Whether you’re selling your first home or your 20th, it’s crucial for you to know the common (and not so common) Home Seller Negotiation Mistakes. Below is a detailed list of mistakes sellers make during the negotiation process.
1. Not educating yourself on the condition of market.
Market knowledge is crucial. When negotiating the sale of you home you need:
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- Up-to-the-minute stats on what has sold in the past 30-45 days.
- Details about how they compared to your home.
- The number of days they took to sell.
- An understanding of what competition is on the market now and the current absorption rate.
This critical information will help you negotiate the best possible deal.
It will enable you to know how much demand there is on your home and how much money you can push for.
2. Not disclosing latent defects to the buyer.
A latent defect is a problem with the home that is not easily found by a buyer or inspector. Examples could be a cracked foundation wall that’s been covered with fresh drywall, persistent water issues in the basement or attic, hidden electrical or plumbing hazards, etc. If you know about these things, disclose them. It’s best to disclose these at the earliest opportunity but be sure to do so no later than the offer negotiations.
If you don’t disclose, the buyer can come back years later and sue.
3. Not trusting your Realtor.
Maybe this is your first time selling. Your friends and family will likely have lots of advice to offer. Unfortunately, some of that advice may be based on false or outdated information. You need knowledge and experience that reflects the current pulse of the market. An example of this could be how to deal with multiple offers. Friends and family may have not experienced this type of market and, although they mean well, their counsel may not be appropriate. In a market where you could have anywhere from 2 to 43 offers, having a Realtor you can trust to help you make the best decisions is crucial. If you’ve decided to work with the Brandow Group, you’re in good hands 🙂
4. Choosing to Close on a Friday or before a Holiday.
Price, conditions, and closing day are three of the most important aspects of an offer. When you have all the offers in front of you and you’re ready to make a decision, choose your closing day wisely. A best practice is to never, ever close on a Friday or before a holiday. One exception to this is when you already have a place to go. The issue with closing on a Friday or before a holiday is that things can happen that prevent your deal from closing on that day. Things like: Funding issues, power outages, lawyer issues, global pandemics, etc. If this happens to you, you could be without a house for 2-3 days till the responsible parties resolve the issues. A simple way to prevent this is to pick a closing day between Monday and Thursday – or Monday and Wednesday if Friday is a holiday.
5. Closing your sale and purchase on the same day.
Completing both transactions on the same day seems like the most reasonable thing to do, but this is another mistake to avoid. Closing day involves many moving parts and if everything doesn’t line up perfectly, your big moving day could become a mess. To avoid chaos, we suggest having a few days (or a week) between closings. To accomplish this, your mortgage broker (or bank) will set up bridge financing. As the name alludes to, it’s financing that bridges the gap between the closing dates. There is a financial cost, but we believe it’s worth it. Staggering closing dates removes a considerable amount of stress from moving day. It also allows time to complete minor renovations and cleaning to your new home before you move in.
6. Warranting, or even insinuating, that an auxiliary apartment is “legal” or rentable when it’s not.
Without a doubt, basement apartments have gained massive popularity in Hamilton in recent years. These apartments are popular with investors and buyers looking to cover the increased cost of owning a home. Sadly, this is where we see many inexperienced agents put their seller clients at risk. If your agent lists anything in the MLS description that suggests that a buyer can “rent out for extra income,” they are misrepresenting the property and the buyers could come back later to sue. For more info on this, check out our article on legal and non-legal second suites.
7. Not understanding what you’re signing.
This market is moving at breakneck speeds, and it’s easy to get caught up in the excitement. The danger in this is signing paperwork that you don’t understand. Click here to learn more about this!
8. Accepting a “Bully offer”
This could be the biggest, most costly mistake on the list! A “Bully Offer” is an offer received from a buyer before the scheduled date to look at offers. This offer usually has a short irrevocability period and is intended to pressure the seller into accepting quickly. Bully offers exist because some buyers don’t want to wait till the offer date. They know there will be competition. We’ve had 3 recent cases where accepting a bully offer would have meant losing out on BIG money.
- Example 1. We listed a home in central Hamilton for $399,900 and held off offers for a week to allow showings. a few days before looking at offers, we received a bully offer of $420,000. We declined that offer and sold the property for $497,000 on offer night.
- Example 2. We listed a small 1 bedroom bungalow with no basement for $325,000. One day prior to offer night we received a bully offer of $385,000 which we declined. The next day we received 43 offers and the property sold for $495,000.
- Example 3. This example is where a client chose to accept a bully offer. We listed the home for $599,000 and the offer came in at $635,000. Less than two weeks later, a similar unit sold for $700,000.
9. Hiring an agent who doesn’t use DocuSign.
DocuSign and other electronic signature apps have drastically changed the way Realtors operate. It’s hard to believe some agents still don’t use this technology. DocuSign allows buyer and sellers to sign documents electronically instead of meeting in person. Not only is it incredibly efficient, but it’s also an absolute necessity during the COVID-19 pandemic. Before you hire anyone to sell your home, make sure they offer this option.
10. Picking the offer with the highest price in multiple offers.*
*This may or may not be a mistake.
The decision can be complex, as there are important factors to consider besides price. When you receive multiple offers on your home, your agent has created a scenario where you stand to walk away with more money than you were asking (and hoping) for. It’s important to select the right offer because, if that deal does not work out, it’s not always easy to replicate the situation. It is crucial to look carefully at all the details in each offer. There are three key areas to consider: price, closing date, and conditions. An offer with no conditions is almost always worth substantially more than an offer of the same price with conditions. Be sure to have a competent agent on your side to help navigate this stressful, but exciting, time!
Other Articles In This Series To Help Sellers:
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