The primary reasons why a home doesn’t sell are location, condition, financing, marketing, and price.
Location is the only factor in which no one has any control over since it cannot be changed. For example, if a home is located on a busy street or near railroad tracks, this detracts from its value (unless zoning permits it for commercial use in which case it’s highest and best use is most likely not residential property). On the other hand, if a home is located on a golf course or lake, for example, there are always buyers who are willing to pay more for these unique locations. Of all the determining factors of value, location is the most important.
Another factor that determines a home’s ability is its condition. If a seller wants to get top dollar for their home, it must be in top condition. If the home is not in good condition and the seller is not in a position to make repairs it should be priced accordingly. Common examples that adversely affect a home’s condition are an old roof, old HVAC systems, damp crawl spaces, old windows, and exterior and interior deferred maintenance.
Financing involves a buyer’s ability to obtain a mortgage loan. This is self-explanatory in that a buyer will need to come up with a larger down payment and have more income to buy an executive type home. In the $200,000 +/- price range the down payment is less of a factor with FHA loans being prevalent and income playing a larger factor in obtaining a mortgage loan.
About fifteen years or so ago, in order for buyers to find out about homes for sale in the market area they were looking in, they needed to engage a Realtor to find out about them. Today when a Realtor markets a home for sale, it is inputted in the Multiple Listing Service (MLS) which streams to a service called ListHub that disseminates the listings to a number of real estate websites such as Realtor.com and the like. So generally speaking, if your Realtor is a member of MLS, then a seller’s home will be exposed on-line for buyers to see without having to contact a Realtor. If a buyer is interested in finding out more about this property they will either call the listing agent directly or contact a Realtor friend. This is how the majority of homes are bought and sold. As a result, Realtors who are members of the local MLS are able to market homes to the public at large like never before. A final word about marketing is that all the marketing in the world won’t sell an overpriced listing, it will just let more people know it is overpriced.
Price is another factor in which a seller has control over it since it is not the Realtor’s job to set the listing price. The Realtor’s job is to help the seller come up with a list price by performing a Broker’s Price Opinion (BPO) but the seller ultimately determines how much to ask for their home. Only once a home is listed and exposed on the market will a seller find out what their home is worth. Based on the number of showings, showing feedback, and offers or lack of offers will a seller get a realistic picture of what buyers are willing or not willing to pay for their home. Price is primarily a function of time. If a seller is in no hurry to move or can’t or won’t move unless they can get a certain price, they will have to wait longer and hope that the market improves. If a seller has been relocated, chances are they will need to sell their home relatively quickly and they will either price their home to sell from the onset or reduce the price accordingly to sell at market value. At the end of the day, a home priced properly overcomes all buyer objections.
Of course, there are other conditions that affect the salability of a home such as the number of bedrooms and bathrooms, upgrades/finishes, the functionality of the home, and the seller’s motivation or reason in wanting to sell. The purpose of this article was to address the primary factors of why some homes don’t end up selling.
If you are ready to buy or sell, call Mary Staton or Bert Ward - they’ll be happy to answer any questions.