And if the home is in need of repairs, updating, and renovations, the pricing can be unclear and inaccurate adding to the pressure for a quick sale.
You might even be considering responding to an ad promising a fast home sale without real estate commissions, repairs or home inspections – which is alluring to be sure. However, consider that many of these operations are seeking to purchase homes at a fraction of retail value minus repair costs.
Unfortunately, there is no “real time” measure to determine if you’re selling your home for too little; and some home sellers often lament in hindsight selling at a lower price out of convenience. However, a little homework and investigation can at least better your negotiating position. Ask questions and understand the purpose, benefits and limitations of a private placement or pre-listing marketing. Additionally, you can get pricing guidance from a market analysis, obtained from at least two (three is better) neighborhood real estate agents. And finally, weigh the pros and cons of selling out of convenience to the process of selling on the open market (listing the home in the MLS).
Original published at https://dankrell.com/blog/2014/09/26/dont-leave-money-on-the-table/
© Dan Krell
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.