Thinking of buying a new home? Having just completed the sale of one house and purchase of another one I can say it was definitely a learning experience. To spare you some of the missteps my husband and I took, I wanted to share what we learned so you can have a smoother experience. Believe it or not, I have bought and sold many homes in the past. But this time was different. This time we let emotions get the best of us and we paid for that.
Don’t be like us. These lessons we learned will save you money, lessen anxiety, and maintain friendships.
The real estate market where we live is incredibly strong and we are lucky to have a good amount of equity in our house. We decided the time was perfect to move to a larger home, having downsized a bit too drastically when the last child left home a few years ago. We pulled up Zillow, and what do you know! We instantly found a house. We had not listed our house yet, but we decided we had to have this one (the first one we looked at). So, we reached out to one of the brokers on the Zillow page with lots of stars next to her name and got ourselves a broker. We told her we wanted this house, and we needed her to sell ours.
That was it. No due diligence. No research, just plain old emotions.
Lesson One. Choose the right broker to sell your home.
This is a big one. Do your due diligence here. Choosing the right broker can mean more money in your pocket at the end of the sale, and a much smoother experience.
a. Make sure the broker you choose has a track record of selling houses like yours, in your neighborhood, at your price range. Ask them to show you what they have sold in the last six months in your price range. It’s one thing to know what comparable homes have been sold by other brokers, but what matters to you is your broker’s ability to sell your house.
b. Speak to former clients about their experience with that broker. Don’t just go off the stars next to their name on Zillow. Did this broker get the sellers the price they wanted? If they used the broker for a purchase, did the broker negotiate well for them? You want to know if the broker is communicative or do emails, texts, and phone messages to them for updates go into a cyber void? Set your expectations for communication up front. And if you want your broker and not some random member of their team to communicate with you, establish that up front.
c. Is the broker a “selling” broker or a “listing” broker? There is a very big difference. Listing brokers are all about getting your listing and then expecting other people to sell the house. This means they are not as engaged in selling your house, which can be a challenge. We have had the most success with selling our houses in the past when the broker we worked with was personally responsible for selling our house. We found they worked much harder to get the best price quickly. They are invested in your sale. A listing broker will add you to their list of listings, and then assume at some time, someone will buy the house and they’ll get a cut of the commission. If you have a deadline to sell your house this can be incredibly frustrating.
d. Does your broker have a “team” approach to selling your house? Find out what your broker’s role is on that team. This might mean once the house is listed you never talk to your broker again (if she is the “listing” broker). You might be shunted to an assistant, you might have random people showing the house on Open Houses and have no clue about your house, your neighborhood, the features and benefits that will overcome simple buyer objections.
After we listed our house a team of staging personal descended on the house in a frenzy. In no time it looked like a spread in Architectual Digest. Which is great, but doesn’t necessarily sell the house. You have to get people to the house, and you have to have a broker show the house. Which brings us to Lesson two.
Lesson Two. Know the marketing plan for your house.
This starts with choosing the right price for the house, and then actively marketing it by way of MLS, brokers’ caravans, Open Houses, and your brokers firm network.
a. Price the house right. If you need to sell it, take that into account when you price it. Systematically cutting the price doesn’t send a good message to the market. Don’t be unrealistic about the value of your house. This is a business transaction, so don’t take it personally. We should have priced our house lower to start. It’s one thing if you don’t need to sell it, but if you do, price the house to sell.
b. Know how your broker plans to market the house. We heard over and again that Open Houses don’t sell homes. But it was a great way to get feedback on the house, and it was the one way our house actually showed, since our own broker wouldn’t show it herself. However, we had to beg our broker to have them. Staging doesn’t do a whole lot if no one looks at the house, so you want to know how they plan to get people to the house. Find out how your broker has marketed houses in the past, where the buyers came from who bought houses they sold (brokers in their network? Newspaper ad? MLS?) Your broker should have a marketing plan for your house.
c. What is your brokers process on soliciting feedback from showings? Once someone has taken the time to see your house, if you don’t get an offer, you should find out why. Your broker can often overcome simple objections just by knowing your property and sharing that information. Your broker also knows where you are on price and can often start conversations here that can lead to a sale. But you want your broker to be on top of every showing for feedback to get you to the next step.
Lesson Three. Have an awesome lender on your team.
This is one thing we did right. Our mortgage broker was a miracle man. If it were not for him, our deal would not have closed. Due the constantly changing price on our house sale, the moving bond market, and the fact that I am self employed, he was running numbers on a regular basis to make sure we could lock in a good loan. He collaborated with our CPA, our broker, escrow, and the Veterans Administration (for VA loan certification of our property). He didn’t miss a beat.
a. Find a lender who works with people like you. I suggest asking trusted resources for referrals, but then make sure they are a fit for you. What is their experience? What kind of clients to they serve? Do they have experience with the loan type you utilize (VA, FHA, jumbo, conventional, etc) Will they collaborate with your team? Will they serve you, or will some member of their team?
b. Speak to your lender before you go shopping for a house. There are nuances to getting approved for mortgages if you are a business owner. And your credit can impact the rate you receive, which affects your budget. Well in advance of qualifying for a loan you’ll want to know how to position yourself to be approved, and what your real budget is. You can read more about how to get a mortgage as a business owner in our blog from a few months back: The Female Business Owner’s Guide to Buying a Home
We ultimately decided against buying the first house we saw and wound up placing a contingent offer on another place. This gave us 30 days to sell our house, which had very few showings, and no offers to date. Think twice before putting yourself in this situation because you lose leverage with the seller of the place you want, plus it’s incredibly stressful. And if your broker is not strong at negotiating either for your sale or your purchase, this can be an expensive lesson.
Lesson Four. Avoid contingency purchases if you can.
a. Keep your emotions in check. Remember, this is a business transaction, and emotions can lead you down an expensive path. You can avoid having to slash the price of your house, meet crazy requests from potential buyers of your house (who repeatedly asked for our furniture), and give up any negotiating on the purchase of the house you really want (we now own a bunch of broken appliances). Your lender will thank you, your blood pressure will be lower, and your relationship with your spouse will be a lot less stressful.
At the end of the day, we sold our house, purchased the one we wanted, got the loan we needed, and all is well. But it was months of drama and frustration, undue stress and strain on relationships, which ultimately started with an emotional decision to buy a home.
You can learn more about making smart money decisions in our upcoming book, Corner Office Choices, which is launching in May, 2018. Until then, check out our helpful blogs on money, career, and life at the WealthChoice website.
