Homes sell each and every day. But although selling is a common real estate practice, the process of selling a home might not be as simple or picture perfect as you think. After putting a lot of pride and work into your home, maybe you anticipate a quick sale and a fair price.
However, the reality can be somewhat different, and you can come face-to-face with a few cold, ugly truths about selling a home.
1. The local market dictates your sale price
If you binge watch HGTV, you might be under the impression that all the hard work and money poured into the house will pay off in the end. Maybe you spent $15,000 or $20,000 upgrading the home with a new kitchen, new bathrooms, new windows, and everything in between. You might have even calculated the average rate of return for these projects. So it can be disappointing when a realtor advises listing the home for less than your target asking price.
The unfortunate truth about selling a home is that the local market often dictates the asking price. It doesn't matter how many upgrades or extras you put into a house. If it's a buyer’s market, many homebuyers will not pay a penny more than the local market value based on comparable sales in the area. Even if there’s a buyer willing to pay your asking price, a home appraiser may determine your property is overpriced, which means you’ll have to lower your price. So while upgrades can improve your property, a return on your investment isn’t guaranteed.
2. Home inspection reports can reveal costly problems
If you’ve taken good care of the house, the home inspection may be the least of your worries. When submitting a purchase offer, many buyers include a home inspection contingency, which basically means the sale is contingent on a satisfactory home inspection. A home inspector checks the home’s electrical system, foundation, plumbing, appliances, and structure. And unfortunately, the report may reveal problems you didn’t know existed. Some issues are minor, but others can be major and costs thousands to fix.
In the case of major issues, most buyers want these problems corrected before continuing with the sale. So make sure you have cash available for home repairs. The good news is that some contractors will agree to complete the work now, and then hold off collecting payment until after the sale, thus allowing you to pay for repairs using proceeds from the sale.
3. Homebuyers can be demanding
If your home sits on the market for several months with no offers and little interest, some homebuyers will take advantage of the situation and ask for the world. If a buyer can smell your desperation, he might knock $10,000 off the asking price, ask for paid closing costs and other extras such as new carpet and updated appliances. At this point you have to consider how badly you want to sell and move. Agreeing to a buyer’s demands can pretty much guarantee the sale, but it can also result in a significant financial loss.
4. Home’s don’t always sell quickly
A real estate agent can’t guarantee how long it’ll take to sell your home. Other properties in your neighborhood might sell in record time, but this doesn't mean your home will sell as fast. It’s a numbers game and it can take months to find the right buyer. And the longer your house goes unsold, the harder it is to sell because some buyers may assume something is wrong with the property. If you have resources to carry two mortgages, there’s the option of buying a new home before selling your old home. This can be a dangerous move since you don’t know when (or if) you’ll find a buyer. Supporting two mortgages could eventually strain your budget.
5. A real estate deal could fall through at the 11th hour
After finding a buyer and going through a home inspection and appraisal, you might think it's a done deal and start packing up your home. But there’s an ugly truth that many home sellers don't like to think about. The entire sale can fall through at the last minute—and the reason might have nothing to do with you. The buyer could lose his job or make a decision that messes up his pre-qualification, such as financing furniture or a new car before closing. Any change to his personal finances can kill the deal. Nothing is guaranteed until both parties reach the closing table.