Your property is attractive, nicely maintained and has many desirable features. It’s well located within minutes of shopping, neighborhood schools, beautiful parks and cultural amenities. The real estate market is in full swing and many other neighborhood properties are selling. So why has your property languished on the market for several months? Why, when there’s still an abundance of prospective buyers, do some properties simply sit on the market for months while others are quickly snapped up – even in today’s challenging market?
If buyers and brokers aren’t responding favorably to your property, if offers are far below what you’re asking, or if the property has remained on the market far longer than other similar properties, then it’s time to re-examine the asking price.
For several years, Denver experienced a “red-hot” real estate market where properties could be over-priced and sellers were still able to make the sale; however, those days are simply gone. With increasing inventory, buyers now have more properties available to them, the luxury of time to make decisions and buyer brokers to help educate them regarding current market conditions and property values. The Internet also makes it tough to be anything but an informed buyer. As a result, buyers can take their time and have little reason to pay more than fair market price for a property.
On the flip side, most sellers want their property to sell quickly and for the highest possible price. Interestingly enough, selling fast is often the key to selling for the most money. Properties that don’t sell quickly – that is, within a month or so of hitting the market – are usually overpriced for the market. The longer a property sits on the market, of course, the more likely its asking price will be reduced … and reduced … and reduced again until finally, the seller is so anxious to sell the property that almost any offer will do. Unfortunately, when over-priced properties do sell, they often sell for less than they would have if they’d been priced right to begin with. A realistic asking price will help you to sell your property quickly and for top dollar.
Establishing a reasonable asking price is not an exact science – especially in today’s market where our economic outlook seems to change on a day-by-day basis and real estate sales are largely dependent on consumer confidence. Additionally, properties located in older neighborhoods with diverse architectural styles & features are often more difficult to price. Location, condition, lot size, and availability within a specific price range often affect a property’s market value. For example, smaller homes priced at or below the median price range in a specific neighborhood generally sell very quickly and at a higher price per square foot because the asking price is lower than the median price for the neighborhood. Similarly, older homes in need of updating that are priced at or below the median price range in a specific neighborhood generally sell very quickly because they have significant potential for upward appreciation – even in a flat market. Additionally, if Builders are buying older homes at land value for redevelopment and, if they are able to successfully sell their newly built homes prior to or upon completion of the construction at a reasonable profit, they will continue the redevelopment process, thus pushing property prices higher by increasing the land value in the neighborhood. If Builders suddenly stop buying homes for redevelopment, and the land value softens, then property prices are also likely to soften as well.
The real key here is to determine and understand the impact of supply-and-demand within specific price ranges, styles and neighborhoods. Supply-and-demand and proper pricing are perhaps the two most critical factors affecting the amount of time it takes for a property to sell. A property is most marketable when it’s new on the market. Real estate brokers and their buyers wait anxiously for new property listings to appear – then they rush to see them before they’re sold. If a property doesn’t sell during the initial marketing effort, the showing activity usually falls off as buyers turn their attention to new properties and the remaining properties become stale.
It’s also important to understand that buyers determine market pricing, not sellers. Simply put, the fair market value of a property is the price that a willing and able buyer will pay given normal terms and conditions. To accurately price your property, you first need to determine the likely fair market value for your property by comparing your property to similar properties that are currently on the market for sale (also known as “the competition”) and also to similar properties that have recently sold in your neighborhood. By objectively comparing your property to these properties, you can generally determine how much a buyer will likely be willing to pay. As for objectivity, it is probably best not to trust yourself alone to make an accurate determination of the market value of your property – because sellers often have a difficult time being objective. To look objectively at your property, you need to put yourself in the buyer’s shoes and look at your property from a buyer’s perspective. A knowledgeable real estate broker will be able to help you with this as well as other important tasks such as determining the proper asking price for your property. Choose your agent carefully. Hire someone with experience in your neighborhood, a good track record and integrity. Then, put your trust in this person and follow his or her advice about how best to maximize the return on your investment. That being said, sellers should also beware of agents who capitalize on a challenging market by instilling a “sky is falling” fear in sellers simply to justify pricing properties below market for a quick sale. The key here is to balance the asking price with supply-and-demand, current market conditions, and your personal needs. Fear need not rule your pricing strategy!
Property condition is almost as important as pricing because buyers will pay more for properties that are in move-in condition. The condition in which a property has been maintained directly affects marketability and pricing. Buyers – regardless of whatever restoration fantasies they might harbor – quickly return to reality when they realize that they don’t have the time, skills or money to embark on a major rehab job. Poor condition does not necessarily mean that the property is in need of a major overall; however, minor things can also equate with a buyer’s perception of poor condition – peeling paint, dirty carpets, a drippy faucet etc. While none of these items are a big matter individually, they do make buyers wonder if bigger problems lurk unseen. The bottom line: to speed up a sale, clean and fix-up the property’s condition before placing it on the market – clean windows, a fresh coat of paint here and there & nice landscaping can often do the trick. Real estate brokers are more likely to bring their buyers to properties that show well – ones that require no apology or explanation. And usually, the more showings there are, the quicker the sale and the higher the sales price.
Real estate is all about location – and some locations are clearly better than others. Since you can’t move your property in the usual situation, the best alternative is to improve what you have. For instance, if you live on a busy street, consider planting mature trees (or perhaps adding hedges or an ivy-covered trellis) to absorb noise and obstruct unwanted views.
You’ll also want to make property showings as easy as possible for prospective buyers and their brokers. A lock box on the door allows brokers to schedule appointments at the convenience of their clients. Owners, tenants, pets and children should be away for showings when possible.
The fact that a property has drawbacks should not be surprising. There are no perfect houses, and there are ways to work around imperfections – proper pricing is critical in these instances.
Here’s a surprising but sensible reason as to why a property may not sell – all properties are not the same! Really unique properties will appeal to very specific and unique buyers. Because of this, it may happen that a property remains unsold – not because it has some flaw or because of poor marketing – but because the property lends itself to just the right “special” buyer. The odds are against it, but it does happen. What to do in this case? Keep on selling until the right buyer finally appears.
The other ingredient necessary for a fast sale at a top dollar price is market exposure. Some sellers worry about a quick sale because they fear that if they sell the house quickly they might sell for too low a price. In reality, you only risk selling too low if you don’t properly expose the property to the entire real estate market.
In Denver’s past “red-hot” seller’s market – where supply & demand often dictated terms and escalated property prices – one acceptable pricing strategy was to “test the market” for a few weeks by pricing the property on the high side in an effort to determine the highest price that a buyer might be willing to pay given the market conditions, then adjust accordingly. Another successful pricing strategy (primarily for highly desirable, well located, premium properties in short supply and in strong demand) was to price a property on the low side, fully expose the property to the market – with advertising, multiple listing and open houses etc. – then, wait several days before accepting any offers. While this marketing strategy worked well for premium properties in a seller’s market (often resulting in multiple offers from competing buyers and a sale price for more than the asking price), it’s usually best to list the property for a price that’s close to the expected fair market sale price. When a property is listed for a price which reflects fair market value, the greatest number of buyers will see value in the property within a reasonable time thus resulting in the greater likelihood of a top dollar offer and a relatively quick sale.
In summary, even though your property may have been on the market for several months without a sale, there are definitely still buyers for your property out there … they just need to see and understand its value. This is most likely to happen when your property is in good showing condition, is fully marketed and readily available to all prospective buyers and is priced to reflect marketplace realities. Location, location, location is still key in our ever changing world of real estate; however, price, price, price is almost as important in today’s real estate market. For more ideas on how to sell your property for the best possible price, please contact your own professional real estate broker or, as always, feel free to give me call – we appreciate the opportunity to be of service!