For many of us, our personal home is the most valuable asset we will ever own. When it comes to selling, we naturally want to maximise the value as much as possible.
What most sellers don’t realise, is that there is one key step you can take to sell your home for more that goes beyond the visual presentation of your home.
While decluttering, staging and undertaking cosmetic enhancements to attract buyers are critical steps, removing finance hurdles is just as influential on your selling success.
Removing barriers to finance approval
Finding a potential buyer, attracting them to your home and having them fall in love with it is one thing. But before they can buy your home, you need the approval of their bank, insurance company, solicitor, builder and close family.
Financial and legal advisers aren’t looking at what they love in a home, like renovated bathrooms, school zones, or trendy landscaping. They care about minimising risk. Therefore, it pays to think like a bank or insurance company and invest time and money in understanding and removing any potential risk hurdles before going on the market.
Example risk hurdles, a.k.a challenges that might stop a buyer from obtaining finance, include:
- Unconsented changes to the property.
- Major outstanding maintenance issues.
- Problems related to the property title.
- Subsidence.
- Design risks: cladding, drainage, flooding, water-ingress.
All of these challenges could impact your buyer’s ability to secure insurance and finance. Meaning they can’t go ahead with buying your home no matter how much they love it.
“It’s never been an issue for us”
When it comes to light that there might be hurdles that could make insurance or finance hard for a buyer to obtain, most owners want to avoid the problem, often deferring to the position: “It was like that when we bought it, so why is it an issue now?”.
The challenge with this line of thinking is that finance and insurance requirements have changed markedly over recent years. What might not have concerned a bank when you bought the home, could now be a reason to deny finance approval, even if it might not seem like a big deal to you.
Remember, banks and insurance companies are in the business of managing and reducing risk. They don’t care if you’ve been in the home for 10 years and nothing has gone wrong with your unconsented deck, or that your roof isn’t leaking even though the building inspector thinks it needs to be replaced. They only care about what could potentially happen in future, under a worse-case scenario.
We all hate spending money on things we can’t see
Who wants to spend money sorting a title issue? Or chasing up your local council to issue a Code Compliance Certificate for work done by a previous owner? Who wants to spend money reinforcing piles under a house which have been performing fine for decades, but that a building inspector flags as being a design risk?
It’s frustrating spending time and money on things that don’t materially improve your day-to-day enjoyment of a property. Most owners would understandably think: “Why spend money on lawyers when I need a new dishwasher?”. The key point to come back to here is risk.
The risk to an owner who doesn’t handle these issues upfront is that your sale falls over at the final hurdle. You might do all the hard work of finding a new home, getting your home ready to sell, putting up with viewings, finding the right buyer, and negotiating an acceptable price, only for your contract to crash because the buyer’s bank gets spooked. Once one buyer pulls out, future buyers tend to get freaked out too, and all this concern can end up lowering your sale price.
Removing hurdles before going on the market minimises risk. It gives buyers confidence to put their best foot forward and make an attractive offer. When you make it easy for buyers to offer, it’s far more likely you will end up with multiple buyers in a competitive situation, which helps secure a premium sale price.
While removing risk hurdles doesn’t offer much in a visual sense to show for your investment, doing this work upfront will positively impact your sale price and make your home far easier to sell.
In other words, the payoff will be worth the effort.
