There are exceptions to every rule under the sun. So, even though the current market climate is hot in most places, every neighborhood, town and county has those homes that simply sit on the market for days, weeks, even months longer than average. These are the outliers. And being the outlier, in this particular context, is not a fun place to be. When all the other listings seem to be flying off the market and yours seems to be stuck, its easy to delve into fear, panic and even depression.
Heres a glimmer of hope: there is a pretty short list of reasons that most slow-to-sell homes lag on the market. Youve probably heard at least a couple of them before, maybe even from your real estate agent. But sometimes hearing things a few times, from different people and at the right moment in time can cause the shift in position that will power a shift in the situations that are keeping your home sale stuck - and your life plans stuck with it.1. Youre stuck on a too-high price.
If your home has been sitting on the market for significantly longer than average, the market has spoken. And its saying: the price is too high for the current condition of the market and the property. Period.
There are only three variables in this equation - which is helpful, because it means there are really only three ways to fix this situation:
- change the condition of your property
- wait until your market conditions change to support a higher price
- change the list price.
Thats it. Thats all there really is. For most sellers the simplest, most sensible of these three variables is to modify is the list price. This is especially so in cases where the home is in good basic condition, is well-staged, and other homes nearby are flying off the market. The fact that you dont want to hear that your home is overpriced doesnt mean its not the truth.
Todays market is ascending in most areas, which simply means that prices are on the rise. Some sellers are waiting to list their homes, hoping that prices will be higher in the years to come. But if you want and need to sell your home sooner than later or you are hoping to sell in time to buy your next home before prices rise much higher, holding out for a higher price probably doesnt make sense.
In fact, your resistance to making a necessary price cut could backfire. Buyers often keep their eye on overpriced but otherwise nice homes, waiting until they suspect the sellers desperation will make them more receptive to a lowball offer. 2. Your home is not be fully exposed to the market.
So the truth that the market has spoken on the matter of overpricing does have one caveat: it assumes the market has actually been exposed to your home. If your homes marketing plan has been limited to that red-and-black For Sale sign you got at the hardware store and stuck in the lawn, chances are good that your home is lagging because your areas community of buyers and brokers have no idea it is on the market!
Other common conditions of home sale-preventing underexposure include:
- Homes that are not listed on the areas Multiple Listing Service or MLS
- Homes that are not listed on major real estate search engines, like Trulia
- Homes that are very difficult to show or are rarely made available for viewing
- Homes that are listed online with no, few or poor quality property photos.
If your home is lagging on the market and any of the above apply to your listing, they could be the culprit. If you chose a listing agent who has a strong track record of success selling homes, these sorts of listing issues can sometimes reflect a glitch in the system. So, do a double check - Google your address and see how your home is represented online. If you find any of these issues, work with your agent to get them fixed.
If you did engage a listing agent at all and your home is simply not moving, it might be time to reconsider and course-correct your home-selling plan.
3. Your home has a glaring issue that needs resolving.
Many times, a big condition issue can cause a home to sit on the market unless and until the seller either (a) fixes the issue, (b) offers a credit or incentive to offset the issue or (c ) reduces the price so low that a buyer thinks the bargain is worth the hassle. Some situations are too costly for a seller to fix (e.g., foundation needs replacing), and others are not fix-able (nuclear power plant next door). In these situations, reducing the price might be the only resolution.
But other listings are sabotaged by highly fixable issues the seller simply might not be willing to admit are at the root of the problem. You might love the highlighter yellow you chose to paint all of your homes interior walls, the wall-to-wall powder blue sculpted carpet or the rustic look of the weathered paint, fences and trims on the exterior. Or maybe you dont love them, but you think buyers should just look past these issues.
Your homes slowness to move is a wake-call. The average buyers tastes might simply differ from yours. Or maybe in your area and price range, buyers dont have to look past issues to find a home that is move-in ready. To concern yourself about what buyers should be willing to do is to live in a fantasy world - and as long as youre there, your home wont move in real life. 4. Youre not really ready to move on.
If none of your agents advice about how to shift your homes fate makes sense, if everything on this list strikes you as outrageous, if even your friends and family members urgings to cut the list price makes you think the whole world must be crazy, ask yourself this question: are you really, truly ready to move on?
Its not at all bizarre for home sellers who are deeply attached to a longtime family home, or somewhat fearful about the next phase of their lives to make decisions around their homes listing that keep it from selling. I once showed a house where there were people still sleeping, in beds that were - bizarrely - in the living room, while the listing agent walked my buyer and I through the place. If you find yourself in a situation where your head is telling you that cutting the price is the right thing to do, but your heart makes you do everything possible to keep the home from being shown, consider whether you are truly ready to move on.
After a few days of showing, I think back on what my clients and I saw and how it reflects on the real estate market. Many homes are beautifully presented and competitively priced...these homes make it hard for a buyer to make a decision.
On the other hand, an awful lot of houses are listed but are just sitting. Maybe the seller isn't really aware of how much competition there is, or maybe she is tired, or maybe too beat up by too many negative comments for months. Or at a vacant listing, maybe the agent has turned on lights and swept the front porch so many times that she, too, is tired of making an effort and not getting results.
I understand...even for the nicest homes in the nicest neighborhoods, there just aren't enough active buyers. Nevertheless, if a house is listed for sale, the homeowner and the agent really should make an effort for every single showing.
Here are a few thoughts after seeing some sort-of-sad houses this weekend.
Current Remarks: Please make sure your MLS remarks are current. "Free Spring Break trip to St. Croix for contract by February 1" is probably not a current incentive.
Real Buyer? I am not entertaining my family and friends by showing houses. I am working and, yes, I believe it's a real buyer. I am NOT sharing client information to get the listing agent to get his seller to clean the place up. You'll just have to trust me...if I'm showing, it's a real buyer.
Schedule Changes: Despite my best efforts, the schedule can change a little as we go through the day. Little kids get car sick, husbands get distracted by their blackberries, teenagers insist on another Diet Coke every hour. If I call in a slight schedule change, either the showing service or the listing agent should be able to reach the seller.
Brochures, feature sheets, something written has to be in the house to highlight the important features of the home. After about the fourth house, the houses start to blur together. And by the way, I think the mini CDs are a waste of money. If someone has to use a computer to see the photos and be reminded of the details, they can just as easily go online.
Community information in the house can be valuable for an out of area buyer. There are hundreds of subdivisions in the Blount County area, and I can't possible know every detail of every neighborhood. Community centers, church programs, recycling information, library information: these are all important and might make a difference in a buyer's decision.
Kids and Dogs: Now that the kids are back in school, they probably need to be reminded of a few basic rules if someone is there to see the house. Even a 10 year old can clean up his dishes and spritz some Febreze. Teenagers need to get out of bed and let us see the room if it's after, say 11:00 am. And, please, the family dog needs to be taken for a walk when we get there.
I know it's a tough sellers market, but if I'm showing your house, I might sell it....help me do the best for all of our clients.
Just when we are beginning to see the signs of a housing recovery and the housing market, critical to our economy, seems ready to return to normal, major markets across the U.S. are about to be impacted by a new housing crisis.
The National Housing Shortage
While this may seem counterintuitive at first glance, our organization has a long history of seemingly counterintuitive projections in housing which have later proven true. We were one of the first organizations to assert that short sales would not only become the preferred foreclosure alternative for homeowners, but that banks would prefer them as well. We were among the first to predict that investors would flock to the housing market beginning in 2010. We feel confident the same will hold true with the housing shortage that we believe will begin affecting some markets in the next 12 months and the majority of major markets within the next three years.
Consider these year over year numbers from the National Association of Realtors comparing the second quarter of 2011 to the second quarter of 2012:
- Existing home salesare up 8.6 percent.
- Existing inventory for sale is down 24.4 percent.
- Median home prices are up 7.3 percent.
Individually, each of these statistics indicates major a market transition. Collectively, they show unprecedented one-year movement in the housing market.
According to the U.S. Census, the recent history of housing construction has been relatively consistent: between one and two million homes produced since 1968.
- Between 1968 and 2008 at least one million homes were constructed each year.
- The year with the greatest output was 1973 at 2,100,500 homes.
- The year with the lowest output was 1982 at 1,005,500 homes.
- The average output between 1968 and 2008 has been 1,531,900 homes.
In 2008, there were 1,119,700 homes constructed. Of course, we now know that 2008 was a pivotal year in the housing market. In 2009 these numbers began to change dramatically.
Between 2009 and 2011 there have only been an average of 647,600 houses built, and every year since the number of homes built has declined. Each year, the Joint Center for Housing Studies at Harvard University issues a report on the state of he nation's housing. This year's report estimateswe need between 1.18 million and 1.38 million housing units per year to meet the demand for new household development that will occur between now and 2020.
Using these numbers one can draw the conclusion: We will see a constrained inventory market in the immediate future. Couple this with the fact that housing is more affordable than it has ever been, and interest rates are at record lows, and the picture of an oncoming national shortage becomes much clearer.
Real estate professionals have been shocked by how quickly markets across the country have transitioned from excess inventory to having constrained inventory. The first markets to experience the housing crisis in 2007 and 2008 have been the first to experience the housing shortage in 2012. Markets in Florida, Arizona, Nevada and California are now experiencing constrained inventories. Year-over-year sales in the sub $100,000 price category has plummeted in these areas by as much as 40 percent.
No Fast Acting Solution
The severity of the housing crash is affecting the speed with which the home construction markets are responding to a housing shortage. Companies in the construction supply chain have downsized or disappeared in record numbers. Given the lead times in housing construction due to permitting, manufacture of supplies (drywall, lumber, etc.) and the availability of skilled labor, the speed with which the market can react to demand has slowed considerably.
If you are one of the millions of Americans that have been sitting on the fence waiting for the ideal time to purchase a property, this may be the time to seriously consider making your move. This is true of individual homebuyers, but it is also true of real estate investors as well. In 2010 investors represented 17 percent of the housing market; in 2011 they represented 27 percent, and all indications are that we are in the midst of another major investor purchase increase in 2012. 34 percent of all homes purchase today are purchased all-cash.
For investors, housing today represents an investment class that outperforms every other class of investment in both cash returns and, for the past year, in appreciation of equity.
It may seem bold to be presenting a housing shortage in the middle of what many consider a housing crash; however, the numbers, market conditions and major market inventories are starting to make this startling prediction real.