Jeremy, you said in a recent post that making “low-ball” offers is generally ill-advised. However, I see homes out there that have been on the market for 3 months with no price change. Doesn’t this mean they’re overpriced?
That certainly could be the case. There’s no question that many homes are overpriced. Any time a house has been on the market for even 1-2 months at the same price, I do want to have some idea of the “why” no one else has bought it. It’s possible that it’s priced too high, but there are other possibilities as well.
First, let’s assume that a home is overpriced based on the market data. They’re listed at $330k, and the best “comps” to support the value come in at $290k. In that case, they’re overpriced and there is likely nothing we can do about – you just need to buy a different house from people who are reasonable about their home’s value.
You can try a low offer if you absolutely love the home, but statistically, you probably won’t get it for a fair price when the seller is that far off so don’t get your heart set on it. Approximately one third of all listings never sell, and often this is why.
But what if a home hasn’t sold for some other reason? There are other factors that will keep a home from selling. Here my thoughts on the most common reasons a home isn’t selling. These first three are the most common factors, and in my experience it’s likely that one or more of these is to blame:
- Bad marketing – especially bad photos. I’ve personally listed 5 homes this year (2014) that were first listed by other agents for months with no success. We sold all 5 of them. Of those, we listed 2 of them at the same price and sold them in a matter of days. The difference was the marketing. They looked stale and overpriced, but the real problem was bad marketing, not price. As a buyer, great opportunities often lurk behind bad photos – even at list price!
- It’s priced too high. As we already discussed, lots of homes are priced too high. Of the 5 homes I mentioned above, we did reduce the price slightly on 3 of them.
- The home doesn’t show well. This is closely tied to the first point about marketing. Lots of homes are held back from their potential by the home owner. Imagine two identical homes are for sale at the same price, one is cleaned, staged, and welcoming – the other is cluttered and smells like last night’s dinner. Which will sell faster and for more money? Which one is actually worth more? Obviously, the first one sells sooner, but once the owners move out and the house is cleaned, they’re worth the same. So was the second one “overpriced”?
Some other reasons, that while not as common, are still reasons I see frequently.
- Unique home that may be priced and marketed right, but only appeals to a small segment of buyers. (Examples might be: homes with handicap accessibility, an mother-in-law suite with private access, or just a house with a unique floor plan that isn’t universally appealling.
- Slow neighborhood. Certain neighborhoods, usually on the outskirts of town, tend to move slower.
- Specific, undesirable aspect of the home that is beyond anyone’s control. The most common thing that comes to mind is a house that backs to a busy street. In a situation like this, the house that would be worth $250k on one side of the road, might realistically only sell for $240k when it backs to the road. However, even at this appropriate lower price, it will still take longer to sell in most cases. I’ve seen a similar dynamic with nice homes where the neighbor’s house is particularly junky.
When looking at a home that’s been on the market for a while, it may be overpriced, or it may be something else.
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