The house that wouldn’t sell, illustrated.
A couple of years ago, I wrote a narrative for this blog that illustrated some of the common errors that are made that prevents a property from being sold. This was an attempt to make it more readable and humorous by telling it as if it were from a story book. Here is a new illustration of the same sort of pattern.
There is tons that I as a Realtor do to make sure that every listing I have has the best chance it possibly can at attracting as much attention as possible from other Realtors and their Buyers. I would go on about it at length here but my competition is watching so you’ll have to contact me and ask. One thing not I, or any Realtor can do, is sell a home for more than it is really worth. Any Realtor telling you otherwise is lying to you, period. There are many things that can and should be done to get top dollar for a property but one of the big ones is a decision that lies with the Seller. That decision being pricing. One of the greater pitfalls that is all too commonly fallen into is that of overpricing or even just overpricing in the beginning and waiting too long to fix it. (See the Selling homes section for more on this.)
I know, this is a counterintuitive concept. Usually in life if you ask for more you will get more and this is why it’s often hard to convince Sellers to price correctly. At least, in the beginning which is when it counts most. For the Seller, the property represents the culmination of years and years of work both on the home and in the workplace, so very many personal memories and so very much money. The thing is, and this is hard to say to people, the market doesn’t care about any of that. The market doesn’t care about anybody’s hopes or hardships. It only cares what the best deal is. And if your property is the best deal out there you will get more money for it and you will get it faster. If it’s not it will get ignored and pushed aside over and over by many people no matter how great of a job your Realtor is doing and how much they are spending on advertising. By the time you get the pricing right, Buyers will think there’s something wrong with it (even though it’s just price) and they will lowball offer you even if your new price is objectively good. Getting more money more easily sounds like the sort of thing people want, but again… it’s counterintuitive so some illustration helps. Read on.
Even in the hottest Seller’s market, many listings will not sell, and more than 95% of the time it’s due to price. The importance of correct pricing is not always easy to illustrate to Sellers but for us Realtors who see on a daily basis how things play out, pricing realistically is not just a detail. It is paramount in determining how much a Seller can ultimately sell the property for and if they can sell it at all. It’s hard to illustrate because the stories of what happens to properties that aren’t priced correctly sound more like a carefully chosen anecdote than something that is as common as it really is. You don’t have to be a Realtor long to have seen this pattern many, many times in the various listings that are out there on the market. Not all Sellers have unrealistic expectations but it’s the thing that worries me the most when I see it because I can see how things are going to play out for them. I imagine my Doctor would feel a similar way if he told me my cholesterol count was too high and I said “But bacon is so gooooooood! I must have it all the time!” He would quite rightly be concerned because he sees on a regular basis how things play out for people like myself.
A Realtor (and the Buyers they are working with) doesn’t need to look at very many properties in a category to be able to tell which ones are better priced and more likely to sell or less likely to sell. All the advertising and quality photos and well written listings are a means of getting those Buyers into the house. Once they are there the house will speak for itself as to whether it is a better deal for the money than the other 5 or so they are likely looking at that day plus who knows how many more overall. Every Buyer is terrified of the idea of not having gotten the best possible option for the best price and as a rule they won’t buy anything until they have, to some extent, looked at everything. The Realtor does this daily for years on end and becomes very quick at processing what adds value to a property. If the balance of those factors that add value is lower than any other properties in its price range it is not going to be the next one to sell. The best priced one is the one that sells.
Recently I came across a listing that had a history that made me mutter “Yeah, you’re not helping yourself by doing that…” as I see it as a long and frustrating method of someone costing themselves a great deal of money. It’s not the first I’ve seen and it certainly won’t be the last but I thought it was clear enough to share so I took a screen shot.
Have a look at this listing history. It starts back in 2005 and didn’t sell for five long years. White house icon on left means expired/cancelled and didn’t sell, red house icon means it sold and it will show the selling price as well as asking price. During this time the Seller went through five Realtors and even though the place wasn’t selling they went through periods where they thought the price should be higher, and then lower, and then much higher, the whole time they would be paying taxes and utilities whether they live there or not, and then gradually lower before it finally sold in 2010.
Now here’s the important part. The new owner decided to sell it four years later. Property values had declined a bit between 2010 and 2014. Not a ton, but enough so that one would expect it to go for 10-20k less or possibly lower. But it sold for pretty much the same price as it sold for four years earlier in the higher market. To me, that’s a clear example of what the overpricing pattern did to the property value when it was on the market for all that time. A few years off market, especially with a different owner who starts with a reasonable price gets a different story. Three months is still a fairly long time to be on market but it’s a much better story than the previous one.
Yes, this is an extreme case. That’s why it is usable for illustration I would say that less less than 5% of listings are as clear cut an example of self destruction via overpricing as this. However, if I go and see ten randomly chosen listings, I would say that on average I would expect to see 4 or 5 where the price is high enough so that it should be lowered before it sits on the market too long and starts to only attract lowball offers if any at all because Buyers will assume there is something wrong with the property as well as be aware that there is no other interest from other Buyers.