Spending their retirement on home remodeling, a couple in their 60s poured money and sweat into their 1928 cottage. They transformed a modest two-bedroom house into a sprawling place with five bedrooms and a mammoth gourmet kitchen that adjoined a large great room.
But after health problems compelled the couple to move to a one-level apartment, they put the property on the market at what they later realized was an inflated price. By the time they finally adjusted the price, the place was so stigmatized that most buyers in the area had lost interest.
The couple ultimately accepted an offer from a single mother with three children who hadn’t been pre-approved for a mortgage. But after it was revealed that the woman had too poor credit to get a home loan, the deal fell through and the house had to go back on the market.
This true tale illustrates several painful lessons for sellers, says Joan McClellan Tayler, a longtime realty company owner. One is that trying to “test the market” with an aggressive price usually backfires -- even in areas where inventory is in short supply.
“A shortage of inventory won’t bail you out if you’re greedy. These days, buyers are too smart to overpay,” Tayler says.
Another lesson underscored by this example is that it’s risky to accept the bid of buyers who’ve failed to go through the mortgage preapproval process, unless those purchasers are making an all-cash offer.
Want to increase your odds of selling well? Here are a few pointers:
-- Choose a seasoned agent for your listing.
Tayler says too many sellers take a casual approach to picking an agent, noting that some make the mistake of hiring a relative, a friend or a young agent looking to get started.
“A lot of the sellers fail to understand that even in a strong market, it takes complex skills to do a great job selling real estate,” she says.
Tayler recommends that sellers opt for an agent with experience in handling lots of different deals. Those with a track record are most apt to sniff out problems before they happen.
If for personal reasons you’re determined to choose a newcomer, she suggests you ask that agent to share the listing with an established pro from the same office.
“With two agents on your side, you’ll benefit from both their strengths,” Tayler says.
-- Consider only prospects who are financially qualified to buy.
Sharp sellers are careful to check the financial standing of would-be purchasers.
“Who wants a deal to fall through because the buyers lack the wherewithal or credit to get it to the finish line?” says Eric Tyson, a personal finance expert and co-author of “House Selling for Dummies.”
Before accepting an offer, sellers should insist on seeing a genuine pre-approval letter from a known lender, Tyson says. This should establish that the prospective buyers have had their credit checked, their employment confirmed and their assets verified.
In addition, prospects can be asked to supply other details about their creditworthiness, such as their credit scores. The most common of these, known as FICO scores, range from 300 to 850. The higher that number, the more likely are borrowers to get the loan they need to close the deal.
“To avoid insomnia, look for buyers with scores of 700 or above,” Tyson says.
Bidders can obtain reports on their credit scores from a website of the Fair Isaac Corp. (myfico.com).
-- Prepare for issues that could arise during an inspection of your home.
Even in tight markets, many purchasers exercise their right to a home inspection. And many use the process as leverage to renegotiate the deal.
“Even in a tight market, if the inspector finds substantial defects in the house, the buyers could attempt to use these findings to revisit the terms of the deal,” Tyson says.
Homeowners should never try to talk buyers out of a home inspection. But smart sellers will consider paying for their own inspection even before the property goes on the market.
“The person you hire for a pre-sale inspection is unlikely to find all the same small problems that the buyer’s inspector locates. But both should spot the really major problems -- like a failing roof or electrical system,” Tyson says.
-- Seek to avoid troublesome buyers.
Not all home sellers can be choosy about the offer they select. But if you’re reasonably certain you’ll have more than one bid from which to pick, Tyson says you should seek to avoid cutting a deal with difficult people.
You may not have any direct dealings with your prospective bidders. But your listing agent or others might observe them when they visit your place. And their behavior can be very telling.
One telltale sign of difficult people is that they often make negative remarks when visiting a property. Though you’re likely to not be present for showings, your listing agent should learn of these unpleasant comments and pass them on to you.
By avoiding such prospects, you could spare yourself a lot of grief.
“If you’re lucky enough to get multiple bids, you can be pickier about the buyers you choose. If possible, resist troublesome folks who might nickel and dime you all the way to closing,” Tyson says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)