Reader question: “I have had my house on the market for nearly eight months now. I know homes are selling in my area, because I’ve seen the ‘sold’ signs. Our house is similar to some of those that have sold recently. Why is my house not selling, and what can I do to expedite the process?”
Without seeing your house firsthand, I can only offer suggestions that may help it sell more quickly. If homes have sold in your area recently, we know there’s some buyer activity. What I’d like to know is whether or not these buyers have visited your house as well.
If people are visiting your house but no one is making an offer, then it could either be a pricing problem or bad presentation. But if no one is even visiting your house, then it’s most likely a pricing problem. In order to fix either of these problems, you must learn to look at them objectively.
Reasons Why a House Doesn’t Sell
I just touched on two of the three most important factors when selling a house — pricing and preparation. These are two of the “three P’s” of home selling. The third ‘P’ is for promotion. If your house is not selling, there is a 99% chance you are missing one or more of the three P’s. So let’s discuss each of these three factors.
Problem #1 – Overpricing the Home
When somebody asks, “Why is my house not selling?” the first thing I want to know is how they set the asking price. If they based it on what they paid for the house several years ago, then the house is probably overpriced. The same goes for pricing the home to pay off your mortgage balance. If you used one of these two pricing “strategies,” then you’ve probably set your asking price too high. This could be the reason your house is not selling.
It’s time for some hard truth. Your home’s value in the current market has nothing to do with the amount you paid for it, or the amount you currently owe on your mortgage. The market value of the house is mostly influenced by recent comparable sales. You’ve already mentioned that homes are being sold in your neighborhood. Are they similar to your house? If so, you need to find out how much they sold for. In real estate lingo, this is referred to as a comparable sale, or a comp for short.
When buyers are considering your home, they will look at recent sales in the area to determine if your asking price is reasonable. If your home is priced well above comparable sales in the area, most buyers won’t give you the time of day. The exception, of course, is when a house has unique features that make it stand out from other homes in the area. For example, if you’ve done a major kitchen renovation, and you now have the nicest kitchen in the neighborhood, you might be able to set your price above the comps. In fact, it might be hard to find a truly comparable sale in this scenario. So you would have to start with the houses that most closely match yours, and then factor in the upgrades. Other items that can justify a higher asking price include a larger lot, a better view, swimming pool, etc.
But since your house is not selling, I would venture a guess that the price does not match the property. So take a good hard look at those comparable sales. And then ask yourself how your house is priced in comparison to the other homes that have sold recently. This is usually where the disconnect can be found.
Problem #2 – Poor Preparation / Lack of Staging
Why is my house not selling? Let me answer your question with another question: How well is your home staged? If you’re not familiar with the concept of home staging, then your house probably isn’t staged well. If you want to get an offer on your home in a buyer’s market, you have to make it stand apart from the competition. And that’s what this is, a competition. You are competing with other homeowners in the area who are trying to sell their homes as well. Buyers will be attracted to the homes that are staged well and priced realistically.
Effective pricing is enough to bring buyers to the house. But you need to follow through with good home staging (here’s how). In my opinion, this is one of the most neglected steps in the home-selling process. People think they can put a reasonable price tag on the house and leave it at that. Nothing could be further from the truth. In 2011, most real estate markets will have plenty of housing inventory but not enough buyers. This means that a buyer has plenty of homes to choose from. And with that in mind, consider the following scenario.
John and Jane are shopping for a home in Richmond Virginia. They are looking for a house in the $300,000 price range. One week, they visit two homes in the same neighborhood. The prices are similar — only a $2,000 difference between them. The first house they visit is immaculate, inside and out. Looking at the front yard, it seems like the landscapers just left. The lawn looks like a putting green, and all of the bushes have been recently trimmed. All of the windows in the house are sparkling clean.
John and Jane are impressed right from the start. And their good first impression continues inside the house. There is a fresh coat of paint on all the walls, and the carpet is either brand-new or recently cleaned. All of the excess clutter has been removed from the house, making it look like a model home in a new neighborhood. The furniture has been strategically placed to maximize the flow, and to give the impression of a larger space. All of the light fixtures have been upgraded from the original “builder grade” fixtures. The same goes for the hardware in all of the bathrooms. It’s pretty clear the homeowners have made an effort to modernize the house.
Since they’re already in the neighborhood, John and Jane visit the other house that’s for sale, just down the street. The yard gives the impression of a foreclosure home, even though it’s not. Weeds are sprouting up everywhere, competing with various brown patches for dominance. The bushes have all grown together into one big wall of green. There’s an old bicycle, a couple of boxes, and about a dozen spiderwebs on the front porch. The windows look like they haven’t been cleaned since the home was built.
Right away, John and Jane have a bad feeling about the second house. The inside is more of the same. There are personal photographs, knickknacks and other forms of clutter all over the place. It doesn’t look like a home for sale at all — it just looks like someone else’s home. John and Jane have a hard time picturing themselves in this house, because everywhere they look they see pictures of the current homeowners. The rooms are overcrowded with furniture and other accessories. This makes them seem small, cramped and dark. The kitchen sink is dirty and the hardware is rusty. The same goes for all of the bathrooms. The light fixtures seem outdated when compared to the first house. John and Jane take a quick look around since they’re already inside, and then they are right out the door again. They scratch this house off their list.
I told you there was a $2,000 difference between these two homes. What if I told you that the first house John and Jane looked at was the more expensive one? Which one do you think they would make an offer on? I would put my money on them choosing the first house. The combination of landscaping, painting, home staging and upgrades would make the first house seem like it was worth a lot more than the second house. So the homeowners could easily justify the slightly higher asking price. The second house, on the other hand, seems to be a project in waiting. John and Jane would have to get the yard under control, which is no small feat. They would have to spend a lot of time cleaning and painting. And if they wanted the upgrades that were available in the first house, they would have to spend money they probably wouldn’t have after the down payment, closing costs, etc.
Let’s get back to the question at hand: Why is my house not selling? We’ve covered two of the most important factors when selling a house — pricing and preparation. Have you priced your house realistically, in relation to comparable sales? Have you staged your home to make it stand out from other houses in the area? If you have even a moment’s hesitation on these two questions, the answer is probably no. And that’s why your house is not selling.
Problem #3 – Not Enough Marketing
I said there were three P’s of home selling, and so far we have only talked about two of them. The last one is promotion. If you want to sell your house in a slow market, you need to make sure every buyer in your area knows about it. Fortunately, this is the easiest of the three P’s. If you put your home on the Multiple Listing Service (MLS), you’re off to a flying start. This will put your house on the radar of almost every real estate agent in town, as well as their clients.
Next, you should consider putting the house on at least one of the major real-estate listing websites. I recommend listing the house on Realtor.com, if it’s not there already. To get maximum exposure, you might want to list it on Zillow.com and/or Trulia.com as well. And, of course, make sure you have a yard sign with property flyers attached.
Proof is in the Pudding
I’m living proof that this strategy works. I sold my home last year, and we were under contract within nine days. Several of my neighbors were in the same situation you’re in right now. Their houses were not selling, and a couple of them had been on the market for over six months. When they saw the “sold” sign in my yard in less than two weeks, they wanted to know how we did it so quickly.
“Did you lowball the asking price for a short sale?” one of my neighbors asked.
In reality, we sold the home for market value and made a reasonable profit from it. He told me that whatever I did, I should bottle it up and sell it. I bottled it up all right, but I’m giving it away for free. Here’s a case study on how we sold our house so quickly. You’ll notice that it focuses on the same three concepts covered in this article. The three P’s of selling a home — pricing, preparation and promotion. If you’re missing one or more of these things, then you know why your house is not selling. Mystery solved!