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House in Fair Condition May Not Sell in Today's Market - 2005-03-12

A Realtor friend called last week seeking advice on one of his listings. It has been on the market for several months now, and has drawn few lookers and even fewer offers.

According to Jim, the house was in pretty good shape, had been advertised in all the traditional methods, and was priced right.

Still, it has been almost three months, and not a single offer has been received. What could be wrong?

I decided that a personal visit was in order, so I took a look. I thought you might find my analysis helpful.

It seems that the house is in fairly good condition, but that the carpet is a little worn, especially in the family room. The owner told Jim that, rather than replacing the carpet with new floor covering which might not suit the buyer, he was willing to give an allowance of $1,000 for carpet.

The problem with that solution is that home buyers today do not want a project. And replacing even half the carpet in the house will cost far in excess of the allowance. Furthermore, it will take several days to pick out the right carpet, decide on the right color, then have the old carpet removed and the new carpet installed. It’s a lot of work for the new buyer, and buyers don’t like work.

In fact, it would be smarter to go ahead and replace the worn carpet now with a neutral color and a medium grade product. Instead of a drawback, the new carpet would be a selling feature.

And installing new carpet resolves any odor problem as well. In my experience, nothing is as much of a turn-off to buyers as lingering pet odors. And the plug-in cover-up smell things are often worse than the original smell in the first place.

Next, I found that the "slightly worn" countertops were, in fact, left over from a 1950's installation of ponderosa pine cabinets and "gold sparkle" Formica. In addition, in viewing competitive homes nearby, I found that most homes in this price range had solid surface countertops, and some even had quartz or granite.

Again, most buyers have little imagination. And the fact that the seller has lived with and enjoyed his kitchen for many years does not make it competitive in today’s market. It is time for new countertops, and possibly a kitchen make-over.

What many sellers don’t understand is that making their home attractive is not about "getting your money back." Instead, failure to do these things may actually prevent your home from selling in the first place, at least for any semblance of a fair price.

Next, in talking with the Realtor, I determined that he had placed a sign in the yard, designed a nice color sales brochure, put an ad in the classifieds, and held several poorly attended open houses on Sundays in December and January. His listing agreement called for a seven percent commission to be split with the selling agency.

It seems to me that the best priced listing in the world will never sell if the eventual buyer does not know it is available for sale. Certainly the sign and newspaper ad were good first steps, but I would recommend three more steps:

* First, let’s have a neighborhood open house, inviting every nosey neighbor with a written invitation card for coffee and doughnuts on Saturday morning. Remember that your neighbors like your community enough to live there themselves, and they may have a family member or a friend who is looking for a home right now. Include a color brochure with each invitation.

* Next, have an open house luncheon for real estate agents, on Tuesday from 11 to 2 pm, with catered-in barbecue sandwiches, baked beans and Brunswick stew. In addition, ask agents to leave their card in a bowl for a drawing for a $100 gift card to a nice restaurant or local store. If the listing agent is well connected, he can likely get a good crowd of agents to attend.

This is necessary because all selling agents have a mental inventory of available homes. If you can get agents inside your listing, the likelihood of that home selling skyrockets. Conversely, if no agents preview your home, it is much less likely to sell quickly.

* Finally, I would urge Jim privately to consider asking the seller to raise the total real estate commission from 7% to 8%.

If Jim lowers the amount of listing side commission he hopes to receive from 3.5% down to 3%, and at the same time gets the seller to raise the total commission from 7% to 8%, the result will be that any agent bringing an acceptable offer can expect a 5% commission instead of the usual 3.5% for selling agents.

Agents always know how much is being offered on every home they show, and just like anyone else, agents are motivated by a bonus. This technique has worked for me and I recommend it to every seller.

Regarding the pricing issue, I would urge the seller to pay for a professional appraisal as a way of obtaining a realistic asking price. Anything short of that route is merely an educated guess at what the property is really worth, and use of a professional appraisal boosts confidence in the buyer’s mind as to the value of your home.

 
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