Who hasn’t done foolish things? What’s the most costly, foolish thing you’ve done? I don’t mean what was your biggest mistake because that’s a different thing. Sometimes we truly just lack accurate information, or knowledge. Sometimes we’re misled. There’s such a thing as an honest mistake. But in another instance we’re maybe too impulsive, or too trusting of unqualified information sources, or too emotionally swayed, or too whatever that we consciously ignored what then caused the big mistake. That was foolish! That we then get to own, and truly regret. At best, hopefully, we learn from it and become the wiser going forward.
Over the years, I’ve seen plenty of foolishness in the course of folks buying and selling real estate. Even though a home is quite often the most sizeable investment most people ever make, it’s often done with too much emotion involved, and too little prudent pragmatism. Real estate investors are rarely emotional and that’s why they make money doing it. The home buying process is different though. There will always be an emotional component, and rightfully so, because you’re choosing your next “home”; your sanctuary; the place you will make memories for years to come. It will “represent” you to friends and family who visit, and therefore it becomes an extension of yourself and an element of personal pride. So, you find a home and think “I love this home! I want it.” or even just “This, of the ones available to me, will serve my needs the very best”. In either case, you’ve made the emotional buy-in and this is when the pragmatism kicks in. You begin the due diligence period of inspections, and other determining details that make the purchase ultimately tenable. To learn that a home has more problems than you can afford to remedy, and then buy it anyway, because you love it, would be foolish. Many have learned that lesson the hard way. Home sellers trap themselves too. Selling is, or certainly should be, less emotional and more pragmatic from the start. I always say that there are two buyers for every home, and one of them already owns it, giving them the advantage for owning it when the negotiating is done. The emotional seller will sometimes outbid the fair market buyer by insisting the home is worth more than the market will presently bring, or by insisting that the home, as it is, should be good enough for any buyer, since it’s been good for them.
Selecting a Realtor to navigate you through the entire process is a decision that you will likely make near the front end of your home buying process, and certainly on the front end of the selling process to get the house ready for market and to pre-determine your net-of-sale and your moving plan. This too is often done based on emotion (eg. my daughter’s boyfriend got his license and offered a great discount), or you saw that ad that saves you $10k in commission if you use their agent (who may or may not have much experience, or know your area, or your type of home). The pragmatic home seller will look for agents in their area who have been around awhile, are active full-time, and are updating their skills and education constantly. They’ll then interview three of those for the one with the best qualifications, and with whom they feel a sense of confidence. This is a significant business relationship. A foolish real estate agent selection can cost you many thousands of dollars– 10s of thousands in some instances, and may even lose you a great purchase or sale. Choose your agent like you’re OJ Simpson choosing lawyers, or like you’re choosing an eye surgeon for your cornea transplant. We’re not all just the same.
If I made a Top 10 list of foolish real estate mistakes it would include:
- Thinking you can sell at the peak of market. See “Chasing the Market” graph
- Selling “off-line” to a friend, neighbor or desperate Facebook or Nextdoor party, forgoing the possibility of a bidding war that could net you a much higher sale.
- Selling by Owner, especially in a hot market when, again, you want ALL the best buyers bidding up your price.
- Overpricing and blowing your first impression
- Not understanding all the costs and their purposes. A good agent will show these to you before you buy or sell.
- Hiding defects that stand a good chance of coming up later with a lawyer attached
- Not adequately following KC’s 3-Ds. Declutter. Depersonalize. Deep Clean.
- Not staging inside and out, including lighting, for an eye-popping photoshoot
- Taking feedback or low offers personally and emotionally
- Hiring an average agent or worse, a part-time agent! The 80/20 rule of Realtors is actually 90/10.
- Engaging with your buyers or prospective buyers during showings and during the escrow period
Much of this is self-explanatory. All of it warrants a candid conversation with your chosen real estate professional. The age-old saying is true. “Knowledge is Power.” But knowledge is not inherent. It comes with education, experience and attentiveness. Don’t be fooled. Be served.