1. Beware the endowment effect.
Behavioral economics researchers have found that humans on the whole tend to overestimate the value of things they own, compared with the value the market will actually bear for those things. This creates a perpetual disconnect between what buyers will pay and what sellers expect to receive. It’s no different with our homes than it is with our cars and other belongings.
Well, there is one difference – if you overprice your home, it can ultimately cost you a lot of money in terms of:
• buyers who never find your home online,
•buyers who see your home online, but never come to see it, because it’s not as nice as other homes in their price range, and
•lowball offers that happen when your home has lagged on the market longer than it would have had it been correctly priced.
That’s why we rely so heavily on the comparable sales data, which reflects the actual prices actual buyers recently paid for actual homes in the neighborhood.
When I was selling my own first home, not only did I rely on the data, I also had friends and colleagues who were real estate agents come in and check it out to give me their feedback on pricing. And because I was selling it myself, I was also able to glean the feedback from prospective buyers themselves as to what they thought about the home and its price. This sort of feedback is available to every home seller, in the form of CMAs and home price estimates that prospective listing agents will create for you, as well as the feedback your agent can collect from buyer’s brokers.
The challenge is to know the bias exists, to understand how critical it is to overcome it and then to commit wholeheartedly to overcoming it by paying attention to the data, listening to feedback and course-correcting as necessary.
2. You only need one offer.
When I first put my first home on the market, I acted as cool as a cucumber, but was an emotional wreck on the inside. The days of crazy multiple offers were gone, but homes were still selling at a pretty brisk pace. A week went by, then another, and it became pretty clear that despite my great pricing and brilliant staging (!), I was likely not going to be inundated with a flood of offers anytime soon. Right around the fourth week on the market, though, I got a call from an agent who had shown the home independently – and they wanted to make an offer.
When your neighbors are getting dozens of offers, or when it seems like every town in the country is riddled with multiple offer scenarios and yours is not – here’s a helpful reality check: with every home sale transaction, there is ultimately only one buyer and one seller, in the final analysis. You don’t need loads of offers or floods of buyers. You only need one.
Your job, as a seller, is to work with your agent to:
(a) understand everything you can about who your home’s eventual buyer is likely to be, and
(b) price and market it in a way that maximizes the chance that one buyer will actually see it and realize that it fits their wish list.
3. Don’t just market, message.
Marketing is about preparing your property beautifully and describing it to its best advantage online and off, making sure there are abundant, good photos of the home on all the websites frequented by buyers in your area, that there are flyers in the drive-by box and that all the buyer’s brokers in your area are exposed to the property. Marketing is about holding Open Houses, if that’s the norm in your neck of the woods.
“Messaging,” on the other hand, is about making sure that these materials and your home’s online presence are flush with content – messages – about why your home is a great choice for the types of buyers who will likely be looking for it. For example, messaging might involve:
•Detailing with some precision the convenient commutes optimized by your home’s ease of access to 3 freeways within a mile, by the fact that X subway station is at the end of the block, or by the fact that the place is located within 3 miles of the local university and 5 other major employers in your area.
•Describing floor plan or layout advantages that might be rare in your area and would be attractive to an older buyer or an extended family, like the fact that your home has a level-in entry (no stairs to the front door) if that’s unusual in your area, or that it has a complete bedroom and bathroom suite downstairs (which someone who wants to move an aging parent in might appreciate).
•Highlighting any major remodeling work that has been done, which is a selling point to a wide variety of buyers who strongly prefer to move right in.
Work with your agent as they write up the listing description for your home, and focus on saving characters by eliminating words like “charming” and “cozy” in exchange for creating more meaningful messages of this sort.
In the end, my first home was purchased by an adult brother-sister pair, who were attracted to the water views, the brand-new kitchen, the uber-convenient commute to very different parts of the Bay and – the deal-maker: the fact that each could have their own suite on their own floor: all of which was “messaged” in the listing and marketing materials.
4. You are not your house.
Selling your home without going entirely nuts simply requires you to grow thicker skin. The endowment effect makes it likely that you’ll feel like you’re getting less than your home is worth, your agent and/or stager will likely come through and pull out half of the belongings you think are amazing and beautiful (yes – including your sequined butterfly mural) and you might even get incoming feedback from buyers and buyer’s brokers that is somewhat less than complimentary. All this can feel like you’re taking a beating right where it really hurts, on the subject of the home that’s been good enough for you and yours for all this time – the home you’ve possibly invested much of your time, personal taste and money into.
So, walk into the home selling process with a thick skin – an unkind comment about your home is not a personal attack on you, no matter how much it might feel that way. Understand that every critique or dig you hear about your home is a step on the path to getting it sold so you can move forward with your life. In fact, some might even be made as negotiating ploys – and have very little to do with your home at all! Again, this process of selling a home is largely a process of finding the buyer for whom your home is a right fit; you might find it helpful to think of those who dislike it as just getting you one prospective buyer closer to the one for whom it will be the perfect fit.
If it’s at all possible to show it vacant or to have it shown while you and your family are away from the home, that is ideal. Not only is it ideal for you and your emotions, it’s ideal for the buyers as well. Serious buyers like to be able to walk through a property and discuss it, visualize their life there, and start sorting through how they would make it their own, with only their agent and family present – without having to worry about how you’ll take their comments.
I had moved out of my first home into my next one before I put that place on the market, which also made it easier to do some of the property preparation projects – including a kitchen overhaul – before listing it. If you can’t or don’t want to do that, though, at the very least allow your agent to put a lockbox on the property and offer a simple way for buyer’s brokers to let you know when they plan to show the property.
At Open Houses for my first home, I heard buyers say it was too small, too fragmented a floor plan, lacked the deck it should have to take advantage of the views, lacked a backyard, was too green – and the list goes on. And those things were probably all true, from their individual perspectives. Turned out, some of the things they disliked were the very things that attracted the family that eventually bought the home.
5. Only worry about the levers you can pull.
The three major levers that you, as a home seller, have the most power to pull are simple: price, preparation and marketing. You control the list price, you control how your home is primped and staged for sale, and you control the agent who is responsible for marketing and messaging your home to prospective buyers. So, focus your efforts on doing those three things wisely. Anything else has the potential to create panic and fear – and panic and fear are completely counterproductive to your efforts to make smart, logical decisions.
During the sale of my first home, while I was waiting for an offer, my mind went to some very dark places. I started to doubt everything: maybe the location was too off-the-grid, maybe the square footage wasn’t as ample as it had seemed to me, maybe the lack of a deck was really a deal-breaker, maybe I had wasted thousands of dollars on that kitchen remodel – maybe the whole town was just “out.”
As my mind spiraled in that direction, I had to force myself to get a grip with the knowledge that even if any of these absurdities were true, there was not a single thing I could do to change any of them. I couldn’t change the market. I couldn’t make buyers appear out of the woodwork. All I could do was price the place competitively, prepare it beautifully, market it thoroughly and place the right messages about it in the right places to the right buyers. So, that’s what I did. And you know what? It worked.