To many buyers, a house that's been on the market a long time must have hidden problems. And that could lead to unnecessary and endless price reductions. Luckily, even in a distressed market, there are ways to prevent roots from sprouting under the 'for sale' sign.
Real-estate agent Vince Romano could have sold his client's house in a month if not for a little paint.
The single-family house in suburban Chicago looked great, except for some graffiti on the walls in the two teenagers' rooms and in the basement. The homeowner wasn't stupid. She'd taken good care of the home and knew buyers could easily see past a little spray paint. (Bing: How to remove graffiti)
Except she was wrong.
"It looks phenomenal online. I had 17 or 18 showings in the first two months," Romano recalls. But buyers — and often it's subconscious — actually aren't good at overlooking even superficial flaws, particularly if those flaws so boldly announce they'll need a redo.
"Buyers don't want to do that," Romano says. "There are homes that are decked out to the nines. Maybe this home isn't ready, but the one down the street is."
In the end, this seller not only lost time, she lost big in the math. Had she listened to her agent and spent the $1,200 to repaint, Romano is certain he could have sold the home quickly for its $350,000 asking price. As it is, he'll likely fetch $310,000, and only after several months of viewings.
Leave it to the pros
Welcome to the wacky world of home sales, where a little stubborn behavior can be costly. But there's a tried-and-true solution that can be summed up with two basic points:
- Find a seller's agent whom you like and trust. (See "Find a superstar real-estate agent.") "Make sure you interview three great agents that focus on your area," says Alan Mark, president of the Mark Co., a real-estate marketing and consulting company in San Francisco. "Then realize that you're hiring a professional who knows how to do this."
- Listen to that agent. More on that below, but the key is to separate the emotional qualities of your home from the basic functional qualities of the house.
It’s never easy to relinquish control, particularly when it’s your home and your money. But if the goal is to sell, and to sell fast, then you’re better off trusting the expert, even if his advice appears trivial — like the paint on a couple of walls — or counterintuitive, such as undercutting the price.
1. Price it right; price it low
Some may find Katya Dennis a bit offbeat — or at least bold — in her pricing strategy, which at first blush appears to be undervaluing the property. But Dennis, an agent in Northern California with David Lyng Real Estate, swears by her method.
"I always tell my sellers, you can never price a house too low, because the market will take care of it," she explains.
Dennis recently listed a home for $535,000, even though it had been appraised at $560,000. The house sold within weeks — for $575,000. The reasoning is simple, she says. The low price drew quick and competing bids.
Had she listed the home for $560,000, she's certain the sale would have dragged and brought in even less than the valuation.
"If you start high and start lowering it, you will never get to the number that you will get to by starting low and going up," Dennis says. "Because when you start lowering the price, people will start wondering what's wrong with the house. ... And if it's been sitting awhile, people will try and lowball."
When Janice Leis, an agent in Pennsylvania, New Jersey and Florida, meets resistance from sellers determined to price high, she will suggest and agree only to the following: Get an independent, certified appraisal and we'll list it there, no more.
"Sellers will say, 'Let's put it 20% higher, then during negotiation we'll have room,'" Leis says. "No. The rule of thumb is you should go where the last (comparable home) sold, or right below that." Too high, and buyers will be scared off.
2. Try a fresh sales approach
Even on the phone, it's clear that Leis can be tough. But her success stories may provide peace of mind to sellers who find themselves initially put off by agents' edgy tactics.
In one case, Leis had a client enraged almost as soon as she acquired the listing, which was for a 5,500-square-foot home that had been on the market for a year and a half with another agent.
Leis immediately placed a quarter-page advertisement in the local newspaper that was utterly devoid of nearly all practical or typical information. The headline said "private compound" and the rest only the square footage and "two separately deeded parcels, full tennis court."
Even the newspaper saleswoman asked her, "Who puts an ad in the paper like this?"
The following day Leis received 33 phone calls. Within a week, she had two offers on the table. One came from a woman who lived in the neighborhood and had been house-hunting for two years. She said it represented just what she'd been looking for.
"Sellers think that you need to have ads in the newspapers and an open house every Saturday," Leis says. "But that has nothing to do with the value of real property. If you have priced it right and cleaned it up, you don't have to do any of those things."
3. Don’t try too hard to fight the market
Tom and Marge Edge's beachfront home in Florida was on the market for four years. When it finally did sell, they got half of their original listing price of $1.1 million.
"We had all kinds of Realtors working for us," Marge Edge says. "It was hard to sell big houses on the water."
Interested buyers either couldn't sell their own homes or had trouble getting financing. Then there were concerns with a sinkhole, hurricane insurance and the Gulf oil spill.
Eventually the couple, in their 80s and eager to move full-time to a smaller home inland, had to accept a loss, although it was mitigated by insurance payments for the sinkhole. Now they're happy just to be done with it.
Sometimes a seller has to accept that there's only so much an unfriendly marketplace can offer.
4. Remember, renovations aren't a magic bullet
Rusty Meador, a contractor who does home restoration work in Wilmington, N.C., sees this rosy-eyed phenomenon all the time.
"The Realtor walks through and says, 'If you do these 10 things I can sell your house for this amount,'" says Meador, the owner of Beach & Barn. But without lowering price, renovations alone often aren't enough.
The once-booming coastal region now has "all these listings that just will not move," he says, in part because hard-up real-estate agents promise clients high-priced sales.
The owners of one three-story beachfront house spent $75,000 on renovations with the expectation that the improvements would put them over the hump needed to fetch a $1.7 million sale price. At the height of the boom, the home easily could have sold for more than $2.5 million.
"The owner has to get about $1.6 million for it (to satisfy the bank) but the reality is they aren't going to get more than $1.4 million for it. They've got nothing but lowball offers," Meador says.
His advice: Be flexible with price. "Price is still what's moving." And if you want the house to move, find an agent willing to be brutally honest.
"(Real-estate agents) want to give that owner as tall a number as they can to get the listing, but they can't make that number too high because they're going to have absolutely no chance to deliver on that promise," he says.
5. Don’t, repeat don’t, skip the online sales push
One last tip from agents: A home that relies on its good personality alone won't cut it in today's market.
Romano received a listing that had been on the market for more than two years in suburban Chicago. "I just sat down with them and said, basically, your house looks horrible online right now."
Romano took more and better photos, then blitzed his social media contacts. He had a signed contract within a month without lowering the price.
"The days when a buyer shows up at my office and says 'Where are we going today?' those days are long over," Romano says. "They show up with a list of homes they've seen online. Some of them, you look at and say, 'Why would you want to look at that?' and you see it looks really good online."
A year earlier, he took a home that had been on and off the market for two years and sold it in 11 days after telling the sellers to follow his rules, which included staging the home and lowering the price.
"The market had continued to decline," Romano says. "Even if a buyer were interested at that (higher) price point, the buyer won't get a mortgage because it won't appraise out for that. It doesn't do anyone any good to list at above the appraised value."
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