This is a common lament of sellers today. And no wonder, in Montgomery County, there are over 5,500 homes currently on the market. Year to date in 2011, 4,649 homes have sold, 926 are currently pending settlement, and 3,055 sellers gave up, and their listings are currently expired or withdrawn.
As the numbers show, buyers do exist, and homes sell every day. But the numbers also show that there are a whole lot of homes available for sale and sellers who would like to move. At the current rate, it will take nine more months to work off the current inventory (assuming no new homes come on the market, which is obviously unrealistic).
Then, why does one house sell within a few days of listing, while others have languished on the market for months, if not years? This is not a simple question, as there is no “perfect” home, and every home is unique in what it offers a potential buyer. However, we can get back to basics. There are four key components to selling a house: location, condition, asking price and marketing.
Location – Location, location, location. This has always been and will always be a mantra for real estate agents and homebuyers. Homes that have undesirable features or compromised locations, such as power lines in the backyard, being on or near a busy road, being adjacent to industrial or commercial buildings, high property taxes, or areas considered poor in terms of crime or quality of education, will suffer more in the down market which we are currently in.
There is very little a homeowner can do to address a problem location. At best, a seller may consider constructing a privacy fence to shelter the home from the surroundings or appealing their property taxes. But, when all other things are equal, a buyer will still choose a property in a better location.
Condition – This is an area that most buyers have almost complete control over, unless they are severely cash strapped and cannot afford any improvements. Even then, a seller can do some of the simpler suggestions: clean, clear out the clutter, clean, organize, clean, open up the shades to allow natural light in, clean, turn on the lights for showings, clean.
Did we stress “clean” enough? Get the cobwebs out of the basement, sweep off the patio, wash the mildew off the siding, make the kitchens and bathrooms sparkle. A clean, organized house with a little curb appeal goes a long way with buyers. Wallpaper removal, fresh paint, new carpets (or shampooed, depending upon the condition) and clever staging can make the difference between a sale or no sale.
After that, there is a real balance between the cost of an improvement and the return on the investment at resale. For example, according to Remodeling Magazine’s 2010-2011 Cost vs. Value Report, a new front door can net a return of 102 percent at resale, whereas installing new windows is only around 72 percent. So unless the windows are so bad that they would deter a buyer, a seller should not replace the windows just to sell. A new kitchen counter and a change in flooring can transform a tired, dated kitchen at a reasonable cost, while a total kitchen remodel is unlikely to be recouped at resale.
There are reasonable maintenance items that homeowners incur over time, and if those items have been neglected, a seller will probably have to address them simply to sell unless they want to sell at a tremendous discount. For example, most buyers (and their mortgage companies) will not take on a house that needs a new roof. The seller will most likely have to spend the money and get the job done.
Sellers need to take an honest assessment of the condition of their homes and ask themselves, “Would I buy this home?” This is an area where a professional real estate agent can help in making the right suggestions for preparing the home for sale. We usually suggest in this order: Clean/declutter first, address maintenance/repairs, and finally, make small improvements/upgrades that provide a lot of bang for the buck.
Asking price – Year to date, homes have sold on average for 90 percent of their original asking price. However, it will not help as a seller to overprice your home in the anticipation that offers will come in at 80 to 90 percent of your asking price. Overpriced homes generate no offers. They are the ones that tend to languish on the market and end up selling “below” market as they develop a stigma of sitting on the market too long.
A good indication of whether or not you are priced correctly is how many showings you are getting (with the caveat that marketing matters). If you are not getting any showings, take a hard look at your price, location, and the efforts of your agent. If you are getting showings, but not selling, take a hard look at the condition of your home, the feedback for what you can change, and your price compared to competing properties.
Quite honestly, homes are currently selling around 2003-2004 price levels, so if you bought in the last several years and want to make a profit (or at least break even), the chances are not good unless you have put some money into upgrading the home since you purchased. There is nothing you or your real estate agent can do about the decline in home values. Face the facts, don’t think too hard about what your neighbor sold for last year, and price your home appropriately.
Marketing – It is the age of the Internet. Your first showing is now online through pictures and virtual tours. Ninety-plus percent of homebuyers are searching for homes themselves online. If your home doesn’t make the “cut,” a buyer will not request that all-important second showing, which is when they actually come to your home in person. Part of an agent's job is to present your home in the best possible light and make it appear everywhere on the Internet. Are you sure your real estate agent is doing everything he or she can in this new age of the Internet?
Even with all these basics in place, selling today requires patience, a thick skin and a realistic outlook. The upside is that, if once you sell, you plan to buy, you will do well buying in today’s market.
Every Wednesday at noon, the Scott Loper Team of Re/Max Realty Group in Harleysville offers some sage advice to potential and current homeowners in our area. The Scott Loper Team includes Scott Loper, Lisa Loper and Gina Wherry, Re/Max Realty Group, 439 Main Street, Harleysville, PA 19438, 215-256-1200.