When is it safe to sell my own home?

If you have a choice in when to sell your home and are not under financial duress, then you’re lucky. As a FSBO survivor myself, I was under financial duress, and had to sell in one of the worst markets ever. So lucky FSBO condidate, take heed on a few market factors before listing your home.

Now, each market is different. Each home is in a different condition relative to competition. And each owner is different in terms of their level of selling capabilities. So these aren’t hard and fast rules. However, they will impact the speed at which you will sell your home and most definitely will impact your pricing decision if you are looking to sell in a specific time frame. For reference, nearly a quarter of home listings on the market as of July 1 experienced at least one price reduction, a 9% increase from the previous month, according to real estate search site Trulia.com. The average price drop was 10% off the original listing price – about the same from previous months.

So delay or think hard about listing your home if 2 or more of the following conditions exist in your selling situation.

  • 5+ similar homes are for sale in your square mile.

    This one is easy right? This is a simple supply and demand issue. The more supply, the more buyers’ hold the power and price reduction is used as THE competitive selling technique. I useRealtor.com for all my competitive searches and try to stay away from sites that don’t serve up the MLS listed homes. Try searching 1 and 2 mile radius’ around your home. Make sure your query looks for homes with similar square footage, bed/bath numbers and year built. If you are in a more rural area, lot size and outbuildings will matter as well. This should give you a good sense of the inventory in your area.

  • Average Days on Market for similar homes within a 2-3 mile radius (DOM) is greater than 6-8 months.

    This one is a bit tougher to find, but it’s out there. Start with the list of homes you found in your inventory search. Take a look at each listing. Go down to the bottom of the listing. There are two things you can check to see how long the home has been listed. The “days on site” is a good indication of how long the house has been listed (may not mean that this is how long it’s been on the MLS, but it’s a good bell-weather for DOM.

    Section located at lower left of a listing page. See "Days on Site" for a rough estimate of DOM.

    The other thing you could look at is the listing that sits on the broker’s site. Most of the time the Realtor.com listing will have a link to the agent/broker’s site in the upper right hand corner. They usually have another version of the listing on their site or give you access to the actual MLS listing which will have a days on market number, also at the bottom. Don’t be confused by what looks like multiple listings. It’s not. It’s the same information just communicated through different “templates.”

    Agent details usually located in the upper right of listing.

  • Home prices in your area have dropped steadily and more than the broader city you live in.

    Almost every market has taken a tumble or the last few years. That isn’t the point here. The point is whether or not your specific area is better or worse in performance than your broader city or county.

  • Your home isn’t ready for prime time

    The shape your home is in relative to other listings is critical especially if you have a lot of competition. Make sure you can rival your competition. This is a much longer conversation that I cover in other blog posts. But be ready, this isn’t just about curb appeal.

Keep Your Emotions From Clouding Your Judgement

Let me start by saying that selling your own home is emotional. Don’t let anyone tell you differently. Not only are you driving the separation between you and something that you’ve called home for years, but you’ve also put your blood sweat and tears into this home. Add to that, you’re dealing with buyers (and their agents) whose one goal in life is to get THE deal on their home of choice. That means hard negotiation tactics. Tactics I’ve seen:

  • Walking in and not showing an ounce of emotion. Leading the seller to believe the buyer isn’t interested.  This definitely makes buyers feel on edge.
  • Telling the seller his/her house is not price competitively given his/her research and that they are crazy for thinking otherwise.
  • And the one that hurts the most…telling you about every flaw they see as they walk through your home.

I’ve seen many others, but these I see most frequent.  All them poke at your anxiety (which is the buyers’ goal), but most of all, all can put you on the defensive.  “I’ve spent quality family time here!”  “I painted the walls myself and planted every flower in the yard!”  “This is a beautiful home!”

Case in point:

I just did a walk through of a FSBO home in San Diego.  I overheard a snarky agent (that’s a technical term) talking to his buyer telling the buyer that there were many ways they could decrement the current price in their offer and that the seller would be crazy not to take it.  “There’s a crack in the driveway.  The back walkway is uneven, which could all be related to foundation issues.  That could cost my client a fortune.  Also, that color paint it very unusual, we would probably want that changed before even considering an offer.  But we’ll talk about it.  We’ll get back to you IF we want to make an offer.”

The seller was incensed.  “He doesn’t know what he’s talking about!  My house is worth ten times what the neighbor’s house is worth.  This is a beautiful color!”

Later I spoke to the seller.  The buyer came back with an offer 20% lower than asking price.  The seller, with an indignant sniff, said he laughed at the agent and said they were moving on.  They didn’t even counter the offer!   Instead of listening and treating this like a business transaction, the seller turned emotional and lost out on what potentially could have been a solid sale.

This happens all the time.  There are a couple things I always do to avoid this:

  1. Know your ‘walk-away’ point and don’t walk away before that
    • Do some homework and come to a decision about what your ‘walk-away’ point will be.  The lowest price you’ll take based on everything you know about the comparables in your market and your personal situation.  It’s usually never the price you list your home at originally.  You also need to know what you’re willing to repair if a buyer requests it.
    • Having a ‘walk-away’ point helps in a couple ways.  If a buyer won’t go above a certain price point or is requesting repairs in the form of a price break that force you below that price point, you can ‘walk-away’ from the deal knowing you made an analytical decision vs. an emotional one.  And on the other hand, until that ‘walk-away’ point is reached, you need to force yourself to stay in negotiation, even if the buyer is not your favorite person or is not showing your desired level of appreciation for your home.  This makes the FSBO process and your decision-making analytical vs. emotional.  It’s easier said than done, but this works if you are disciplined about it!
  2. Know that everyone has different tastes and negotiating tactics
    • Buyers are looking for a deal and will do pretty much anything to pick apart your home.  Be prepared and know it’s about getting the best deal possible.  It’s not personal!
    • One trick I use is to jot down and translate the buyers’ negative remarks into dollars.  For example:  “There’s a crack in the driveway.”  I can assume that he will come back with a decrement to the price even though the crack is a minor blemish and nothing more.  Even paint comments like “The paint is chipped on the window frames.”  I will jot down all the comments and put a price tag against each one.  That way I’m prepared when the buyer offers a lower price or requests repairs as a contingency to the purchase.  I can often combat the decrements to price with realistic costs or reasons why the decrement is unjustifiable.  This provides a data-based counter offer vs. an emotion-based!
    • Bottom line; use the buyers’ negative comments and prickly negotiating tactics to your advantage!

The point is…everyone is emotional.  The goal is to make sure you balance that emotion with an analytical approach.  You’ll be far better of if you do!