- by Jerry Fowler
Why won't your house sell?
One day a woman named Mary called to ask for real estate advice. She started by saying that her house had been listed for four months with another agent. Activity was slow and she had no offers. When she questioned her agent, she was simply told, "Well, selling a house takes time."
Quite rightly, that answer didn't satisfy Mary.
Nationwide research shows that there are five main reasons real estate doesn't sell in a timely fashion. Click on any of the below to explore why:
Price
Before listing her house, Mary had wisely interviewed three agents. This is a smart move, even if the first or second agent makes you feel comfortable enough to list your house immediately. Without multiple interviews, you have no way to compare each agent's marketing plans, including their price recommendations.
Each agent had proved Mary a written price opinion, which is called a comparable market analysis (CMA). Two agents had recommended a similar price, and the other had suggested a price that was a bit higher.
Mary said one of the agents told her she could get $20,000 more than the other two agents had quoted. The agent was so enthusiastic, believable and convincing that Mary really believed this agent. After all what did Mary know about market values? This agent was an expert.
"Buying" a Listing
What probably happened is the agent "bought" the listing by quoting Mary a higher price during her presentation, knowing that Mary's house would never really sell at that price. More likely than not, the agent intended to wait a few weeks before convincing Mary to lower the price.
This is commonly called "buying a listing."
Mary's situation demonstrates a valuable lesson for sellers: if one agent quotes you a significantly higher price than the others, that agent is probably not the right one for you. The market doesn't lie, so each agent you deal with should arrive at a very close figure. If you list your house higher than market value then drop your price later, your house will be "market worn." Your final selling price will probably be lower than if you had listed it correctly in the beginning.
Let's say you list your house for $150,000 but it's really worth $140,000. Buyers in the $140,000 range will never see your house because they're not looking at $150,000 houses. They can't afford them. And $150,000 buyers will be comparing your house to others that are truly worth that price, meaning those houses will sell while yours just sits there. In fact, many agents will show an overpriced house for comparison when they're trying to sell their listings that are more realistically priced.
Why do Some Owners Overprice?
Often it's on their agent's advice, which we just discussed. Another reason they'll overprice is based on past value. Assuming a house appraised for $140,000 three years ago, they'll add an annual appreciation rate of three, four or five percent to come up with $150,000 or more. Makes sense, right? But that's not valid reasoning. I've never found any research to indicate that a home is guaranteed to appreciate.
Your house is worth what today's market says it's worth, regardless of what the house was worth one, two, five or ten years ago.
Comparing Home Prices to Stocks
Houses are just like stock. Hopefully they go up in value. Sometimes they come down. If you paid fifty dollars for one share of IBM stock two years ago and it's valued at $30 per share now, would you expect to sell your stock at what you paid ($50) plus a profit? Of course not. Well your house is the same. A property's value is determined by today's market, not by yesterday's value plus appreciation.
Mary's price was too high. That's the number one reason it hadn't sold after four months.
Condition
After concluding that Mary had her house listed too high, the next step was to ask about the condition of the home. She said it was in pretty good shape, but that it was hard to keep it clean with a family and that it needed painting. She thought she could avoid that expense in such a good market.
Mary couldn't have been more wrong.
Buyers are looking for model-home conditions. The paint inside and out should be near perfect. Everything should be kept perfectly straight and orderly. In fact, a buyer should be able to move into her house without doing anything, including cleaning the carpet.
Even if Mary received an offer, the condition of the house would cause the buyer to offer less than market value. Mary need to take the house off the market and paint it inside and out, cleaning everything, including the carpets, windows and light fixtures.
Although it may be difficult, a seller really has to walk through the house as if they are a potential buyer, being very critical and asking whether they would purchase a home in this condition. If you don't feel you can do that, hire an interior designer to do it for you and to suggest what needs to be done to prepare your house for the most important show time you'll ever have.
Once Mary had completed the recommendations above, the next step would be to invite all three agents back to visit and do another market analysis. She might even invite another agent that had impressed her during the previous listing period.
Another common question that many sellers ask and that is what do I do about pets, especially dogs. The results of a recent survey stated that 60 percent of all people are extremely scared or highly allergic to animals. What does this mean to a seller? Its very simple -- you need to make other arrangements for your family's pets. Of course, these pets are family members and you probably don't want to board your pet. That's okay, but you may not sell your house in a timely fashion or at its full market value.
With dogs, just the liability factor is huge. Your pet is the friendliest around but some little boy may come in pull your dog's tail, causing your pet to react by biting this boy. Then you have problems. Therefore, its best to board your pet, let a friend keep him, or have some relatives take care of him during this important stage of selling your home.
The things that make your house stand out the most is price and condition.
Location
The third reason a house won't sell in a good market is location. Such things as undesirable schools, a higher crime rate, filthy/messy neighbors, a busy road, or noise pollution (i.e. beside a busy railroad track or under a flight pattern) can mark a bad location.
Mary's location was good. There were no real negatives to affect her sale.
However, if your house is located poorly, the only thing that can compensate is a lower listing price. In order to sell a house in a bad location, the owner would have to ask for less than what similar homes in more desirable areas have sold for. Favorable terms could also help sell your house, especially if you are in the position to offer owner financing or a lease with options.
A good REALTOR will be savvy enough to recommend a good strategy and overcome a bad location.
The Listing Agent and their Reputation
The fourth reason a house won't sell in a great market like we're currently experiencing is the listing agent.
Your listing agent could cause huge problems if he or she is hard to get along with or difficult to work with. That's something you can't really anticipate, but that kind of attitude in an agent can make other REALTORS not want to show his or her listings unless they simply can't find anything else to show potential buyers -- even though such behavior goes against the REALTOR's code of ethics. It's only natural not to want to work with someone who has a bad attitude or a condescending nature
Agents who are rude, arrogant, and difficult to work with will not have as many showings as an agent who is cooperative and enthusiastic.
Many times an buyer's agent will see a certain listing agent's name on the multiple listing sheet and immediately take that house out of their showing schedule. Just because an agent is a top producer in your area does not guarantee that he/she has the respect of other agents in town. The only way to guard yourself against this type of discrimination is to check out the reputation of the agent you are thinking about hiring or get personal referrals.
Marketing Plan
Aggressive Marketing Plan
If your house won't sell but you feel the house is priced right, in good condition, in a good location, and your agent is easy to work with, the marketing plan is probably the problem. Gone are the days when all the agent had to do was put a sign in your yard, place your house on the multiple listing service, run an ad, and wait for the offers to come in.
Today's agent must have an aggressive written marketing plan that is made as an addendum to your listing agreement, allowing you to cancel should the agent fail to perform as promised. Your agent must make effective use of the latest technologies and must be attuned to the new information age. A good agent will spend thousands of dollars marketing their listings.
Lock-Box & Ease of Showing
That brings us to ease of showing. If you don't allow your agent to put a lock box on your door you will miss out on a huge part of the showing market. Let me explain why and a step-by-step process of a typical showing agent.
Here's how that agents works: when an agent has a couple coming in from out of town to buy a house, the agent will prepare a list of possible properties to show the couple. The properties are based on a previous in-depth interview to determine the couple's needs. After searching the MLS computer, the agent will print a list of possible properties.
The first thing a highly organized agent will do is check out the showing instructions, separating the possible showings into two piles: properties with lock boxes and properties for which the agent must make an appointment or pick up a key. Because most agents and buyers are on a very tight schedule, the agent will place all the easy-to-show properties on the "A" List with a showing schedule in 30- to 45-minute increments.
Your House May Be on the "B" List
If the agent must make an appointment to show your house, you're going to miss the first few rounds of showings because your house is going to be placed on the "B" pile. If the buyers don't find a house that meets their needs in the first few days, the agent goes back to the second pile of properties and starts showing the ones without lock boxes or houses whose instructions demand an appointment by calling the listing agent.
Suppose this couple falls in love with a house on the first few rounds of showings. Even if you have the best house in the city in the best condition -- you've lost that sale. So for every showing you do get, just think of how many you've missed. Allow your agent to put a lock box on your house and never require an appointment to show. You'll get much better traffic and a quicker sale that way.
The MLS is an extremely convenient way to narrow down your search. When you find local listings that you feel fit your needs, call us (480-258-3438) to make an appointment to view your selections.
