After a summer of Real estate searches and dealings, I learned a lot. We had bought a new house, and had just gotten a deal signed to sell our old one.
Here’s what I would do over again, and what I would do differently:
First, I would use the same agent again. He’s still a friend, and though things got really stressful at times, he never violated my trust.
That said, I did see behind the curtain a little, and would change how I handle things based on the experience I went through.
The first change I would make is that I would pay a few hundred dollars for an appraiser to go through the house before the sale. The whole system of “comps” is really terrible, and shouldn’t be taken seriously as anything more than a very rough starting point. They tell what the square footage is of homes sold, and the price sold for. You divide the second by the first to get the cost per square foot, which you can use to decide where to set your starting price. This doesn’t tell you other things that are valuable though, such as the amount of renovations a house has had, or the amount of disrepair it’s in. Inspections will tell you if there are serious problems you’ve overlooked, and an appraisal will tell you what a bank would be willing to lend a buyer for the house.
That’s a really valuable piece of information. Our house had to go through appraisal before our buyers’ bank would approve their mortgage, but they don’t provide any information to the sellers except “sufficient value.” In other words, we didn’t arrive at a sale price that was too high, but we’ll never know if it was too low. While you’ll never know what would have happened if the house remained on the market a few more days, knowing what a bank would lend on it would give a much better idea if you’re in the right ballpark.
Another thing I learned was regarding home improvements. In the end, it seemed that we never got out of our house what we put into it. The improvements were nice, and they probably helped sell the house FASTER than if I hadn’t done them, but they didn’t get us a HIGHER PRICE. I will weigh all future home improvements against that lesson. Fortunately, most of what I did was necessary for getting a decent sale though. The biggest thing I did was remodel a basement bathroom, which I really had no choice about. The tile was falling off the walls in the shower, and no buyer would have overlooked it. I also replaced the carpet in the living area with bamboo flooring. The carpets were just worn out and in rough shape. I could have left them, but they would have been a big weapon against us for negotiations.
The biggest area in home improvements that hurt us was the windows. I had replaced almost all of the windows in the house. When I started, I didn’t plan to sell the house, so I got nice windows that I liked and wanted for my house. In the end, I would have been better off with cheaper windows that ended up in someone else’s house.
Lesson learned in home improvements: don’t do them to fetch a higher selling price. Do them to either sell faster, or to enjoy the house more while you still live in it.
Another lesson I walked away with, in addition to getting an appraisal and being more mindful of proper home improvement projects is to have a tighter game plan ahead of negotiations. We never told our agent what our top price was when we bought, nor our bottom price when we sold, and I wouldn’t change that. However, have a top when buying and a bottom when selling and stick to it. Don’t let the other side intimidate you into giving up on them. We never regretted coming up on our buy price; his house just wasn’t worth what he wanted for it; and we got a better house in the end. However, we gave up our strong position on the sell side because the buyers threatened to walk if we either took too long to reach an agreement or didn’t come down enough. Think about it, they lost out on another buy because they low-balled a seller and the seller got a better deal. If they wanted our house bad enough, they would have learned not to low-ball sellers and lose out on deals in a sellers’ market. My mother-in-law was disappointed that we took the first offer, and told us she would have rather waited to get her share of the sale price of the house (the remaining balance of the mortgage, including the last few payments) and had us get a price we were happy with.
The next post will be the last, and will be “wait, there’s more.”