A blog cannot deal with all aspects of a subject and is not intended to replace professional advice. It's purpose is to highlight information and identify areas of possible interest. Anyone wishing to discuss this blog or to make any comments or suggestions about this blog is invited to do so by either posting comments or emailing me directly.
June 25, 2011
Top Reasons Why Homes Don't Sell
If you have had your home on the market for several months and haven’t seen much activity or any offers, chances are that one or more of the reasons below are to blame:
No doubt about it, the most common reason for a home not selling is that the asking price has been set too high. The reasons for setting your price too high to begin with are many. Ranging from over enthusiastic listing agents, to unrealistic seller expectations, to a falling market. Regardless of the reason though, if your home is priced too high, you’ve set yourself up for a number of obstacles to actually selling your home. Even if you do get an offer for the overly high asking price, the deal may fall apart before closing because the buyer may have problems getting financing at too high a price. Look at other homes for sale, ones as similar and as close to yours as possible in location, style, features and even lot size and site influences. If they're going for less than you are asking, you may be priced too high. Review your price with your agent every 2 to 3 weeks to see if it should be adjusted. The fact is, your home is competing against those other homes, and what buyers are willing to pay is what will determine the final sales prices.
There is a lot of competition out there. Your home has to compete against other similar homes for sale, as well as competing against shiny brand new homes. It even has to compete with non-similar homes that are priced the similarly. So, the more you can do to make your home look appealing to a buyer, the better your chances for a quick sale. Look at your home with a critical eye – put yourself in the buyer's position. A buyer doesn’t want to have to do anything except move in. Your best “bang for the buck” in improving the condition of your home are paint and flooring. Make sure that all of the paint is in great condition, both inside and out. Repainting doesn’t cost too much, and will usually make the biggest impact on buyers. Make sure all of the flooring looks good too. You may want to consider putting in new carpet. Again, it’s not that expensive but it sure does make an impact on buyers coming to look at your home. And of course the basics: keep the beds made, the laundry clean and put away, the bathrooms spotless, the grass cut, the hedges trimmed, the walks and driveways shoveled and every light bulb turned on. Your home must be in "show home" condition! It may not be the home's contents that you're selling, but they sure do make an impression on your target market - buyers!
Imagine shopping for a car: There are two identical cars that are priced exactly the same. One is freshly washed and shiny, the other was driven to the car lot in yesterday's rain so it has on it a slight film of road grime. Obviously they're both worth the same, but which would you buy?
It’s the oldest cliché in the world, but it’s true. When it comes to real estate, it’s all about location! When it comes to homes, things like how good the schools are, crime rates, visual appeal of the neighbourhood and noise or the smell of pollution can all effect how desirable the location is. But you as a seller have absolutely no control over any of these. If you’re in a bad location, a good real estate agent may help to minimize some of the impact by suggesting improvements to the house. But the only really reliable way to overcome a bad location is with a lower price. Simply put, an identical home in a bad location won’t sell for as much as the same home in a better location.
The marketing system of the real estate agent you hire is a good part of what you are paying for in a real estate transaction. In my experience, the more comprehensive the system, the more exposure the home receives and the higher the net price you receive when the house sells. The best selling agents all use a very aggressive marketing plan to market their listings - some charge more than others: afterall, real estate fees and the services you receive are all negotiable. If your agent isn’t making sure your home can be found easily on the Internet, doesn't have a website featuring real estate listings, isn’t actively touting their listings to other competing agents in the area, isn’t running ads in the local real estate publication, has their for sale sign falling down, then it might be time to change agents. Look at all the things they are doing to market your home - are they trying to sell your home, or are they marketing for your agent to get more business? The very best agents market their listings and the listings of others. And, if all your agent has done is put a sign in your front yard and add your home to the local magic MLS® System, and is waiting for a buyer to call them, then that agent isn’t coming close to doing all that can be done to effectively market your home. It might be time to call them in for a frank, open, "heart-to-heart" discussion.
You’ll hear it described as a slow market, or a buyers' market, or maybe a cold market. But it all means the same thing. That home sales in the local area, or market, are slow. That there are too many homes for sale and not enough active buyers. There are several things you can do to combat a slow market. The most effective strategy is to offer your home for sale at a lower price. Tied in strongly with effective marketing, buyers expect to find bargains during a slow market. Your home's listing must stand out so they can find it (marketing) and it needs to appear to be a bargain. Offering a bargain, without the exposure won't sell your home - no one will even see it. You can also help yourself by offering to pay some concessions to help a buyer that might not have a lot of cash, or offer a new flat-screen TV. The ultimate way to beat a slow market is to simply wait it out. But that’s not always an option for many sellers.
To get your home sold quickly, it’s important that other agents in the area show it to as many potential buyers as possible. As a seller, you really want that "area specialist" to bring their buyers to view your home - they know the area and know value when they see it. Make it easy for them. When a busy agent is compiling a list of homes to show a buyer, the agent will naturally tend to show those houses that are easiest to gain access to first. Most homes on the market today have digital “lock boxes” on them. The lock box is a secure device which holds a key to the home, that only qualified local real estate board approved agents and appraisers can access. Homes that are listed as being “lock box, call agent before showing” will get shown more often than homes listed as “agent has key”, "call agent's office for appointment" or "call owner for access." If at all possible, you should let your agent put a lock box on your home for easier showing. If not, you should do anything else you can to make it as convenient as possible for agents to show your home while still keeping your family and property secure. Limiting viewing hours to "9 a.m. to 9 p.m." or "2-hours notice" are reasonable (and expected), but "showings only after 4 p.m." are really difficult for busy agents and their clients that often view home during the day on weekdays.
This sounds almost silly, but it’s very true. If your listing agent isn’t liked or respected by other agents in your area, it could slow down the sale of your home. When an agent prepares to show properties to prospective buyers, the agent begins by talking to the buyer to find out what kind of home they are looking for. Then the buyer either chooses the homes to view or the agent searches the local MLS® System and other sources for homes that fit the buyer's needs. If there are a number of good matches to choose from, and one of them has been listed by an agent that is hard to get along with, arrogant, overly aloof, doesn't negotiate well, or has otherwise made themselves unpopular, well… It’s just human nature to leave their listings to the last to show a buyer. It's unethical to not have their listings in the list to show, but they certainly won't be near the top. The more difficult the agent, the further down the list your home may appear.
While this may at first seem strange given that buyers have - for years - been able to negotiate their own agent's fees, but still today, buyers expect "the seller to be paying their fees." With thousands of listings on the market and maybe dozens that meet a buyer's criteria, if you're not offering a "competitive" co-operative compensation your home will likely be well down on the showing list since buyers and their agents expect they will need to either negotiate with you to increase your offered compensation or they will offer you a lesser price so the buyer can pay their additional real estate fees since "market value" of a home always includes "competitive" co-operative commissions. Today, the MLS® System stills functions on this co-operative - and guaranteed - compensation for agents to show each other's listings. Through this somewhat archaic system, buyers have somehow been misled so that they think buyers don't - or shouldn't - pay real estate commissions.
In reality, the buyer always pays the commission - of both agents - not the seller; but, under the current system of commission payment contingent upon a sale, the seller negotiates with the listing agent how much the buyer is going to pay in commissions at the point they list their home for sale. It's never "if the buyer is paying the commission," it's "how much they're paying."Not withstanding the co-op compensation offered, it's unethical for agents not to have homes offering a low buyer's agent compensation on their list to show. So it WILL show up on their list: It won't likely be near the top of that list. Once a buyer expresses an interest in a property with lower (or higher) than expected commissions, they will be reminded by their agent how much they and their brokerage agreed to work for. My experience is that when buyers know that they need to "top up" the commissions, many don't want to even view those listings and they give their agent explicite, legal direction to not show that property to them. It is completely the buyer's decision. But, it is human nature: agents and buyers usually go after the low hanging fruit. Make it difficult to reach, and they won't even try.
If you are looking at saving on the fees you pay, offer to pay the listing broker up front for their work in preparing and marketing your property as well as a small amount that is contingent on the sale for their side of the transaction PLUS a competitive amount to the buyer's broker who brings the successful buyer. But that discussion is another discussion entirely...
Position your home attractively for the market you are in - price, condition, marketing, accessibilty, and if you're after the widest number of agents to show your home (and not just the agents from the brokerage that holds the listing), offer a competitive compensation - for your area.
Post Your Comment: