The Insider’s Guide to Real Estate / Real Estate Landscape / Different Options That Affect Net Proceeds

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Learn the levers affecting net proceeds

So you can pull the right ones

If you want to organize your thinking based on how much money you can get from a home sale, then it pays to focus on net proceeds. The three variables that a seller can manage to impact net proceeds are price, commissions, and costs to get ready to list. Understanding these topics make it possible to create conditions that give you the best shot at optimizing the financial result of your home sale.

When pricing your home you should spend a substantial amount of time doing the research yourself. The truth is, you can’t trust anyone else blindly on this crucial topic. Brokers and agents give guidance on pricing, but they hardly follow it themselves when they sell their own homes. And while we detail the many ways in which pricing can go wrong, the main thing you want to be aware of is getting talked down on price by professionals who benefit when you sell at lower prices. Home sellers who take this poor advice and don’t ask questions often end up in a situation where they receive multiple offers, and even if those prices get bid up, the results remain lower than the true asset value of the property. Sellers who don’t do the work to research a price for their property themselves run the risk of getting taken to the cleaners — avoid this at all costs.

The impact of commissions on your net proceeds is clear since this is money that you pay to a broker and do not keep. Home sellers often expect basic economic principles to hold up such as ‘you pay for quality’ when retaining brokerage services, but this turns out not to be true. In fact, most traditional broker’s don’t compete on commissions publicly and instead set prices at uniform levels. As a home seller, you’ll pay the same commission for an experienced agent or a new agent and for a good agent or a bad agent-- everyone charges the exact same rate. There is no connection between the amount you pay in commission and the background of your agent. This is is especially true of the ubiquitous but totally unnecessary up front buyers agent commission. The good news is that if you call around, you can find brokers that will get you into the MLS without these commissions (even though they won’t publicly advertise that).

Once you’ve selected your broker and researched pricing, the next thing you need to do is get ready to list your home with the right amount of effort and cost. At a summary level, this means cleaning up, doing light touch-up work, and getting an awesome set of photographs to attract buyers. Net proceeds can be negatively impacted when home sellers get going on a new remodeling project or thinking they need to ‘stage’ the home with someone else’s furniture to get a good price.

Manage your commissions strategically. Make sure not to underprice. Skip over the stuff that doesn’t pay off as you get ready. These are the points of focus that a seller should keep in mind if they want to take home the highest net proceeds possible in a home sale. It’s your equity. You’ve earned it. So it makes sense to do what it takes to keep it.

Craft a plan that gives you the most money back

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