Marketing

Reading the tea leaves when your house isn’t selling

by John Rice

House not selling? Wondering how to interpret what is going on? Here are a few of my thoughts on some common situations. The following assumes your house is being presented well online with plenty of good pictures and marketing remarks that describe it with more than trendy generic AI generated verbiage.

The house that gets lots of showings but no offers

Assuming that you don’t have some negative that wasn’t obvious like backing to a highway, apartments, or having an Eiffel Tower looking electrical thing in your yard, this situation simply means that the house doesn’t live up to what buyers expected. The good news with this one is that buyers think the price for what they thought the house would be is okay or else they wouldn’t come at all. The solution here is to either lower the price or improve the house so that it meets the expectations buyers have. Whichever is easiest.

I once had a condo that got tons of showings. I kept encouraging the seller to paint. Once we did, it sold. I recently had another listing that was getting tons of showings. It was a nice place, but just felt like a 15 year old house that needed a fresh vibe. The seller did some painting and replaced the flooring in all the bathrooms. As soon as it was done, it sold. Both of these places looked great online, and just needed to match what buyers thought they were getting. Both were improved for far less than the price reduction we would have needed, so both sellers actually came out better by going that route.

The house that gets no showings

This one is easy, but hard for sellers to accept. The price is too high. If a house is presented well on the MLS, and still nobody comes to see it, all you can do is lower the price. Real estate is all about price, location, and condition. You can’t change the location, but the other two you have some control over.

Also something to think about is this: If you have a $400k house and you’re asking $475k for it, buyers are comparing it to other houses that are really worth the asking price. The buyers who are going to spend what your house is really worth aren’t even going to see it since the list price is over their budget.

The house that gets the same bad feedback over and over

This is the least fun thing that can happen to a seller. I mean, they get kicked out of their house for showing after showing with no offers AND get to hear what people hate about their house.

Several years ago I had this really cool older house that had been mostly remodeled. It had the smallest living room I have ever seen……must have been the smallest anybody had ever seen since that is all I kept hearing after the showings. I’d ask for feedback and the buyer’s realtor would go on and on about how beautiful the place was, how unexpected it was to have walk-in closets in such an old house….then they would say their client wasn’t going to buy it since the living room was so small.

We tried putting in smaller scale furniture, but that didn’t help. After that, all we could do was drop the price. A price reduction opens the house up to a larger pool of buyers as well as enticing them to overlook a shortcoming if they are getting a better deal. We got that one sold too.

If you have a situation that doesn’t fit into these scenarios, give me a shout and I’ll let you know what to do.

Wait til Spring to Sell?

by John Rice

Okay…..I know what’s on your mind right now if you are even remotely thinking about selling your house…..SHOULD I WAIT UNTIL SPRING TO LIST MY HOUSE OR DO IT NOW?

No worries.  Everybody wonders that about this time of year. 

I usually tell people that while Spring is a good time to sell since more buyers will be out, there will also be more competition since many sellers wait until then.  More demand, sure.  More supply too.  Also…..if your house isn’t on the market, you have a 0% chance of selling it.  Plus, people do buy houses in the winter……why can’t it be your’s?

Another thing people wonder about is how buyer’s will perceive a house that has been on the market all winter.  I hate to be a cliché buster, but any buyer who is actively looking at houses in November, and hasn’t found one by March is someone who probably isn’t gonna buy a house anyway.  Don’t worry about them!  Also, with all the inventory we now have, seeing a house that has been on the market 6+ months isn’t that alarming to anybody.

Here is how you get the best of both worlds.  List it now……price it right, do great pictures, express in the marketing remarks what is unique about your house, but if it is still around come spring do these:

1)  Update your pictures.  In the spring nobody wants to see what your house looks like with a foot of snow on the roof.  As soon as the grass is green and you have the first pretty day, get some new pics made!

2)  Delete the listing and put it back on with a new MLS number at the same time.  That erases the days on market from the public side of the MLS.

3) And most importantly, make any adjustments needed before you do all this, or else you may end up not getting a buyer all year again.  If after a few showings, people have said they didn’t like the paint, the carpet needs replaced, or the price is too high, make those changes now.  If there is a problem with how buyers perceive your house now, having more buyers tell you the same thing in the spring won’t really accomplish your goal of selling.

Soooooo, what do you think?

What about the “Average House” in a slow market?

by John Rice

Know what I have been thinking a lot about lately?  The “Average House” that is on the market.  I get a lot of statistics thrown at me that I have to analyze, but there is nothing more depressing to me than the “Average house.”

See, there are a TON of houses on the market right now and not many buyers.  The last number I heard was that there are 13 buyers for every house available.  Do you know what that really means?  The other 12 houses per buyer aren’t going to sell.  What are those houses like?

They are the ones that don’t stand out in any way shape or form.  There is nothing special about them.  Average location.  Average condition.  Average price.  Not that there is really anything wrong with any of that, it is just that there are sooooo many of them on the market right now.  I hate to be the bad guy, but they probably aren’t going to sell.  Sure, there is a sign rusting away out front, and an MLS listing that is getting as much attention as I probably would on a dating website, but really, it might as well not even be for sale.

I’ve been in plenty of these houses with my buyers.  They normally just walk in, walk out, then tell me the house was okay with the enthusiasm they might have when picking out toilet paper at the grocery store.  Heck, I bought one of those houses….kind of.  Sure, I picked a good location, but everything else about my house was…..well, like everything else in every other houses in my price range.  There was really nothing great to say about it other than the fact that it was in a nice neighborhood.  The floor plan is one that is scattered over pretty much any neighborhood in town, the lot is nothing to write home about, and it wasn’t in move in condition.  In fact, it was what I call “Move-Out” condition, meaning the seller’s had moved out and left the nail holes, the indentions in the carpet where their furniture had been, their kid’s finger prints on the walls, etc.  Now, I have done a lot of updating, so I think my house would now stand out due to location and condition if I had to sell today……but without the work I have done, all I could do to sell it today would be to price it lower than other houses currently on the market.

I think the sellers who have it worst are those who are in newer neighborhoods where a buyer can even pick from multiple versions of the same house.  I’ve shown several houses back to back that were the exact same house, but with different finishes…..”Oh, this one has berber carpeting and the last one had plush.”  “Oh, this one has beige vinyl and the one around the corner has blue.”

I got a phone call from somebody last week about selling their house.  I was pleasantly surprised when I got there to see that it was in move in condition, would show well, and had new laminate flooring throughout.  In the price point the house is in, that is an attractive perk to any buyer.   It helps too that they are willing to price it competitively.    I have no doubt that when it hits the market, one of the first buyers to see it will want it because it is better than the “Average House.”

So, what are you to do if you find yourself in a house that doesn’t have anything any different that any other house available?   First, don’t feel bad.  In the hot market of yesterday, people routinely settled for their second or third choice house and felt lucky to get it.  Now those peeps are trying to sell in a market where most buyers get their first pick.  Here are your options…..there are only two (trust me, there is no third option here!)  You either make it attractive to a buyer by pricing it lower that the competition or make it better than the competition.  If you are in a neighborhood where vinyl is common, put down tile, if carpet is common, go hardwood or laminate.  Increase the size of the deck or patio.  Fence the yard.  Add stainless appliances.  Leave a nice washer and dryer.  It is all about one upping the other seller and stealing the next buyer away from them.

Why buyer’s don’t make offers on an over-priced house

by John Rice

 

Often, when talking about pricing a house with a seller, they say something like “Couldn’t we price it at this and won’t people just make an offer if they like the house?”  Makes a lot of sense when viewed through the seller’s mind, but doesn’t when you look at it through the buyer’s eyes.

Why?   Let’s say a buyer is pre-approved for $190k.  You have a house that is worth $170k, but are asking $190k because somebody will make an offer if they like it.  So, the buyer goes out and looks at every house that is priced at $190k, most of which are really worth about $190k.  To that buyer, your house seems like the worst house he has seen.  Why?  He is comparing it in HIS mind to the better houses that are worth $190k.  The buyer is either going to get a better location, a bigger house, or one in better condition……They are never going to like your house enough to make an offer.  On the flip side, the person who is going to spend $170k is never going to see your house because they aren’t looking that much over their price cap.  So, you have a situation where the people looking at your house aren’t going to buy it and the person who would buy it isn’t going to see it!

Here are some tips to keep this from happening:

1) If you must price on the high side, never go more than 5% over the comps.  Once you get up around 10% over people won’t even come to look at it.  Sometimes an over-priced house will get a lot of showing, which makes the seller think they are priced right.  You can still get a lot of showing on a slightly over-priced house, but no offers.  When you get showing and no negative feedback, it means you have a price issue.  See, agents are afraid to tell another agent that they priced the house wrong, so they say nice things about the house and hope to get off the phone with you.  I know because I often ask what agents thought of the price and they seem a little nervous to answer.  So, the advice is that if you have a fantastic $170k house, it needs to priced around that number.

2)  Avoid the temptation to have a high price and have your agent tell people you are motivated.  When I see a steep asking price and the agent says the seller is motivated, what comes to my mind is that they are motivated to get their price.  A truly motivated seller will price his house at or less that what it is worth.   The days of testing the market are a thing for the history books now.

3)  Realize how the market works.  You have so many buyers and so many houses.  The buyer gets to pick whichever house he/she wants……and they always pick the best one.  Even in this sloooooow market, I have been in more multiple offers than ever.  It is human nature to want the best.  The buyer is comparing all the houses available.  Make your house the best one by pricing it right.

Trust me on this….There is no magic in real estate.  Rarely do I ever see a house sell for more than it is worth.   Even if you do find a buyer who will pay too much, you are going to have to convince their realtor too.  If the buyer is going to have a mortgage, their lender is going to insist on an appraisal.  If the house doesn’t appraise, no loan, no sale.  So, the formula you need to get more for your house than it is worth is to find an ignorant cash buyer with an equally ignorant or careless realtor……and I have only had that happen once with one of my listings!

Real Estate Catch Phrases….EXPOSED!

by John Rice

Ever hear folks say things that just make total sense when they say them…..but then you get to looking at it beyond face value and realize that it doesn’t always apply 100% of the time?  Back when I was a kid, people around here would put bags of sand in their trunks for the winter.  The logic was that it would add weight to the back of your car and help with traction in the snow.  That is very true…..if you have a rear wheel drive car.  I remember in the 80’s when front wheel drive was starting to become common.  In the late fall you’d hear people with front wheel drive cars say it was time to get their sand bags.

Same thing happens with real estate.  We’ve all heard some of the following thoughts that in general are true, but don’t really apply to all situations all of the time.

1)  Location Location Location:  While generally true, I’d like to see this one replaced with “Location, Price, Condition.”  Why?  I’ve seen too too many houses in a prime location sit on the market because the price and/or condition weren’t right.  You just can’t price your house in a prime spot equal to others in your neighborhood if it isn’t an equal house.

2)  You can get a good deal with a For Sale By Owner:  I hope I am not offending anybody here, but in all the FSBO houses I have ever seen, all of them have been grossly over priced.  Let’s face it, people go the FSBO route because they want to save themselves some money.  For somebody who thinks they can pocket the commission savings, it is easy for them to think a buyer should also pay what they feel their house is worth…….But it is the buyer who always gets to determine the value of a house.  You’d think seeing houses in some parts of the country go for 30% of their previous value would testify to that fact.   That is why sellers usually end up listing with a realtor.  The day sellers figure this out is the day you’ll start seeing a lot of realtors lined up to give plasma.

3)  Go Neutral:  I must admit, I generally tell people to paint bold rooms beige, and when they remodel, go neutral.  The reason is that if 10 people come to your house when it is for sale, 10 people won’t be offended.  However, 10 people probably won’t fall in love with it either.  If you have something with some character and 10 people come in, 9 won’t like it at all, but that 1 that does will probably buy your house and give you top dollar.  I have cherry floors and slate in the bathrooms.  I polled my Facebook friends to see how they reacted to slate.  About half loooooved it and half didn’t.  Same thing with my friends.  Some see it and want to touch it and keep looking at it.  Then some give me a look like they are trying hard to not ask why I picked slate!

4)  It’s better to have the cheapest house in an expensive neighborhood than get a nicer house in a cheaper neighborhood:  This one can bite you on the bum.  The problem is that the buyers who will be looking in the nicer area will probably expect more than the house has to offer.  Also, buyers who will be looking in that price range may elect to get more house and skimp on the location.  Going this route is best for somebody that plans on improving the house to the standard of the neighborhood since it gives them a better chance to recoup their money.

5)  You’ll get your money back out of an improvement when you sell:  I don’t hear this as much since the market slowed.  Even when the market was super dooper hot, you never got 100% of what you spent back, and you certainly don’t today.  Another thing to remember is anything you do to your house has a life span.  The more of its useful life span you pass on to the buyer, the more you get back.  A good example?  Carpet.  It only really adds value if it is new.  Imagine if you saw a house for sale and it said “New Carpet in 2005!!!!  Not gonna get your blood boiling is it?

6)  You need wiggle room in your pricing so buyers can think they got a good deal:  I just blogged about this one, so I won’t spend much time here.  Think about this though…..Do you think pricing your house without wiggle room will get you more showings than the sellers who have their house overpriced?  Buyers are online looking at houses they want to see in person.  A realistic price makes your house stand out in comparison to the others and they come out to see it.  You need showings to get an offer.  I have never had a buyer tell me to make an offer on a house they haven’t been in. 

That’s it for today and my “Deep Real Estate thoughts by John Rice.”