During the current springtime peak home sales season, the largest number of prospective home buyers are searching for houses or condos to purchase. That means this is a great time of year to be a home seller.
Although mortgage interest rates recently rose a bit, that slight increase motivated many first-time home buyers, move-up buyers and move-down buyers to purchase a house or condo before interest rates rise more. The result is near-record numbers of new and resale home sales.
Purchase Bob Bruss reports online.
But some houses and condos aren’t selling. For example, I recently received an e-mail from a Realtor whose new townhouse listings aren’t selling. When I checked his Web site, the photo showed the townhouses lack “street appeal” because the garage doors faced the street and they give an unattractive first impression. I suggested a lease-option “rent to own” would help attract buyers.
Although that example might be a special situation, there are five primary reasons why some homes listed for sale with a professional realty agent don’t sell, even during this peak home-sales season:
1–THE ASKING PRICE IS TOO HIGH. When a house or condo is properly marketed through the local Multiple Listing Service, in newspaper advertising and on the Internet at www.realtor.com, after 30 to 60 days if there has been no purchase offer, there’s a big reason.
That reason usually is the asking price is too high.
Many home sellers have an inflated “dream price,” which the listing agent agreed to accept to get the listing. Listing agents often accept overpriced listings, hoping to later convince the seller to reduce the inflated asking price.
Home sellers sometimes either calculate how much they need to receive from the sale, based on their financial situation, or they anticipate some stupid buyer (especially out-of-town buyers) will overpay for their home. But buyers rarely overpay, usually because they are more informed about the local home sales market than are sellers.
Prospective home buyers quickly become attuned to local home values. Sometimes, they know more about market values than do their buyer’s agents.
The correct method of setting an asking price is to base it on recent sales prices of comparable nearby homes. For this reason, savvy home sellers interview at least three successful realty agents who sell homes in their vicinity before listing with the best agent.
Each agent interviewed should present a CMA (comparative market analysis) form to the prospective home seller. It will include recent sales prices of comparable nearby homes, asking prices of similar neighborhood homes listed for sale (the competition), and even asking prices of recently expired nearby listings.
Only after a home seller has all this CMA information from at least three successful local realty agents, to compare their sales “comps” information, is the seller is in a position to set the correct asking price.
2–CONDITION OF THE HOME. Most home buyers want to purchase a house or condo in “model home” move-in condition. Unless they are “bottom fisher” distress property bargain hunters, they don’t want to do any fix-up work.
For this reason, smart house and condo sellers get their residences into tip-top condition before exposing them to the market.
Paint is the most profitable home improvement of all. Spending a few hundred dollars, or even a few thousand dollars, on painting the interior and exterior will often add thousands of dollars to the home’s sales price.
Other very profitable home improvements include complete cleaning and repairing, new carpeting, new light fixtures, and fresh landscaping. However, home sellers should avoid major renovations, such as kitchen and bathroom remodels. All that is usually necessary is to be certain everything is in its best presentable condition.
3–AN “AS IS” SALE MIGHT BE A BUYER TURN-OFF. But fixing up some homes is a waste of money, especially when the residence is a “tear down” in a highly desirable neighborhood.
That’s why many home sellers offer their residences for sale “as is.” An “as is” sale means the seller must disclose known defects but refuses to pay for repairs.
For example, a fix-up house adjacent to mine was purchased by a contractor over a year ago. He spent what I estimate is about $100,000 on unproductive work, such as terracing the hillside, which added zero value. But the house itself is still a structural mess. The best thing that could happen is a run-away bulldozer demolishes that house with its major defects so a new residence can be built to today’s standards.
When a home is offered for sale “as is,” the seller should be aware it will appeal to a very limited potential market of bargain hunters.
4–THE LISTING AGENT MIGHT BE A HOME SALES OBSTACLE. Without intentionally doing so, some listing agents make it very difficult to sell a home they have listed for sale. Unfortunately, most home sellers have no clue when they list their homes for sale with a listing agent who is disliked or known as a difficult agent among other local agents.
Cooperation among realty agents is the name of the game when it comes to selling houses and condos. Most listing agents are very cooperative in arranging home showings and answering questions from buyer’s agents.
However, some listing agents make it very difficult or impossible to show their listings.
For example, in my community there is an agent who won’t install lock-boxes on her listings and insists every MLS agent must come to her office to pick up the key for showings. The result is other agents hate to show her listings because of the difficulty.
But this agent’s sellers have no clue why their homes don’t sell quickly. Do you suppose it is because the listing agent hopes to find a buyer so she can receive the full sales commission without another agent’s involvement?
5–POOR MARKETING METHODS. Although newspaper ads remain the most effective method of generating buyer interest in home listings, over 60 percent of today’s home buyers begin their quest on the Internet (usually at www.realtor.com).
For this reason, home sellers should question their prospective listing agents about what methods they plan to use to market their homes. In addition to newspaper advertising and Internet marketing, the local MLS is the most effective distribution method for conveying listing information to local realty agents who may have prospective home buyers waiting.
Home sellers should be wary of any listing agent who refuses to place the listing into the local MLS, explaining the listing agent’s brokerage firm can market the home without MLS participation. That’s just not true.
The best listing agents use aggressive marketing methods, such as their personal website, local mailings to nearby home owners (often a great source of buyers who want to live in the same neighborhood), relocation services to attract out-of-town buyers, weekend open houses, broker open houses (an extremely effective marketing technique), and constant newspaper ads at least weekly.
Luxury houses and condominiums often require additional promotion, such as color brochures, Internet virtual tours, and local real estate magazine ads.
CONCLUSION. The real reason your house or condo hasn’t sold might be difficult to pinpoint. But the local home sales market in most communities is excellent, primarily due to still-low mortgage interest rates.
However, if your home hasn’t sold, or at least received several purchase offers, it’s time to have a serious talk with your listing agent to discuss the five reasons why some homes don’t sell. If you listed with an ineffective realty agent, when your listing expires, it’s time to switch to a better listing agent.
Real Estate Center).
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