Vicki Moore Pacifica Realtor
When houses don’t sell right away, people immediately think there’s something wrong with the house – and sometimes there is something wrong, but not always. The first question people ask when they come into an open house is: How long has it been on the market?
If the house hasn’t sold in an arbitrary timeframe, they immediately think there’s something wrong with it. There’s a lot of reasons houses don’t sell. And a lot of them don’t have anything to do with the house.
Most houses don’t sell because the price is too high. There’s always a fix for houses not selling, not matter their condition, and that’s lowering the price. But let’s talk about the other reasons a house may not be selling.
1. The seller makes the house difficult to see.
The house is too difficult to get an appointment to see because there are limited showing times; there are sleeping children or big dogs that have to be managed causing buyers to have to wait to see if/when they can get in.
Buyers get annoyed when it’s just too difficult just to get in to see a house. They’d rather go to the next one – and so would their realtor. If it’s going to be a long wait to see the house, there has to be a good reason. Good reason to a home buyer, that is.
And time is money. When your house sits on the market, it becomes stale. That’s when home buyers start asking what’s wrong with it. So be prepared to be inconvenienced at short notice for showings. Houses in Pacifica sell quickly so it won’t be a long process but you’ll be better off if you know in advance that it’s going to be an inconvenience that you’ll just have to manage if you want to sell your house quickly and for the most money possible.
2. The original buyer couldn’t get their act together to get a loan – or their bank couldn’t.
We’re living in the time of COVID. All sorts of strange things are happening with banks and buyers. And it’s all taking longer.
Because of COVID banks are short-staffed and are looking for new ways to recuperate some of the losses they’ve suffered. They’ve closed branches to consolidate staff. People in management are retiring early as they condense their overhead. They were also closing the warehouse lines which allow mortgage companies to sell their loan products.
This is unbelievable, but true: A bank can give an approval for a home loan and then change their mind completely, pulling the rug out from under the buyer. The home buyer is completely approved; they’ve gone through the whole process and then the bank withdraws the loan. They have no legal obligation to give a buyer the loan – even if the buyer meets all the requirements.
In a volatile time in finance, like we have currently, banks may increase interest rates or increase loan requirements creating a situation where a buyer no longer qualifies for the loan. That’s why it’s important that the buyer work with a direct lender. A direct lender like Wells Fargo or Chase has more control over the transaction than a mortgage broker who isn’t directly funding the loan.
The buyer changes jobs before the loan closes can completely ruin a transaction and there’s no way to fix it. It used to happen a lot more frequently when pre-IPOs were on fire. The home buyer is offered a position they can’t refuse at another tech company with a ton of stock options but he has to take the job right now. So, without thinking of the consequences to the purchase transaction, he quits and starts somewhere else. Well, the bank doesn’t like that type of instability and may withdraw the offer to loan on a property.
Just prior to wiring the buyer’s loan money to the escrow company, the bank will call his employer to verify employment. If he doesn’t work there anymore, they’re not going to send the money. The delay involved in resolving the question of whether he’s still in the same job or has relocated can cause loan rate locks to expire, and contracts to be cancelled, putting the buyer’s deposit at risk. A seller may demand a home buyer’s deposit by claiming damages.
Now if the buyer stays in the same industry, the bank may give him a pass; however, it’s not without wreaking havoc on the home purchase by creating a mess of confusion and delays.
3. The buyer gets cold feet.
Home buyers, especially first-time home buyers, are nervous. Understandable, right? At these home prices anyone would be nervous. And if they’re not, they should be.
Different markets have different expectations and standards. For example, in a very hot sellers’ market, the buyer may not have any contingencies – or very few – which would allow them to withdraw from their purchase agreement without the repercussion of losing all or part of their deposit. The most common contingencies in today’s market are the loan and/or appraisal contingency. In other markets, you may see a contingency for the buyer to sell their home or a contingency for the buyer to get an additional inspection.
Currently, fewer contingencies are the norm but not as dramatic as it has been in the past where a buyer was expected to have no contingencies whatsoever; giving them no opportunity to change their mind about the purchase.
Sometimes a buyer may have buyer’s remorse that they just can’t get past and will withdraw from the purchase. Unless it’s a very rare circumstance of a quickly escalating market, the seller is doomed to get a lower sale price on the next offer they receive. Then the seller is dealing with the perception that something is wrong with the house, whether there is or not really doesn’t matter. It’s about perception or consumer confidence. That perception will effect the seller’s bottom line through the sales price, negotiations for repairs or credits for closing costs.
You get the most impact from marketing your house in the first few days. That’s when the largest number of people who saw it online are going to want to see it in person. It’s the time in which the most excitement is created. If the house goes back on the market after a failed sale, you never get that momentum or level of excitement back again. At that point, you’re only going to get new buyers just coming into the market – as opposed to all the buyers in the market at the time when the house first goes up for sale. And, then of course, they’re going to ask what’s wrong with it.
4. The seller’s agent has a bad reputation so agents won’t show the property.
In a small real estate community like Pacifica, there aren’t any secrets about agents, the houses for sale or the transactions themselves. When you hire a realtor, you’re not only hiring their abilities – you’re hiring their reputation. And if it’s a bad one, you’re going to be the one to suffer.
Agents can make it extremely easy – or awfully difficult – to get your house sold by being rude, unethical, not returning calls or emails or not doing the things they said they would.
Some agents will only respond by email or text. You can’t actually have a conversation with the agent which makes it extremely difficult to communicate during the complicated process of getting a home sold.
Be sensitive to how long it takes an agent to return your call before you agree to work with them to sell your house. We’re at our best behavior to win your business before you sign the listing agreement to sell your house. If you’re not getting a satisfactory and timely responses at the beginning, you can be assured that it’s only going to get worse.
5. When houses don’t sell, it could be because of a declining market.
When the market slows down and houses don’t sell, it takes some time for the consumer to realize it. The media is always a few steps behind what’s actually happening in the market. The news may gather their reports by looking at data and statistics which is outdated in a quickly moving market, whether it’s speeding up or slowing down. We have micro real estate markets just like we have micro climates. The market bumps up and down week by week, consumer confidence altering it a little here and there. So home buyers may think there’s something wrong with the house when, actually, the market is in the process of changing.
Buyers are more particular than ever. They’re also more savvy. Oftentimes, they know the recent sales better than we do because they’re tracking a small piece of the market that effects only their buying situation. They’re analyzing data from multiple websites – although the data they’re seeing on these websites is not always accurate, they’re analyzing it.
Earlier this year when we were allowed to do open houses, a couple looking for a home came in and told me that they had been seeing the same home buyers at open house after open house. They got frustrated with competing with each other for the same house. So they actually agreed – as a group – not to write an offer on a particular house to keep the price and competition down!
6. The final reason – for this post anyway – why homes don’t sell.
The biggest reason homes don’t sell in a timely manner is because they’re overpriced. Pricing your home correctly is the number one most important piece of selling. If you’re priced too high, you’re doomed. You might as well just forget it. Pull the house off the market and sell another time.
A pricing strategy has to be carefully thought out and planned based on the market at the time the house is listed in the Multiple Listing Service. You may determine an approximate list price for your property when you initially start working with your agent, but if it takes some time for you to prepare the property for sale and it doesn’t go on the market right away, the price has to be reevaluated.
I tell my clients the price needs to be discussed repeatedly between the time of the first meeting and the time when the property goes onto the Multiple Listing Service. It’s an educational period for the home seller to learn what other similar houses in their neighborhood are selling for and to determine if the market is moving more quickly or more slowing; if buyers motivation is generally strong; how many homes are for sale; what the interest rate expectations are in terms of increasing or decreasing; the status of the job market. All of these things have an effect on home sales.