The market has bottomed out. You’ve just fired your do-nothing agent. Making two mortgage payments is no longer a challenge, it’s bleeding you dry and you’re wondering what would be easier to live without, food or hot water. What’s wrong with your house? Why hasn’t your house sold?
After flipping twenty houses over the past thirty years, I’ve learned a thing or two about why properties do or don’t sell. Here’s a quick list to help you wade through the mortgage debt you are drowning in.
First, the main reason a home doesn’t sell within the normal timeframe is price, pure and simple. A normal timeframe in a healthy market is 90 days. The market we’re currently experiencing is more like 180-270 days. After a 90 day listing, the market has rejected your property at your current list price. The secret now is to find the right price that will bring the market back to take a second look. The best way to sell a house quickly is to price it at least three percent below the comparables in your area. In other words, if homes are selling for $100 per square foot all around you, price yours at $97. The agents in the area will immediately smell a bargain and bring their buyers with them.
After lowering your asking price by 3%, if there’s no additional traffic, you may have to lower it again and again. Give each price drop three weeks to work (and advertise the change). It will hurt your pride, but over the long haul, it will hurt you more to maintain two homes and pay two mortgages. You will know when you’ve hit the ‘right’ price, because agents and potential buyers will start calling. The week you have three or more showings, you’ve found the right asking price, so stick to it.
Which brings me to my next point, be willing to work with a buyer’s agent. Yes, that means paying a commission or flat fee. Compute how much a 2.5%-3% commission will cost. Then compare that to another two to three months of mortgage payments, utilities, plus advertising expenses, and you will come to understand that 3% is a bargain. If you can afford it, by all means hire another agent to get your property on the Multiple Listing Service (MLS). The normal fee nationwide is 6% (this is an average). In a recent survey done by the National Association of Realtors, over 80% of homes sold during the past three years, buyers found on an MLS website first and contacted the listing agent second, so getting your home listed with another agent will expose it to millions of potential buyers.
In a ‘normal’ market, many agents are not willing to work with a FSBO (for sale by owner). But with the market so soft, FSBO’s have more clout now than ever before. Agents are scrambling for business, but keep in mind that they don’t want to do all the work for half the price. Show all buyer’s agents that you’ve already completed a ‘Seller’s Disclosure Form’, where you list everything that’s ever been wrong with the house. Have a copy of a recent pest inspection available, as well as information on all the local schools, how much you pay in taxes, average yearly utilities, etc. Listing agents usually do this legwork. Without a listing agent, the seller must provide this information on their own.
Third, keep your house picture perfect at all times. If there’s one thing that can bring a sale to a screeching halt, it’s a nasty odor found in the laundry room, pantry, closet, etc. If the house looks clean but smells dirty, you’re in trouble. The most offensive odor has been and always will be the infamous ‘kitty box.’ Keep the kitty’s toilet in the garage or in a place far, far, away….and keep it cleaned out, daily. Buyers will overlook dirty dishes in the sink, newspapers piled on top of the coffee table, even wet towels on the bathroom floor before they will forgive an offensive odor.
Not sure if your home stinks? Ask a friend, an honest friend. They will often smell things you are immune to. Did you fry fish or boil cabbage last night? Are you a smoker? If you answered yes, here’s another tip. The smell of cinnamon is a retailer’s secret. And right now, you are a retailer trying to sell something very expensive, a house. Get all the plug-ins you can find, and buy anything with cinnamon in it. Cinnamon conjures memories of the holidays, happy, warm and fuzzy times. A place called home, which is exactly what you want the buyers to think – that they have found their new home.
To summarize, price your home at least 3% below the neighborhood’s market price, and keep dropping the price until the number of showings increase. Be willing to work with a buyer’s agent. They do serve a purpose and earn their daily bread. Lastly, keep your house clean and odor free. You’ll have a contract in no time.