10 Reasons Why Your Home Did Not Sell
by Dan Pizano
1. Price - Price is the number one reason why a home does not sell. It's overpriced! Make sure that you choose a price that is aggressive in a challenging market. This means that if your neighbor is priced at $450,000 and the home down the street is priced at $465,000 and both are similar to yours don't price yours at $475,000. Start off competitively at $449,000. If the home sits in a normal market for 30 days then you need to adjust the price. However, in a tough market you should evaluate the price every two weeks.
First, study homes that sold recently (not 6 months ago) and those homes that are pending (under contract). The currently sold homes tell you where the market was last month and the pendings tell you where the market is NOW. The homes that sold 6 months ago are irrelevant.
Next, study the homes that are currently on the market in your given neighborhood. Are they priced better for their square feet, is there lot larger, is their home in better condition? Be honest with yourself. If you were a buyer would you buy your neighbors home over your own? If you answered YES, reduce your price to make it more appealing. Remember, price overcomes ALL objections.
"Overpriced homes" will end up just sitting for months and may eventually become "Really-Overpriced!" Buyers and buyers agents will stigmatize your listing as a "stale" listing. Some buyers and agents will wonder why your home has been on the market so long and feel that something is wrong with the property.
Get an accurate picture of the value of your home from a reputable real estate agent by having him or her prepare a Comparative Market Analysis. Replace your emotional connection with your home by looking at your home through the eyes of a typical buyer in your area. The truth is that buyers are very savvy and have access to tons of information on the web. Go to Zillow or Trulia or Redfin. What are these websites saying about your price? I guarantee that todays buyers are looking up your list price on these websites and determining that it's overpriced or not (without even considering the new kitchen and upgrades that you have done to your home). Take a deep breath, adjust your price and sell your home.
2. Marketing - The merchandising of your home is very important. If your price is great but nobody knows that your home is for sale. Guess what: "You WILL NOT SELL your home FOR THE HIGHEST possible price." You need to make sure that the real estate agent has the ability to merchandise your home incredibly well not just adequate. Look for someone who has a good Internet presence because according to a recent NAR survey, buyers used a variety of resources in searching for a home: 87 percent used the Internet, 85 percent used a real estate agent, 62 percent yard signs, 48 percent attended open houses and 47 percent looked at print or newspaper ads. Fewer buyers rely on a home book or magazine, home builders, television, billboards and relocation companies. Buyers most commonly start their search process online and then contact a real estate agent. Choose an agent who uses many mediums to market your home: Internet, Open House, Newspaper Ads, Broker's Tours, etc. By using many mediums the home has a better chance of selling because you don't always know where the buyer will come from.
3. Location - If you are on a busy street or hear freeway noise from the home you are trying to sell you need to take this into serious account. Most Realtors tell their clients that the three most important things to remember in buying a home are: Location, Location, Location. This also applies to a home on a "T" intersection, next to a school, close to electrical towers, by apartments, by a cemetery, etc.
4. Condition - If the condition of your home is poor you need to adjust your price lower OR make all necessary repairs. Most buyers will calculate a "fair market value" of your home regardless of what you listed it for. Buyers are frightened at "fixer uppers" these days and many busy high-tech workers prefer turnkey homes in excellent condition. Buyers who take a chance to buy a "fixer" want a great deal for all their trouble!
5. Agent - Hiring an out of town agent is fine when it's a hot market and homes sell quickly but when the market is challenging this is a big mistake. Selecting the right agent who is aggressive in marketing your home is a serious component in the overall effort of selling your home. Research suggests that one-third of all buyers said a real estate agent was the reason they found the home that they ended up buying. A real estate agent in a large brokerage company with other agents have a distinct advantage over the one-man broker outfit simply because they can network with other agents better. They pitch their properties at office meetings, send out inter-office emails promoting their listings, have the entire office tour the property, and get more traffic through the home. Choose and agent with a solid marketing plan, has a proven track record, and has excellent references.
6. Know Your Target Market - In advertising the Traget Market is your audience that you are advertising to. Does your agent pride him or herself of being the first time buyer specialist? Does your agent work with buyers who buy in your million dollar neighborhood? Don't hire an agent who regularly sells condos to sell your million dollar estate. It just doesn't make sense. But just understanding who is out there buying will relieve some pressure for the seller of the million dollar estate that has not sold. Sellers can stop beating themselves up asking the nagging question,"Why doesn't anyone like my home?" Maybe the market favors entry level homes and not million dollar homes. According to the November 2008 National Association of Realtors®Profile of Home Buyers and Sellers the number of first-time buyers rose to 41 percent from 39 percent of transactions in last year's survey and 36 percent in 2006. According to the NAR study, the median age of first-time buyers was 30, down from 31 in 2007, and the median income was $60,600. First time buyers are looking to take advantage of the first time buyer credit of $8,000 by buying a home before the November 30, 2009 deadline. Keep in mind, 7 out of 10 homes sold in the first quarter of 2009 in Santa Clara County were homes priced at $600,000 and under. So if you are selling a home above the $600,000 price there are many home on the market competing for fewer and fewer buyers. Many buyers are looking for lower priced homes so that they can lock into a low interest rate under the $417,000 conforming loan limit.
7. Market Conditions - Basic Supply and Demand play an important role in the sale of your home. If there are too many homes on the market and not enough buyers it can significantly impact the sale of your home. Some areas have such an oversupply of available homes that if NO new listings were allowed to go on the market it would take 9 to 10 months to sell the existing inventory. As of May 2009, we are at approximately 4 to 5 months of inventory in Santa Clara County. The rate of new listings versus the rate of sales is an important key consideration. It answers the question how quickly are the new listings swallowed up by eager buyers. The Days on Market is also very important to consider. As of May 2009, the average Days it takes to sell a home is approximately 60 DOMs. These numbers are always changing and it's important to understand how they can affect the sale of your home. There are other conditions that can have a serious effect on home sales such as: high interest rates, continued unemployment, global crisis, perpetual negative news media, natural disasters, sickness and epidemics, and even adverse weather conditions.
8. Commission Offered - In a perfect world a seller could offer a small commission to both the listing and selling agent and get offers. During tough economic times sellers can still offer small commissions out to agents and they do. However, during tough times buyer's agents have sales that are few and far between and rely heavily on each payday. Given the choice of showing two homes that are identical, priced the same, and located next to each other, a typical agent would most likely favor the one that offers a better commission. This is not greed but simple and basic economics. If you are offering 2% commission to the buyer's agent and wonder why the home down the street sold in record time you might want to see if they offered more commission such as the standard 3%. Some smart sellers even add a credit or bonus to the buyers towards non-recurring closing costs on top of a generous commission. These are called incentives and they are very important in a down market. Keep in mind that the same goes for the listing agent (agent representing seller). Is the listing agent working hard to sell your home when you offer him only 1% or is he spending more time selling his other listings that pay him 3%. Can you blame your agent? They just want to get paid fairly and put food on the table and feed their family.
9. Restrictions - Sellers often place restrictions on showing the home to other agents. Sometimes the tenants do not cooperate in selling the home. Other times the owners are ill or frail and require special showing conditions and restrictions. Homes that have no lockbox/keys available will have a tougher time selling because this will restrict the amount of foot traffic through the home. Other restrictions such as a 24 hour notice or appointment only showings restrict the exposure to buyers. Other conditions such as having dogs that need to be secured before entering the home have the same effect on the buyers exposure. The price must be adjusted to overcome the restrictions. In other words, if you want to sell the home with no lockbox the price better be very good.
10. Price Reductions - You can be ahead of the Market or you can chase the market. Chasing the market means that your price is always lagging behind all your competition. Other homes tend to be better deals than yours. The market constantly changes as it always does and you find yourself overpriced again and again. You continue to lower your price but only enough to "fit in" and your home still does not sell. Finally you realize that you've been chasing the market down and down over several months. Instead you should get ahead of the market and sell quickly. A side by side comparison is that by selling at a reduced price up front you get may end up with more money than the person who chased the market down. Consider your time as very valuable, several months of taxes and payments, and just getting on with your life. The key is to periodically evaluate your price to make sure that you change with the market and ultimately sell your home.
Of course there are other reasons why a home doesn't sell like trying to sell a home yourself without the help of a brokerage, but based on my opinion these are my Top 10 reasons. This is not meant to be a solicitation to list property that is currently under contract with a brokerage or is listed on the mls. If you have a listing with a licensed real estate agent you should work with your agent to determine why your home is not selling. Good luck.
DISCLAIMER: The information contained in this blog is my personal opinion. This information can not be considered as legal or financial advice nor should it be relied upon as legal or financial advice.
Send me some other Reason that you feel your home did not sell. Please reply. Thank you.