Why didn't my home sell?

Why didn't my home sell? is usually one of the first questions an unsuccessful seller asks me.  For the past 19 years, almost by accident, I have become a specialist in helping people that couldn't get their home sold with their first, second, or even third listing agent.  At the risk of losing my competitive advantage, here is probably your biggest problem.

It's all about quality vs price.  Your home's condition must justify the price you are asking in a BUYER"S MIND - NOT YOURS!  If your home didn't sell, I suspect that either your last agent was too afraid of offending you to tell you what repairs you needed to do, or they simply don't understand this correctly themselves.  Most agents tell sellers that don't want to do repairs to lower the price.  THIS IS WRONG!  Lowering the price will certainly make your property more appealing, but you usually have to reduce your price drastically more than the repairs cost.   

Selling a home that needs repairs is a bit tricky.  One of the toughest things for most sellers to understand is that they need to invest some of their money up-front on a home they are selling, especially if they want to get top dollar out of it!  Most sellers subconsciously think just the opposite; "I'm not spending another dime on this place if I am selling it." "Why should I sink any more money in it?" or "I'll just give the buyer a credit to do the repairs, that way they can pick out their own colors!"  Unfortunately most buyers don't have that good of an imagination.  Buyers also don't see eye to eye with sellers when it comes to how much it will cost to complete repairs. 

Here's a simple example:

Let's say that you painted your child's bedroom lime green and purple because these were your child's favorite colors.  Now you put the home on the market, several buyers look at the home, but no one makes an offer.  Finally, a buyer comes along, likes the home, but can't stand the color of the room.  Their offer comes in significantly below your asking price based on the bedroon needing new paint.  Here's how each party adds up the cost of painting the room.

Seller's Estimate         1 Gallon of paint            $19.95

                                     Painting supplies           $20.00

                                    Total cost to repaint     $39.95

Buyer's Estimate        1 Gallon of primer        $22.95

                                    2 gallons of paint         $57.90

                                    Painting supplies          $85.00

                                    Labor                          $200.00

                                   Total cost to repaint   $365.85

The seller never wants to include the true cost of paint supplies, usually because they already have some materials in the garage that they can use.  They simply don't think about the fact that a buyer may not own any supplies and will have to go buy everything.  Sellers almost never want to include labor in their calculation either, because if the buyer paints the room themselves, it doesn't cost them anything.

Buyers almost always lean towards picking out higher grades of paint (carpet, roofing, appliances etc.) than a seller does.  After all, they want their new home to be the best, while the seller is trying to limit their expenses because they are selling.  Buyer's also over-estimate how much their time is worth in calculating the cost of repairs. 

It really is not that uncommon for a buyer's estimate to be ten times a seller's estimate.  And this is only one small example.  What if the home has half a dozen projects that need to be done?  Say... the whole interior needs paint, the main living area and bedrooms need carpet, the roof only has a few years of life left, the bathroom and kitchen are getting dated, and the deck needs to be replaced.  It doesn't take much for a seller and buyer perception to be tens of thousands of dollars apart on a home's value.  Now can you see why some sellers never even get an offer?  The buyer simply thinks the home needs too much work at the listed price.  It's much easier for the buyer to go find a home that doesn't need all the work and buy it at a higher price.

Bottom Line - if you're trying or going to try to sell a home that needs repairs, get the work done now!  You'll get more money when your buyer's offer comes in higher, and your home will probably sell much quicker.  Remember, you're making mortgage payments, so the longer you take to sell, the more money you're flushing away in interest.

Additional note:  When making repairs, first consult with your real estate professional on which colors should be used.  They will give you guidance towards neutral colors that will appeal to, or at least will not offend, potential buyers.  Don't decide on your own!  Get their advice!  After all, you thought the lime green and purple room was ok.