Getting the best deal when selling a house is all about making your home stand out — while spending as little additional time and money as possible.
In a housing market still adjusting to the economic effects of the COVID-19 pandemic, doing everything you can to make the most money on your house is especially important.
To make the best decisions, you need to understand what’s driving home sales in your area. There is evidence that buyers are returning to the market due to low mortgage rates and a stabilizing housing inventory. But things continue to evolve and change every week, so it’s important not to rely too heavily on expectations based on historical housing data.
How to Sell Your Home for More Money
The things buyers are looking for in a home are shifting, partly driven in part by an increase in remote working and social distancing. While it’s too early to forecast what these changes mean long-term, experts think it will affect certain housing markets more, and possibly influence your priorities in how you prepare to sell.
For example, Kerrie Kelly, creative director at the Sacramento-based Kerrie Kelly Design Lab, has seen a pandemic-driven focus on outdoor spaces. “Our personal home office has moved out to the front porch or the side patio,” she said. “People are really capturing those spaces to spread out and enjoy areas that they may not have previously.” So as you’re making decisions about selling your home, take into account the extra attention buyers might be paying to your home’s outdoor spaces.
Here are some other ways you can set yourself up to make the most of your home selling strategy.
1. Work with a local expert
The average homeowner may buy or sell a house only a few times in their lifetime.
So unless you’re a real estate professional or investor, you’ll likely benefit from professional help and guidance to get the most out of your home’s sale. And with changes happening much faster than normal, it’s even more important to work with someone who has their finger on the pulse of a given community’s real estate market.
Finding the right agent can have a big impact on all aspects of selling. It will make it much easier to time your sale, set the right price, and to prepare for listing. A real estate agent’s services aren’t free — they’ll cost you 5–6% of the sale price — but having an expert help you navigate the laws, customs, and marketing of a home sale can be worth the expense. Just don’t expect an agent to magically increase your home’s value. Think of your agent as more of a coach who can help you make the right decisions.
2. Time your sale appropriately
The time of year you list your home can affect what it sells for — or how long you’ll have to wait to sell at the price you’d like. Research has shown the best time to list a home is in early spring. In most of the major cities in the U.S., homes listed during that time have historically sold faster and for higher prices.
However, the pandemic shutdowns threw a wet blanket on the market at the time of year when the real estate market usually begins to heat up. “We do see signs that maybe sellers have reacted more strongly to market conditions and are deciding not to list their homes,” says Danielle Hale, chief economist at realtor.com. “We’ve seen bigger declines in the number of new listings.”
Because there were fewer buyers, it offset the smaller supply of homes for sale and prices remained fairly stable throughout the lockdown. However, with mortgage rates still near all-time lows, some real estate markets show signs of increased activity.
At the same time, banks are tightening lending guidelines. FICO score and down payment requirements have increased, and lenders are scrutinizing borrowers more thoroughly.
“You are seeing lending requirements where they are, in their underwriting, kind of putting a COVID test on it,” says Cliff Perotti, CEO and managing broker of the Chicago-based brokerage the Perotti Group. “Meaning if we have a second wave, is your job gonna be here or not?”
Aside from what’s going on in the housing market, a potentially more important consideration is: What’s going on in your life?
If you’ve just retired and are looking to downsize to cheaper housing, waiting until the prime time of year to sell might not make sense. And a growing family or a job change won’t always line up nicely with the real estate market. So if you need to sell, at the end of the day, that’s the best time to list your home. By taking other steps to get the best return on selling your house, you can diminish the impact of selling even if the market isn’t optimal.
3. Set the right price
Figuring out the right price to list your home at can be tricky.
You want to make the most money, but also attract buyers and sell your home quickly. This step is where a good agent is essential. Having your agent complete a comparative market analysis (CMA) will show you what similar properties in the area have sold for recently. Most real estate agents will perform a CMA for free; you can ask for and compare CMAs from multiple agents before you decide which agent to list your home with.
Perotti explained how the way he uses a CMA to price a home has changed over the years. Previously, the focus was on the final closing price of comparable home sales, or comps. Now, because buyers can quickly and easily see what others homes are for sale, he bases listing prices more on the price of competing homes currently on the market, and he uses comps to support those numbers.
If you list your home too low, you risk leaving money on the table. Come out of the gate too high and you might scare off buyers. The most successful sellers Perotti works with are not emotional in their decision. “Everybody thinks theirs is the best,” Perotti says, but sellers who are too emotionally invested in their home tend to overprice their home and take longer to sell.
4. Negotiate the best offer
As a seller, the best way to negotiate for a better offer is to have multiple bidders on your property. Then you can have your real estate agent reach out to the prospective buyers, let them know there are multiple bids and ask for their “best and final” offers.
It’s also important to understand that the highest offer price may not always be the best deal. As a seller you should pay attention to the contingencies that are included in the offer. Contingencies protect the buyer by allowing them to back out of the deal under specific circumstances and can include contingencies dependent on:
- Home inspection
- The sale of the buyer’s current home
Some of these contingencies are standard, and depending on the type of mortgage, cannot be waived, such as the appraisal contingency for a VA loan. However others, such as a clause allowing the buyer to back out of the deal if they can’t sell their current home, are entirely optional. So you can negotiate to limit the contingencies to what you feel comfortable with.
5. Make essential repairs
As a seller, you’re not required to hire a home inspector, but you may want to anyway. Perotti always recommends homeowners get an inspection before listing because it can help preempt potential negotiation points for buyers. Being able to make necessary repairs in advance can also expedite the closing process.
Any prospective buyer, on the other hand, will be required to complete an appraisal — a different type of home assessment that helps their lender confirm the value of your home. For a government-backed loan (FHA, VA, or USDA), health and safety standards are strict. So an appraisal for these loans is more likely to come back with repair issues. For example, FHA loans require handrails for all steps (including porches), and any room classified as a bedroom must have outdoor access such as a window. If you anticipate your target buyer needing to qualify for a government-backed mortgage, then a pre-market inspection is even more important.
Low-cost cosmetic improvements to enhance curb appeal are smarter investments than expensive remodeling projects.
6. Be prudent with upgrades
You should be sensible with the money you invest into upgrading your home prior to selling it. Bob Fullerton, managing broker at ERA New Age Real Estate in Colorado, believes a one-on-one consultation with your agent is essential in determining what makes sense to upgrade. “Sometimes you can stray off course and be upgrading things that have no return to you, but you thought were important,” Fullerton says. Leaning on the advice of a local real estate agent will help you balance what you spend on upgrades with what the market will return a good investment on.
Before you spring for the new deck or kitchen, consider this Remodeling Magazine report that looked at the return on 22 remodeling projects across 101 U.S. real estate markets. With only a handful of exceptions, in specific regions or cities, almost all of the renovations cost more than they recouped upon selling.
“If you’re gonna spend a dollar I wanna make sure you can get two dollars, because as soon as you think it’s only gonna take a dollar it’s gonna take a dollar fifty,” says Perotti. So few remodels meet this standard that he rarely advises sellers to invest in big projects prior to listing.
7. Think about curb appeal
You only get one chance to make a first impression, and making inexpensive cosmetic improvements to the outside of your home can have an outsize impact.
“Curb appeal is so important when selling a home; you gotta get ’em in the house first,” Kelly says. She suggests simple touches to create an inviting environment. Painting the front door, adding a new light fixture, or potting a few plants can help set a good tone for buyers when they pull up to your home.
Kelly believes you’re never going to know what a buyer wants, so you should avoid expensive kitchen or bathroom remodeling. Weekend side projects like painting, replacing a faucet, or updating your kitchen’s hardware are all good starting points. “A fresh coat of paint is the least expensive and the most powerful thing we can do when addressing the interior of a home,” says Kelly, noting that neutral colors are ideal. As much as you may not want to, remove your personality from the space. Pick a relatable color and stick to it throughout the house to avoid a disjointed feeling in the home.