Homeowners who list their homes for sale obviously have one goal in mind: to sell it. So why are there so many homes that show up as ‘Expired’ listings each and every day? Expired listings are those that didn’t sell and the listing agreement has reached it’s expiration date. So why didn’t the house sell??
There are really only three reasons why homes do not sell: (1) price; (2) condition; and (3) marketing. Let’s discuss each in more detail.
Number 1: Price
The number one reason most homes do not sell is that the asking price is too high. I know that no one wants to hear that but it’s an unfortunate fact of today’s economy. Homeowners often have such a strong emotional attachment to their home that they feel that almost everyone’s home value has decreased, but for some reason that normally can’t be explained, theirs has retained most of it’s value. Regrettably, there’s a saying in the real estate business that goes something like this: when the tide goes out, all boats go with it. Another factor that causes owners to ask too much for their home is the amount that they owe. If a home was purchased near the height of the real estate bubble, the outstanding loan amount often drives the owner to ask for a higher price. Sellers will often say they “need” to get a certain price, either to pay off the current loan or because they need the money to purchase another home that they want. Unfortunately what a seller “needs” to get has nothing to do with what a buyer is willing to pay. You have to remember that it’s neither the seller nor the real estate agent who sets the selling price of a property. They can set the asking price but the market sets the selling price. When the asking price is too far out of line with what the market value is, the home normally does not sell.
Number 2: Condition
Condition and an excessive asking price are usually closely related. Some sellers will see another home that sold for X dollars and assume that theirs should sell for a similar price. That may be true if the homes are similar and in similar condition. Often they’re not. A poorly maintained home will never sell for the same price as one that has been well maintained and/or updated.
Number 3: Marketing
Homeowners who experience an expired listing will often blame poor marketing. In actuality this is not usually the case. I’m certainly not claiming that this is never the case though. So how do you define ‘poor marketing’? Poor marketing can mean many things. The obvious meaning is that the agent didn’t try very hard to sell it – little if any advertising, few or no open houses. I also consider poor marketing to include agents setting the asking price too high, especially if they do it just to appease the seller. I hate to say it but some agents will promise a seller a high price just to obtain the listing. Then they’ll try to get the seller to lower the price down to where it should have been in the first place. This generally causes the sellers to miss out on the time when there is the most buyer interest (the first 30 days). Unfortunately some sellers will choose to list their home with the agent who promises to get the highest price for the property when in fact, as we said above, the agent has no control over what the property actually sells for (the market sets the selling price). Choosing your listing agent based on the price they claim they can get would be like choosing one because they promise you that it will be sunny and in the 80’s for the entire duration of the listing agreement. While the good weather might bring out more potential buyers, you know they can’t deliver on that promise – any more than they can deliver on the promise of a high price.
You might have noticed that all three of the reasons for not selling are somehow related to the price. Exactly. Get the price right, with the help of a good real estate agent, and your home will sell. Get it wrong and…..you get the idea!