Why Isn’t My House Selling?

There are four factors which determine how fast a house will sell. Each factor plays an integral part in the role of selling; some you can control and others you can’t. With today’s technology, the advertising of a house through a Realtor’s local multiple listing service is a fixed constant and a surefire given that the house will receive maximum exposure. Let’s explore the four factors and answer the question of ‘Why isn’t my house selling?’

The four factors are price, condition, location, and economic conditions. When pricing a house, a good Real Estate agent will take into consideration the condition of a home, the location, and how the overall market is performing.  Pricing is easily the most influential factor, but often the one that most sellers will resist changing. When pricing a house for sale it’s not a matter of ‘if’ the house will sell but ‘when’. Pricing a house in relation to other houses in the area without any consideration for the condition of the home or location positions your house to be priced too high or to ‘leave money on the table’ (selling too low).

The condition factor is sometimes easy or the most difficult to manipulate. Let me share an example. When studying like-sized and comparable homes with regards to amenities, upgrades, and location you can easily assume that ‘House A’ should be the same price of ‘House B’. But if ‘House A’ is lacking exterior paint, has a colorful interior appealing to a lesser percentage of buyers, lacks upkeep, needs updating, etc. then a seller must either price it lower than ‘House B’ or improve the condition. Sometimes there are too many items to take care of so a combination of some repairs and a lower price will be required. Years ago, I was working with a couple whose dining room was located directly off the foyer and the first room visitors would see. It was pink and they commented, “If someone can’t see that a can of paint can easily change that then this isn’t the house for them.” They refused my advice and put the house on the market. The house sat on the market for over two months attracting lots of showings but not a single offer. Feedback from Realtors and buyers was consistent, “The house was hideous because of the paint color.” I told them they needed to reduce the price, offer a paint allowance (same as lowering price), or paint the room. Within one week of painting, they received two offers and closed quickly.

Location is singly the most important factor with regards to pricing. Location is literally what defines Real Estate. It seems every major metropolitan area has a neighborhood that is prime above others. Sometimes the location is so valued it even allows one to tear down the existing house and erect a new custom home. Developers and builders recognize this important factor of location when selling their houses. If the new development borders a busy street they’ll put deeper lots at the busy street to create a compensating factor. Most of their buyers would prefer an interior lot but some will want the deeper lot and accept the nosier location. A cul-de-sac location with a nice pie-shaped yard will be sold at a premium. Let me share an example. Years ago I was selling a house for a church friend. He had purchased the house from a builder three years prior and it sat directly next a fire station and was on a busy street. I asked my client/friend, “How much did the builder discount this house when you purchased?” He quickly responded, “We got it at a steal! They took off 15k!” I analyzed the market prices for the area and determined that liked-sized houses with similar finish-outs had appreciated about $50,000 since he purchased. He was ecstatic. However, I had to give him my professional opinion based on education and experience and shared with him the following, “Since there is decent amount of available homes comparable to yours we need to price yours at about 10 to 12k lower than the others.” He was not happy. I explained to him that he had an inferior location, the very reason why he got a steep discount when he purchased. Against my advice he listed it at the comparable price to other like-sized homes, with no consideration for the inferior location, and it sat on the market for over six months. Throughout that time period he refused to lower his price and became increasingly frustrated. When he would ask, “Why isn’t my house selling?” I’d respond with the same answer, “You have an inferior location and need to be competitive.” He listed it with someone else and it took another year to sale. Sometimes an improving market can catch up to your price. Location matters!

Throughout history Real Estate has been cyclical with rising prices followed by lowering prices. Recessions and boom markets happen. Years ago, I was working with a client and the analysis I shared with her was thorough and detailed. I explained that we were in a declining market and needed to price her house just ahead of the declining curve. So although the comparable homes were showing a price of $380,000 I explained that we needed to list it at $370,000. She was alarmed and after some discussion, some of which was an agreement to lower the price after 30 days, she listed the house and enjoyed an above-average amount of showings but no offers. After 30 days the amount of showings influenced her not to reduce the price. After five months on the market she said, “There are more houses on the market and it appears the prices are coming down a little...and I need this house sold.” I gave her some depressing news. I explained to her that the market had turned even further downward and she needed to list it at $359,900 if she was going to employ the strategy of staying ahead of the curve. She refused and ended up a market casualty. She had to lease the house and I ended up marketing and selling her house about eight years later.

Interest rates are low and inventory conditions have been tight in the recent year. Early in the Spring I was seeing houses list and then sell within hours. Some were getting multiple offers, most above the list price. Most agents in my market were not staying ahead of the curve and pricing the house high enough. Experience, knowledge, and good analytical skills matter and a good agent and/or a savvy seller must take into consideration the four factors which determine how fast a house will sell. The question of “why isn’t my house selling?” can easily be answered by factoring price, condition, location, and the current economic conditions. Price the house right. If you have some deficiencies with the condition either make some changes or price to reflect the deficiencies. If you have an inferior location with no compensating factors then you need to make a price concession. What kind of inventory of homes are you competing against? Price the house accordingly and constantly analyze and review the market. Don’t be a market casualty or leave money on the table. Be informed and maximize your sales price.

James DeLaGarza

972-390-2000