It can happen. I am not going to be one of those agents that pretends all my houses sell fast, like I am some sort of magician. A lot of selling a house has to do with….the house and the market. I put the same effort into all my listings. Most sell quickly, even when the market was terrible. Sometimes though, a house struggles to find a buyer, even when you’ve done everything correctly and the price is right.
Here are some reasons:
- Too much competition. If there are like 50+ houses competing for a buyer and all are pretty darn nice and equal to each other, you’re waiting for the right buyer who likes your house just a bit better than the rest. I am seeing this a lot in a few towns surrounding Lexington where there are a ton of new construction homes.
- Bad timing. Usually the market slows down when school starts in the fall. The week that school starts is usually really slow because everybody with kids is getting ready for the school year and wants to enjoy that first weekend. If your house is in a neighborhood with a very popular school district, you may have missed most of your buyers and are waiting for somebody to move during the school year.
- There are no buyers….at the moment. I see this one occasionally. Sometimes in a certain neighborhood or price range, there just aren’t any active buyers. This is like fishing when you have the right rod and bait, but there just aren’t any fish there. I had a listing in a neighborhood of $450-600k houses a while back. I put my listing on in the late winter. It got a few showings. Over the next 6 months there were about 8 houses that also were not selling in this small neighborhood. It got so bad that all of the agents got together and did a neighborhood open house to try to get some attention for our listings. Of course, it was a total waste of time and energy because none of them sold any time soon. It was much later in the year when several of them began to sell left and right. It wasn’t the neighborhood’s fault. It wasn’t the fault of all the listing realtors. All of the houses were priced right. There were just no buyers at that time and the sellers had to wait for them to enter the market.
I’ve been saying for several years that people don’t have much of a reason to move.
Yeah, everybody knows they can sell their house fast but where would they go? Everybody knows their house is worth a lot more than it was a few years ago but so is the house they’d want to buy. And then there are the interest rates. It is sort of hard to think about giving up your 3.25-3.75% rate and signing off on a new loan at 4.25-4.5%….even though I remember bragging about my 6.5% rate on my first house when all my friends were paying 7.25%.
Rates are back under 4% now.
I am thinking that we might start seeing more houses come on the market as people move on to bigger and better things. If there is one thing I know about real estate in America, it is that we all love to move to a bigger and/or better home. I mean, as soon as the economy picked up after the Great Recession, we flipped from a Buyer’s Market to a Seller’s Market overnight as people felt comfortable to buy the home they had been wanting for a while.
If that happens in the next few months, the headlines will read that it is a seller’s market fueled by the threat of a recession, but you and I will know the real reason. It’s the rates.
One day on the market is best.
A lot of sellers feel like if their house sells immediately that their realtor under priced the house. Some of them feel like realtors shouldn’t make that much money when a house sells fast.
Here is the truth from 14 years experience: 1) A house will always sell for market value. If it was under priced, buyers will bid over the list price. 2) The effort between selling a house the first day on the market or it taking 6 months is not that different. Being the listing realtor is a lot like fishing. You bait a hook with your marketing and cast it in the pool of buyers. Then you wait for one to bite.
Enough about the realtor perspective, how about why this is somehow great for the seller?
Statistics tell the story.
A seller is much much much more likely to get their full asking price when it is a new listing.
When a house hits the market, every buyer in that price range comes out to see it. They often see other buyers leaving the house before they see it and/or have other buyers waiting to see it when they leave. Buyers know that they need to act fast if they want the house. They know that other buyers may want it too so they better put out their best offer first. There is a sense of urgency.
If it sells, it will most likely sell for the full list price.
Once all the buyers currently in the market have seen it, a seller will only get showings as new buyers emerge into the market. There is no frenzy. No buyer is afraid of losing the house so they want to see how low they can get the seller to go.
A phenomenon that has been happening since buyers have been able to set up their own saved searches on Zillow is that buyers seem to look at a house online only once when it is a new listing. Few buyers these days will comb through rejected listings. They opt to just wait for new listings to come on the market…..which means a house that did not sell quickly is unlikely to ever have a buyer reconsider viewing the house. It is like it doesn’t even exist to them.
So, how many days on the market are best for the seller?
One day on the market is best.
I’m starting to see an interesting thing happen.
We all know that due to the lack of new construction for many years, we have a shortage of houses for sale.
Many people have said the way to solve this is to build our way out of it.
I am starting to see this happen.
In Nicholasville between $200k and $250k, 17 of the 30 houses for sale are new. In Lexington’s 40509 zip code, there are 104 houses for sale between $300k and $500k. 48 of them are new. That’s an incredible amount of houses for sale in the Hamburg part of Lexington. No wonder sales are slowing way down in that price range and I am seeing $10k price reductions left and right.
So what does this do to sales of existing houses?
Most people who buy a new house are only looking at new or newer houses. If you live in an older existing neighborhood, you are probably in good shape. Few buyers will seriously consider a 20+ year old house on a bigger lot with mature trees AND a brand new one on a smaller lot with trees shorter than they are. If you have a house that is less than about 10 years old in this price range, well, you may have a hard time competing with brand new houses.
Any time I have a buyer wanting a newer house in an area with a lot of new construction around them, I always tell them that it might be hard to sell and/or might not appreciate that much until the last new house has sold. The longer they plan to be there, the better. If they tell me they may only be there for 2-3 years, I tell them it might be wise to pick another house.
If you are buying in an area with lots of new homes around you, try to pick one that has some unique feature or has a super good lot. In a neighborhood where most homes aren’t too much different from each other, these small things are the difference between your house selling and always being a buyer’s second choice house.
Pretty simple. It is what a ready, willing and able buyer is willing to pay.
It has to be all 3. Not 1 out of 3, not 2 out of 3. All 3.
Too many times when I have gone to list a house, a seller tells me how they have or had an offer from somebody they know or a friend of a friend that is waaaaay over what the house is worth.
I start asking questions. Most of them end with replies like:
“They had to sell their old house first.”
“They had to get preapproved.”
“They have to wait to file their tax returns.”
“They haven’t returned my call from last week yet…..”
It always breaks my heart to tell these sellers that their Buyer is not ready, is not willing, and is not able to buy their house. These people are not buyers. I call them Dreamers. It is easy to make a high offer if you’re never going to buy the place.
Another thing on market value. It’s what most ready, willing and able buyers will pay. Out of 100 buyers, probably something like 98 will all think a property is worth the same. Those last two buyers are the oddballs. There is always one person who thinks eveeeeeeeeeerything is overpriced. And then there is that one buyer who will pay too much. This of course is the one ever seller wants, but in 14 and a half years of being a realtor, I have only come across a few of these buyers. LOL, they are usually the ones who go way over the list price or make a full price offer on an overpriced listing…..making me look bad to my client.
A house I was going to flip is a perfect example of this. I put this place on the market for, I think, something like $138,500 because that was what the recent sales showed. I got 7 offers. One was for $122k. One was for $143k. The others were a little over the list price because there was nothing for sale in that price range at the time and they all knew there were other offers. The 5 offers were all within $500 apart. That was probably market value since 5 buyers independently came up with pretty much the same value.