what makes a house not sell

Best advice when buying a home

by John Rice

It is amazing to me to think about the extreme markets I have seen.

I spent most of 2011 until COVID giving advice based on my experience of seeing how hard it was to sell ANY house during the Great Recession.

I think I will spend the next decade giving advice based on my experience of seeing how easy it was to sell ANY house right after COVID.

We are now back to a more normal market. Inventory is up a little, but seems really high compared to the days of only 3-4 houses being on the market in any price range.

I recently had an out of state buyer. It is always fun when somebody rolls into town with a mission of finding a house. I get to literally see almost any house worth considering, and all within a few days.

I sorted through about 90 houses in their price range. I narrowed it down to about the best 15 houses. Man, it sure was nice to be able to do this. I haven’t been able to do so in many years. Just not too long ago, there were not 90 houses for sale in all prices ranges in the whole Bluegrass area.

Many from this list were new listings. Most sold immediately. We ended up finding an ideal home that was clearly the nicest in it’s price range since there were multiple offers. After going over the list price, waiving inspections and paying cash, I am happy to say it closed last week.

The whole time I was out with these buyers, I was thinking about those other 75 or so houses for sale. I am sure none of them had back to back showings like practically every house I showed my clients. A couple of years ago, any of those houses would have gotten multiple offers the first day and possibly sold for over the list price…….but not today. Today they are nothing anybody wants. They all had some bigger negative like being on a busy road, in poor condition, a bad lot, etc.

Which takes me back to some timeless advice I have been giving for years: Buy a house that will be easy to sell in a bad market. Buyers in any market all want the best house available to them. I remember getting multiple offers on listings in 2009 when there were literally hundreds of houses available to those buyers who all wanted my listing. What house is that? One with a good floor plan. One with a good lot. One that is in a desirable location. One that fits into it’s neighborhood nicely. One that has no big negatives. One that has at least one unique feature that gives it a little pizzaz. How will you know this house when you see it? Take me along and I will let you know.

How much do updates really add in value?

by John Rice

I often run across articles in the news about what specific updates give the most return for the money spent.

While I appreciate that somebody took the time to research this, I sort of roll my eyes as I read them.

For example, if your house is a hot mess but you put a brand new garage door on, trust me, your house didn’t grow in value by 87% of the cost of that new garage door.

Why doesn’t it work that way? Well, because the buyer is looking at the whole house, not each individual feature.

A few weeks ago I showed a house that looked absolutely fabulous online. The kitchen and flooring were brand new. It was a total WOW house…..online.

When I pulled in the driveway, I wasn’t sure I was at the same house. I had to check the address!

The exterior of the place was very rough. The original windows had peeling paint and cracked window glazing. The driveway was cracked up and probably hadn’t been recoated since the 80s.

It didn’t get better once I got inside. The lockbox was on the backdoor. The addition on the back that I had to walk through had 1970s paneling that clearly had water damage under that fresh coat of paint. The basement was pretty much lipstick on the world’s ugliest pig.

But oh that kitchen!!!!

Here is the thing. The buyer who sees that kitchen and is willing to pay the seller back for their investment is expecting the rest of the house to be equally as nice. The buyer who doesn’t mind the condition of the rest of the house isn’t going to want to reimburse the seller for that gorgeous kitchen.

I see that all the time having shown houses like this for the past 19 years.

For this house, the seller didn’t really get much of a return. I think they might have sold for almost as much had they not done the kitchen at all. It would have been wiser to have taken the money spent on the kitchen and spread it evenly across the whole house, rather than put all their eggs in that one basket.

The single most important thing when selling your house (or anything really)

by John Rice

I did it again.

I bought another car. For people who know me, this is par for the course. I am always falling in and out of love with cars and trading them like crazy.

If you’re wondering how me getting a new car is related to real estate, it is because of pricing.

The car I bought was not expensive. It is just a little Japanese sports car that is fun to drive. A new version came out during COVID and they have been in short supply ever since. You never see one on a lot. Most are sold before they arrive. Dealers are taking deposits on them and telling people they will call when the car arrives.

I went to a Volkswagon car show with my oldest son and his girlfriend last weekend. We had lunch on the way home. They asked about the deposit I had on another one of these cars at a local dealership. I replied that I was told it should arrive later this month. He then went on a mission of finding me one that was immediately available. He found one about 250 miles away in Indiana.

He called to confirm that it was in fact in stock. It was. I remember thinking to myself “Why is this car in stock, collecting dust on a dealer’s lot when every other one is pre-sold???”

Ahhhhhh……the price!

This dealer wanted $9000 over the MSRP price.

I told the salesperson that I was definitely interested in the car but there was no way I was taking it at $9000 over MSRP. He started telling me what a hot car it was and how many calls they get on it. I am totally sure all that is true. I’m a realtor, so I know how markets for things for sale work. This is a super hot car in high demand, but the reason it hasn’t sold is that it was overpriced.

Here are some truths about any market:

  1. You cannot sell something for more than it is worth.
  2. The whole market determines the value, not just the seller.
  3. A buyer is defined as ready, willing and able. (At $9k over list for a very affordable car, that price pushed the total cost well over budget for the target buyers, thus knocking out the “Able” part of those three requirements.)

Like real estate, you cannot sell the most gorgeous $500k house in a highly sought after neighborhood for $750k. If you try, it will sit on the market and you will reduce the price until those ready, willing and able buyers think it is worth it.

But isn’t the market still hot? Yes, it is. Prices are still going up in our area. That means you still, like always, have to price a house for something a buyer will pay. A hot market doesn’t mean you can sell it for more than it is worth. It just means it will sell quickly and many buyers will want it and be eager to pay top dollar….not more than top dollar. If you ever see a house that is sitting on the market and wonder why it hasn’t sold, literally 100% of the time it is due to price. It may have some odd feature or be in bad shape, but it will definitely sell when the asking price is in line with what Buyer’s think it is worth.

So what happened with the car? They came down to $6k over MSRP and I drove up and got it yesterday. I suspect had they priced it at that from the beginning, it would have immediately sold.

Know what I like about this market?

by John Rice

If you just want the answer but don’t care to know why, it is because this market is LOGICAL.

If you want to know what I mean, here we go:

Other than the past few years, the real estate market has always been logical. The best houses sold for the most money and sold the quickest within their price range. The second choice houses sold for less than the more desirable houses. Location mattered. The lot the house was on mattered.

For a few years there, nothing mattered. Any house was selling for more than it should have and it didn’t matter if one house was in a second choice neighborhood or had a terrible lot. It was tough being a realtor back then. You could look at recently sold comparable homes and determine what a house should be worth, but it always sold for more, sometimes waaaaaay more than that. I would tell my sellers “Here is what your house is really worth but here is what it could sell for…..expect anything to happen!” I would tell my buyers “Here is what the house you are bidding on is worth, but here is how much of a convenience fee you may have to pay just to end your misery of losing in multiple offers.”

Today’s market is about logic again and I am glad. If two identical houses come on the market on the same street and on the same day and one of them backs to the interstate and the other doesn’t, the one with the better lot will sell for more. If a house is overpriced, it won’t sell at all.

Why is this? It is because today’s buyer has choices. Yesterday’s buyer had one shot at the only active listing in their price range. Having a little inventory makes a difference. It is still a good market. It is an even better market if you have one of the better houses in your price range. This has always been true. I remember back in 2009. The market sucked yet I was getting multiple offers the first day on the market for some of my listings. Buyers will always pick the very best house that is available and take a pass on those that aren’t. That’s just the way logic works.

How the market works when there is inventory

by John Rice

Now that we are back to having some inventory in our real estate market, I thought it would be a great time for a refresher on how the market works when there are actually houses for sale.

The recent past has shown that any house will sell fast when there are more buyers than sellers. When your choice is between whatever house in your price range hits the market or hoping the next one is better, people usually make an offer on the one for sale that day.

We are back to a normal market where Buyers have choices and this is how they make their decisions.

Simply put, they pick the best house on the market. Usually this is a house that is priced realistically, that is move in ready and is in the most desirable neighborhood within the Buyer’s price range. Then there is their second, third, fourth and so on choice.

Once that #1 pick house sells, then the #2 pick house becomes the top choice. Once the #2 house sells, then the 3rd pick becomes their 2nd choice. Once the…..well, you get how this works I am sure.

Sometimes what happens though is that a brand new listing hits the market and changes the ranking. If you have the #2 house and are excited to be the next house to sell, a house hitting the market that is better than your house means you will stay at #2 on any Buyer’s list. Sometimes winter is a good time to sell a house that has been the #2 or #3 house because we tend to see fewer new listings. Eventually your house rises to become the best choice in its price range.

The goal of you and your realtor is to make your house as competitive as possible so it ranks high on the list of Buyers. Sometimes it is as simple as rearranging furniture, doing a little updating, doing a few repairs that have been noticed during showings, or even a price reduction.

While we are discussing inventory here, I want you to know that in the coming months you will see headlines about the “Average days on Market” rising. Any time you have inventory, this will happen. It doesn’t mean that every house is harder to sell. There are still plenty of houses selling fast and even getting multiple offers. Those are all the #1 choice houses, the ones everybody wants. All the houses that are further down the list will stay on the market longer, waiting for price reductions or some other change to be made which will eventually lead to a sale. In the meanwhile, those houses will dilute the average days on the market statistics.