Your house may not be selling for reasons that have nothing to oo with the house. Home buyers immediately jump to the conclusion that there’s something wrong with the house if it doesn’t sell right away. Sometimes there is something wrong, but not always. There are a lot of reasons houses don’t sell. And a lot of them don’t have anything to do with the house.
The first question buyers ask when they come into an open house is: How long has it been on the market? They want to evaluate if it’s been on the market “too long.” If it has been, then they want to know why.
Most houses don’t sell because the price is too high. There’s always a fix for that. No matter what the condition is, lowering the price will make any house sell. But let’s talk about the other reasons houses don’t sell.
1. Reason the House is Not Selling: The seller makes the house difficult to see.
Limiting showing times makes a house difficult to get an appointment. Buyers don’t even like the perception of that.
Buyers get annoyed when have to wait to schedule an appointment. 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 the home buyer, that is.
Time is going to cost the home seller money. When a 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 private showings.
2. Reason the House is Not Selling: The original buyer can’t get a loan.
We’re living in uncertain times. All sorts of strange things are happening in the world. Mortgage brokerage companies are closing without notice. They’re leaving buyers hanging in limbo without a loan. Interest rates are jumping up and down. Home buyers are nervous and are canceling transactions.
Banks and Covid
Banks were short-staffed during the height of COVID. Now they’re looking for new ways to recuperate some of the losses they suffered. They’re continuing to close branches to consolidate staff. People in management are retiring early as they condense their overhead. The big banks were closing warehouse lines which stopped mortgage companies from selling their loan products.
This is unbelievable, but true: A bank can give an approval for a home loan and then yank that approval at any time. In other words, they can pull the rug right out from under the buyer. And the seller.
Even if the home buyer is completely approved. They’ve gone through the whole approval process the bank can still withdraw the loan. Banks have no legal obligation whatsoever to give a buyer the loan.
In a volatile time in finance, like we have currently, banks may increase interest rates or increase loan requirements. That can create a situation where a buyer no longer qualifies for the loan.
A buyer changing jobs before the loan closes can completely ruin a transaction. And there’s no way to fix thats. It used to happen a lot more frequently when pre-IPOs were on fire.
The employee was offered a ton of stock options by taking a position at another tech company. So, without thinking of the consequences to the transaction, he quits and starts somewhere else. Banks don’t like that type of instability. They might withdraw the offer to loan on the property.
Employment Verification
A bank will call the employer to verify employment just prior to wiring the loan money to the escrow company. If he doesn’t work there anymore, they’re not going to send the money.
The delay in resolving the employment question can cause loan rate locks to expire and contracts to be cancelled. All of that can put the buyer’s deposit at risk. A seller may demand to close. And, consequent to the delay, have damages.
Now if the buyer stays in the same industry, the bank may give a pass. However, it’s not without wreaking havoc on the home purchase by creating a mess of confusion and delays.
3. Reason the House is Not Selling: The buyer gets cold feet.
Home buyers, especially first-time home buyers, are nervous. Understandable, right? During these unsettled times, prices, and interest rates, anyone would be nervous.
Contingencies
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. Contingencies allow a buyer to withdraw from their purchase agreement without losing any 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. It’s no as dramatic as it has been in the past. Buyers were expected to have no contingencies whatsoever. No contingencies at all doesn’t allow a buyer any opportunity to change their mind about the purchase.
Sometimes buyer’s have remorse that they just can’t get past. Then they will withdraw from the purchase. Unless it’s a quickly escalating market, the seller is doomed to get a lower sale price on the next offer.
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 and consumer confidence. That perception will effect the seller’s bottom line through the sales price, negotiations for repairs or credits for closing costs.
Marketing Impact
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. All the buyers that were already in the market aren’t going to be excited to see the house come back on the market. Of course, they’re going to ask what’s wrong with it.
4. Reason the House is Not Selling: The seller’s agent has a bad reputation. Agents won’t show the property.
In a small real estate community, 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. They may not do 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. That 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. 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. Reason the House is Not Selling: A declining market.
When the market slows down and houses don’t sell, it takes some time for the consumer to realize it. Sometimes it takes time for the local agents to figure it out too.
The media is often a few steps behind what’s actually happening in the market. The news might get their reports by looking at data and statistics. That info is often outdated in a quickly moving market, whether it’s speeding up or slowing down. 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 savvy than ever
Buyers are more particular than ever. They’re also more savvy. Oftentimes, they know the recent sales better than the agents do. 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.
A couple came into my open house and told me that they had been seeing the same home buyers at open house after open house. They got frustrated competing with each other for the same house. So they actually agreed, as a group, not to write an offer on a particular house. They were working with each other to keep the price and competition down!
6. Reason the House is Not Selling: Price
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.
Pricing Strategy
A pricing strategy has to be carefully thought out and planned based on the market at the time the house is listed. You’ll determine an approximate list price for your property when you initially start working with your agent. But the price has to be reevaluated if it takes some time for you to prepare the property for sale and it doesn’t go on the market right away.
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.
That time span is an excellent time to watch the market to learn what other similar houses are selling for. You can 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.