There are always appropriate steps to investing in real estate. However, there are also inappropriate steps vendors/landlords can walk down when it comes time to put their property on the market. In my 23 years of being in the business I see the same mistakes over & over when all they had to do was to listen to the voice of an experienced professional.
The eight costly mistakes
Mistake 1: Putting the home on the market before it’s ready. Most times this happens because the vendor/landlord gets impatient or is a procrastinator and has pushed himself up against a moving deadline without getting the pre-work done. So it comes on the market with the dated kitchen/bath, horrible carpet/tile (that gets replaced during the marketing of the home); or they are painting it while it goes on the market. Presentation is everything — so get the work done before marketing the property. You want to have a WOW factor!
Mistake 2: Over improving the home for the neighborhood. This happens with additions and upgrades that the owner will never be able to recoup on his investment. For example, installing a gourmet kitchen & gorgeous bathroom in a neighborhood that only commands a $700k selling range. Keep it simple!
Mistake 3: Pricing the home based on what the vendor/landlord wants to net. This pricing strategy almost always ends in failure. Vendors/Landlords can control the “asking” price, but they don’t control the “sale/rental” price. The market does. It doesn’t matter what the vendor/landlord wants, the price is determined by the matter-of-fact reality of the market. What happens they usually end up chasing the market down and the property stays on the market for months or even years. They end up taking an amount that was offered to them months/years ago now they have lost all that money that could have been used to pay the mortgage, pay bills, reinvest or purchase another property with. We have a saying in our business “the first offer is usually the best offer”. Bottom line watch the market!
Mistake 4: Hiring an agent based on non-business factors. Make sure you’re hiring a professional with a proven track record. It might be nice to hand over your largest asset to your family member who just got his/her license — but make sure he/she has a mentor to keep your deal from going south.
Mistake 5: Getting emotionally involved in the sale/rental of the home. This is one of the biggest challenges vendors/landlords face when putting their property on the market. Once you decide to sell/rent your property, it’s no longer a home, but a commodity. It needs to be prepared as a commodity, marketed as a commodity, and priced as a commodity. It doesn’t matter what you “want,” only what the market can bear on pricing. People are going to come in to kick the tires, so to speak, and you can’t get emotional about how they may or may not appreciate the nuances of your home that you have lived in for so many years. Step back & look at it if you were they buyer/renter.
Mistake 6: Not getting your ducks in a row before trying to sell. This would involve financing, reading the fine print on your current mortgage to ensure no pre-payment penalties, not listening to the particulars of your local market, etc. If the local market is dictating lower home prices, lower it early, not later — it will cost you more. If the local market dictates selling your home first, then sell it first then look for another home to purchase. You can always put a contingency “subject to vendor finding suitable housing”. Would you want to wait for someone to sell before they can purchase yours? It could take months or even years…
Mistake 7: Not disclosing. Even though Bermuda is a nondisclosure country savvy buyers are now having structural surveys done on properties before they purchase. If you are aware of the roof leaking, electrical issues or leaking water tank, etc. It is best to let your real estate professional/buyer know so no surprises arise upon inspection. Honesty is the best policy!
Mistake 8: I don’t have the funds to pay a real estate professional. It stays available on the market losing you money month after month when it could properly be marketed by a professional.
Avoiding these mistakes is not that difficult. There are plenty of resources (like this publication) and professionals, who are there to help you step over the pitfalls. Do the research early, and listen to that voice in your head (it’s probably the whispers of the finance, real estate, insurance person who’s warning you of a hole you’re about to step into). I truly do hope this was of some help to you!