Selling a property marks another milestone in your life as you will be relocating to a new home. Though it might seem like a daunting process, it is actually doable if you avoid making the top 10 mistakes when selling a property. These mistakes might seem straightforward, but most sellers tend to make these common mistakes as they are eager to sell their property.
If you are planning to sell your property, my team and I have helped hundreds of parents make the right property sale decision (back by a 11 year track record). Apply to be a client here.
1. Showing the ‘ugly’ side of the property
The first impression of the property is the deciding factor as to whether the buyer will come back for a second visit. Dusty floor, unkempt tables, and potato chip crumbs lying around are just a few of the many things which a property seller forgets about before showing the property to a potential buyer. As a result, the property will appear to be undesirable, even if it is located strategically and is affordable for the buyer.
What you should do: Clean the property before the buyer pops by for a visit. A simple tidying up will immediately make the space neater and much more desirable.
2. Pricing your property based on how much you want to profit from it
This pricing strategy has a huge impact on the number of potential buyers that will make the first move to contact you. For instance, if you price it based on your emotional attachment to the home, you might lose a significant number of buyers as the price of your home exceeds their budget. This will in turn lead to the property being left on the shelves and potential buyers might start to wonder if the property has any undisclosed defects.
Remember: you are selling your home (has a sense of belonging and attachment to it), but they are buying a house (purely a space that provides a roof over their head).
3. Researching on the property’s price based on your neighbours’ unit asking price
A way to check the value of your property is to engage a professional to assess the property, or to get a rough number online. Sites such as UOB and Money Smart provide the calculator to find out the value for free, and within seconds.
In the event where you price your unit higher than your neighbours’ asking price, it will lead to a low stream of buyers and make your property look undesirable. Additionally, when buyers compare your unit to your neighbours’, the latter will definitely be more hot selling due to the lower pricing.
Do note that it is inaccurate to price your property based on your neighbour who is living 3 levels above you as flats on the higher levels tend to fetch a higher price
4. Thinking that renovation costs should be included in the sales price
A common misconception when it comes to renovation is that it has an impact on the value of property, and should be factored into the selling price. In actual fact, renovation does NOT have a significant impact when it comes to property valuation.
Rather, a renovation can attract more eyeballs to your property as it looks refurbished and neat. In some cases, potential buyers might have the same taste as you do and will contact you (or your agent) for a viewing session. Some might even look for flats that were renovated so that they can save on the renovation costs and the hassle that comes along with it.
An important point to take note of when it comes to renovation is that it has to be done within the recent years for it to attract buyers. Renovation that was done a decade ago has a different touch to it, and young buyers might perceive it to be old-fashioned.
5. Letting your emotions affect the final sales price
It is a common sight to see inexperienced sellers letting buyers low-ball them, even though the agreed selling price is lower than what they have in mind. The two main reasons are urgency and sympathy.
If your potential buyer asks you for the reason for selling your flat, remain calm and show as little signs of urgency as possible. You might be selling your unit due to a cash flow problem or have plans to relocate to New Zealand in a couple of months, but your urgency level will determine the amount that your buyer will try to bargain with you. On the contrary, if your reason for selling the flat is to move into your child’s new home, the low level of urgency will deter the buyer from low-balling. He/she now knows that you can always wait till a better offer comes along should he/she offer a low price.
During the casual chats with the buyer, it is important to remain neutral as much as possible. Do not sympathise with their sorrowful story of how he/she has to work 7 days a week to make ends meet. If you are someone who is highly emotional, you should consider engaging in a property agent to help you to handle the property sales. More on this in the next point.
6. Not engaging in a professional to handle the sales of your flat
A professional property agent can help you to handle the entire sales process, from listing the property online to getting the final sale sealed on papers. These professionals know how to get new clients due to their wide network in the industry, and they are an excellent negotiator as they do not have any emotional attachment to your property. They can also assist with the property viewing and handle the documents which you might be unfamiliar with.
In addition, you can work out the commission structure with your property agent to work within your budget. For HDB flats, sellers usually pay a 2% commission; private & landed properties, 2% – 4%. The commission rates are negotiable.
As much as possible, it would be ideal to engage a professional estate agent to handle the sales of your flat as it will save you a lot of effort from getting buyers, meeting them, negotiating with them, and handling all the legal documents.
If you are still not convinced, then fully equip yourself with all the necessary knowledge by attending my Free Masterclass (No sales, pure education): How to consistently increase your cash flow with property even if you start with a single HDB with limited time and capital.
7. Engaging a real estate agent, who is also your friend
One of the common friendship deal breakers is money, and this is why you should ideally engage a real estate agent whom you are not familiar with. This decreases the likelihood of fallouts due to difference in opinions on the commission rate and the methods to sell your property.
For instance, you might prefer to sell your unit by using the traditional way of doing door-to-door flyers, but your agent (who is also your friend) said that it is more efficient to market the property online. Though neither side is wrong in this case, it will still leave a mark on the friendship between you two.
On the commission rate: Your agent-friend is willing to accept your proposed 1% commission for your HDB flat, as he/she takes into account the friendship that you two have (even though the market rate is 2%). Will he/she bring this issue up again in the future, stating that you took advantage of the friendship that you two had and pushed the commission rate to the lowest?
From these two scenarios above, you can see that it is not the most ideal to engage a property agent, who is also your friend as it might lead to a soured relationship after a period of time.
8. Getting too many agents to sell your property
As the saying goes: ‘too many cooks spoil the broth’; it applies to the case of selling a property as well.
Imagine this: you are a buyer scrolling through a property marketplace and saw a unit that caught your eye. After liking the listing, you continued browsing and saw another listing of the same unit at a lower price.
Thinking that you had a bad memory, you continue to scroll through the listings and see another listing of the same unit with an even lower price! How would you feel as the buyer?
Let me tell you: the buyer will be confused and have a ton of questions in the mind. Why are there three listings of the same unit, yet, with different prices? Is there any issue with the property? Was that why the seller engaged in three property agents?
The buyer will definitely have some alarm bells that rang upon seeing three listings of the same unit. Not only that, the agents that you have engaged will try to undercut each under in order to secure the deal. This will result in a lower profit for you.
9. Keeping the defects and problems of the property under wraps
By not disclosing any information about any of the property’s condition, which might affect the property value negatively is not considered illegal if the contract has the ‘as is where is’ clause. However, it is not recommended to keep the defects and problems under wraps as it might cause harm to the new owner in severe cases.
The buyer might be able to raise a lawsuit against you to claim for damages. If this happens, it is likely that you will have to fork out a larger sum of money for the lawsuit and compensation, as compared to disclosing the issues in the first place.
10. Excluding any other costs beside agent’s commission
There are several costs, excluding the property agent’s commission, to consider when you are selling a property. These include transaction fee (to close the deal at a lawyer’s office), home inspection cost, professional photography cost (to list your property) moving fees (if you are not selling your furniture), bank loan penalty (if applicable) and the financing for your next property.
All these costs can add up to a significant sum, thus, be sure to do your calculations before making the actual move to sell your property!
Better yet, to confirm that you do not miss out on anything, check in with your community and help keep an eye out for each other. Be part of Yvonne Megan’s inner circle and join the smart parents/investor community now.
Now that you know the top 10 mistakes to avoid, make sure to practice these when you are selling your property. When in doubt, always seek the advice of a professional property agent or property appraiser. Do not be penny wise, pound foolish!