Estimated reading time: 7 minutes
The National Association of Realtors (NAR) reports that 70–85% of homes on the market for less than 2 weeks sell for at or above their asking price, but once a home reaches the 5–8 week timeframe on the market, only 23% receive the full list price and sellers are twice as likely to provide some type of buyer incentive. If your “For Sale” sign is in danger of developing cobwebs or you simply want to prevent that from happening, this article will provide 5 reasons why a home may not sell as quickly or for as much as expected, and what to do about each situation.
Selling your home can be a challenging and emotional process, especially when you’ve invested your time and effort in preparing it for the market. When your home has been on the market for a considerable amount of time with little to no interest from potential buyers, it’s crucial to assess the situation and consider adjustments. One of the most effective ways to attract buyers is to lower the asking price.
HOW PRICE AND VALUE WORK
Prices and perceived values are two market metrics, meaning that the market of possible buyers will determine the best price for the value. Where the two metrics meet represents the successful combination of these two key factors.
The extremes in this scenario are: sellers want to try and sell for the highest price without having to put in much, if any, extra value while buyers want the opposite. The two different approaches that increase the odds of selling your home are:
- For a given price, a buyer should expect certain features. If the seller doesn’t want to lower the price in this scenario, then they need to add value such as home improvements and buyer incentives.
- For a home lacking certain features (value), the listing price should be in a lower range. If the seller doesn’t want to provide additional features or incentives, the price needs to come down to more closely approximate what the market may expect in this scenario.
The table below shows the different combinations of these price and value approaches along with what you can expect from the outcome given the various levels of each.
A well-developed Comparative Market Analysis (CMA) will help with both of the approaches above and provide some guidance on the pricing. Sometimes, however, it isn’t enough to price it at a fair market value. Market conditions can change quickly. Interest rates, other available homes, and other factors can affect how quickly (or slowly) your home will sell. Market demand, the economy, and other factors out of your control may also have an impact on the length of time it takes to sell your home. Regardless of how you originally arrived at a list price, you should suspect the price is too high (for the value) when any of the following presents itself:
THE 5 SIGNS
- Comparable Homes Are Selling Faster: Keep an eye on similar properties in your neighborhood or the surrounding area. If comparable homes are selling more quickly than yours, it may indicate that your pricing is not competitive. If the Days on Market for your home is greater than the average without any offers, this is an indication that either the price or value needs to change. Buyers are often well-informed and will compare multiple listings before making a decision. If your home is priced higher than similar properties, it might be time to reevaluate your asking price.
- Limited Showings and Lack of Interest: If your property has been listed for weeks without generating many phone calls or showing requests by prospective buyers, it’s a clear sign that the current asking price probably needs to be lowered. Other indicators of disinterest include low internet traffic and low attendance at open houses. Real estate markets are dynamic, and if your home isn’t getting the attention that you believe it deserves, a price reduction could make it more attractive to a broader audience.
- Interest Without Offers: If you’ve had a lot of showings but haven’t had any offers or received only lowball offers, that tells you the property is not showing well, and the perceived value of this listing is not meeting buyer expectations for the price you are asking. The price is right but the value is not. Either lower the price or increase the value.
- Your Neighborhood Isn’t Drawing Enough Interest: Houses in your neighborhood are not selling as quickly as those in other areas, even those similar to your home in features and price. Since you can’t change the neighborhood, you’ll need to lower the price or increase the value of your home to encourage buyers to look at other listed homes in your neighborhood for comparison purposes.
- No Offers Despite Marketing Efforts: If you’ve invested in marketing your home through various channels, including online listings, open houses, and professional photography, but still haven’t received any offers, pricing may be the primary barrier. A lack of offers despite your marketing efforts is a strong indicator that the current listing price is not resonating with potential buyers.
WHAT TO DO ABOUT IT?
The best bet is to price it right in the first place, but if you find yourself in any of the situations above, what can be done?
Pricing
- Get a new CMA with comparable properties that have sold more recently.
- Pay for an Appraisal. An appraisal without an accompanying offer may result in a lower dollar figure than if a committed buyer has made an offer. However, it does give you a ballpark number to work with.
- Lower the price.
Value
- Add more value with these low-cost, high-impact improvements. Curb appeal always makes a positive difference in your home’s marketability and will often inspire higher offers. Here are 30 great ideas to increase curb appeal.
- Even after attending a showing of your home, some buyers may still be looking for a little extra value for the price you are asking. This may be the time to provide additional incentives to buyers. Here are 5 strategies to encourage offers.
- No buyer is going to make an offer without requesting a showing and examining your home, inside and out. Here are 10 tips to make showings of your home count for more.
In addition to changing either the price or the value, you may also want to consider:
- Changing your marketing efforts using one of these strategies to attract more showings.
- Staging your property to impress potential buyers even more takes time and effort, but it’s a task you can perform on your own.
However, you should be careful about any of these strategies:
- Taking your property off the market and then on again shortly after. This is easily seen in the property history report online and can cause potential buyers to question the situation.
- Multiple price reductions. Not only does this add more “Days on Market,” but it indicates that you initially overpriced it, costing you valuable time, and may make potential buyers skeptical of your home’s real value.
In conclusion, home selling involves a delicate balance between setting a competitive price and attracting interested buyers based on their perceived value of your home. If you notice any of these signs – limited interest, slower sales compared to similar properties, less than positive feedback from real estate professionals, changing market conditions, or a lack of offers despite your marketing efforts – it’s probably time to consider lowering your asking price.