Regardless of whether the real estate market is a hot seller’s market or a slow buyer’s market, there are always some homes that just don’t sell.
When I have one of those listings that just isn’t getting showings, or is getting a lot of showings…but no offers, it means that I need to have a candid conversation with my clients to lay out the options.
What are your choices if your house just won’t sell?
1. Reduce the price
Even the most obsolete home on the terrible lot will sell if the price is knocked down low enough.
Think about this for a moment. Let’s imagine you have a home that is listed for $300,000 and no one seems interested in making an offer. If you dropped the price to $200,000, do you think you would get it sold?
Absolutely!
Of course, no one wants to just give their house away. The challenge is to find that number between the overpriced $300,000 and the ridiculously underpriced number of $200,000.
If you have a house to sell, and it isn’t getting showings or offers, you may want to consider trying a price drop of 3% to see if the perceptions of buyers change. A buyer that can afford $300,000 has higher expectations than a buyer that is stretching to spend $290,000. When you drop your price to the point that you look like the best house at that price point, rather than the average or below average house, someone will make you an offer.
2. Make improvements
Honest feedback from buyers or their agents is important. If one buyer complains about something, there’s no reason to get alarmed. However, if you are getting numerous comments about wallpaper, painting or condition, you need to seriously consider fixing the things that the buyers don’t like. If you are unwilling to drop the price, then making improvements may be your best bet to get the house sold.
Last year I had a condo listing that I took over when it had already been on the market for a few months. The property was vacant and looked a bit scuffed up. I arranged for a handyman to make a few minor repairs and a cleaning service to make it shine. Still, buyers were comparing it against a nearby large rehab project with smaller units but the flash of granite and stainless appliances.
After a few months with no success, I finally convinced my client that replacing the worn carpeting would have a bigger impact than the carpeting allowance we were offering. It worked. We pulled the listing off the market, got the carpeting replaced, and found a buyer quickly once we relisted.
3. Wait it out
If you aren’t willing to drop the price or improve the condition of the home, and really MUST sell, waiting it out is your only other option.
But, if you’ve had 30 buyers through that chose to NOT make an offer, the chances that one of the next 30 people will feel differently is slim. As time goes on, buyers see that you’ve been on the market for a long time. They know that you haven’t adjusted your price (pricing history is available through the MLS to agents). Either they will assume you won’t be flexible…walking away without even making an offer…or they will assume you are desperate and their offers will be really low.
In the end, you may end up getting less for your house than if you had just gone ahead and dropped the price.
Just as waiting it out doesn’t work well when you’ve had lots of showing with no offers, it rarely works when you aren’t getting many showings. If you are getting lots of MLS hits and no one is coming, buyers are sending you a message. The house simply doesn’t match their expectations based on the location and features.
On the other hand, if you are getting very few MLS hits, the likelihood that you’ll get showings when almost no agents are evening opening the listing is just unrealistic.
One of my current listings had been on the market for 29 days with only 2 showings when we dropped the price a little more than 4%. We had been getting a large number of MLS agent hits, but they were opting not to bring their buyers to the house. Four days after the price reduction, we got a showing from an agent. In the next 2 weeks, this agent showed the house 4 times (eventually writing a contract) plus we had 2 other showings. Less than 2 weeks after the price drop, we had an contract accepted.
At the same time, I have another listing that opted to take the ‘wait it out’ route. My clients did make an initial 3% price reduction after only 13 days. We had 5 scheduled showings in those 13 days, but we had a number of buyers that chose not to come in when they drove up to the house. The house floor plan and curb appeal just didn’t meet their expectations. It’s a great house in wonderful condition with a fabulous yard, but the floor plan just isn’t popular with buyers. We talked about their choices, and they decided to stick with their price. As of today we had 36 showings in almost 4 months, and still haven’t had an offer.
Waiting it out for that one buyer could work, but you could be waiting a long time PLUS end up with a really low offer.
4. Decide not to sell
In the last year, I have encouraged two of my clients to take their home off the market and stay put. One was going to take too big of a loss to justify moving. She was hoping to reduce her monthly expenses by downsizing, but saving a few hundred dollars a month couldn’t justify a $20,000 loss. Ultimately, she tightened up her budget and stayed put.
Another client was ready to move up to a more expensive house. When it became clear that in order to sell the price was going to have to come down, they realized that they wouldn’t be able to afford the type of home that they wanted to buy. Since they didn’t have to move, they decided to stay put and wait a few years until the value of their house improves.
5. Rent it instead of selling
If you simply must move out of your home but can’t find a buyer for the price you need, your other option is to become a landlord. Hopefully you will be able to bring in enough rent to break even. Even if you take a small monthly loss, it might be better than taking a huge loss by selling.
Another client of mine just found a renter for his condo. He is getting married and moving out of town, so staying put simply wasn’t an option. The condo was rehabbed a few years ago and in excellent condition. We had already dropped the price below market value, but there simply isn’t any demand for condos in his part of town. We checked out the competition, and they weren’t getting showings either. Of course, there is always a price that will make someone come out of the woodwork to buy the property. But, a $20,000 loss was just out of the question. So, I suggested he seriously consider renting the condo for a year or two until the market improves. Even if he has to replace every inch of carpeting and repaint the entire condo when the renters move out, he will will still come out way ahead than if he dropped the price more just to get it sold now.
What Doesn’t Work to Get Your House Sold
There are a few other things that some sellers want to try when their homes aren’t selling. Newspaper advertising, open houses and agent bonuses rarely are effective. The LA Times recently eliminated their Real Estate section. I promise that if newspaper ads were effective, agents would swarm to them. We really want to get our listings sold. That’s when we make money. The rise of the internet has made the newspaper classified ads obsolete. When was the last time you looked in the paper for homes for sale?
Open houses and agent bonus programs are just as ineffective. Open houses attract noisy neighbors and people contemplating buying a house at some point in the future. If they were pre-approved ready buyers, they probably would have an agent and would have already seen the house if it was a good match.
Agent bonuses or high buyer’s agent commission rates assume that an agent will suddenly decide to show a house to a client that hadn’t made their list already. Honestly, if you were paid strictly on commission, and there was a house that your client might buy, wouldn’t you rush out to show them that house.
Cherry picking homes with high commission rates to show a client will almost always dramatically increase the amount of homes (and time) that occurs before the buyers choose a home. I would much rather find a home for my clients quickly, even at a lower commission rate, so I have time to take on another client. If I spend all of my time with just one client because I’m not showing them the right homes, I’ll make much less money in the end. Plus, I will have a less satisfied customer (and fewer future referrals!).
When home sellers are encountered with the hard choices that I’ve presented here, they often choose another path – Fire the Agent.
I’ll admit there are times when agents are not doing everything that they could to get a home sold. But, if your agent has quality pictures, good marketing remarks, detailed home information and internet advertising, changing agents without changing the price or condition of the house is not likely to result in a sale. There are other reasons to fire an agent – poor communication, personality conflicts and high pressure techniques are a few reasons that I think justify changing agents.
Ultimately, your house will sell when a buyer decides that your house is the one with the best features in the best condition in the area for the money.
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