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Wednesday, August 27, 2014

The Top 5 Reasons Homes Don’t Sell, Even in Today’s Seller’s Market

[Published Aug. 28, 2014, in the Jeffco editions of the Denver Post's YourHub section. An abbreviated version also appeared in five Jefferson County weekly newspapers.]

In my Aug. 14 column I wrote that your choice of listing agent could be a reason your home isn’t selling.  Selecting the best and most experienced listing agent is important, but it’s what you and your listing agent do or don’t do that can make the difference. And there are some reasons homes don’t sell that you can’t control.

This is not the definitive list, but it is drawn from over a decade of representing several hundred buyers and sellers. Other real estate pros may come up with a different list, but this is mine — for today.  A year from now I might make a different list, because market conditions will change — they always change! — and I will have had other experiences.  Make sense? Then let’s start:

#1 — Price. Every home has a price at which it will sell. The danger in a seller’s market is that the seller sees the rising market and lists at a target price that he could well obtain if he listed the home at a lower price that draws multiple offers.  I experienced this situation recently.  A seller lowered his condo’s price by $10,000 after three weeks of few showings and no offers. Within just a few days we had multiple offers and sold it for $3,000 above its new listing price.  (This was still a record for that size condo in that complex.)

#2 — Commission offered to buyers’ agents.  With buyers doing their own online searching and dictating which homes they want to see, you’d think a seller could get away with hiring a company that suggests a flat $3,000 co-op commission instead of the traditional 2.8% which most companies offer and which buyer agents expect.  However, in response to that practice, agents are now writing buyer agency agreements which state that the buyer will pay any difference between such a co-op commission and the standard 2.8% co-op. The result is no contract or one which dictates a higher commission to the buyer’s agent.

Several years ago I experimented with offering 2.5% instead of 2.8%, and even that small reduction in co-op commission made a noticeable difference in traffic and offers. After several months I realized my folly and returned to offering 2.8%.

#3 — Neighborhood conditions.  This is one reason which does become less of an obstacle in a seller’s market.  Buyers who would never buy a home with highway noise in the past are buying now, but when there are more homes without highway noise to choose from, such a home will sell last.  Other factors you can’t control include noisy neighbors (or their dogs) and, in neighborhoods with no covenants, neighbors who neglect their home’s appearance or who park their RV’s or junk cars in their driveways or yards.  Conversely, many buyers don’t want a home with an HOA, especially ones with excessive fees or property taxes. (Newer subdivisions are often created using new tax districts to finance infrastructure costs. That can increase property taxes by 50% or more for the next 30 years.)

#4 — Inferior marketing.  We at Golden Real Estate pride ourselves on superior marketing, including HDR photos and narrated video tours of every listing.  We’re always on the lookout for new ways to add value for our sellers, whether it’s a free moving truck, solar lighting on our yard signs, or better internet marketing ideas.

#5 — Availability of listing agent.  That company famous for offering only $3,000 to buyers’ agents is closed on Sundays and says in the remarks seen by buyers’ agents “No Sunday deadlines.”  No agent name or phone number appears on their listings.  (Make sure your agent discloses his/her cell number on MLS and sign.)

[End of column as published in the Denver Post's YourHub section]

#6 -- Home is hard to show.  I wish every agent and brokerage would use Centralized Showing Service, but they don't.  Some brokerages still set the showings for their agents, which is okay, but they're not open 7 days a week from 8 a.m. to 9 p.m. like Centralized Showing.  (After those hours, agents can set showings on CSS's website.)  Worst of all is when the agent saves money by posting his or her own phone number -- or the seller's phone number -- for setting showings.  Imagine getting voicemail or a busy signal when you're trying to set a showing for 1 p.m. and it's noon and you have no idea when the call will be returned or the agent will answer his or her phone!  Ugh!

#7 -- Home reeks of cigarette smoke.  Enough said. Buyers turn around and leave as soon as they open the door.

#8 -- Tenant.  My latest failed listing was because a tenant's lease doesn't expire for 7 more months and he/she will not vacate early.  An owner-occupant can't get a loan when he can't live there within 60 days.  In such a case you have to get an investor loan which typically has a higher interest rate and higher down payment requirement.  If the tenant is month-to-month, it's easier, but if the tenant doesn't want to see the house sell, he or she can do all sorts of things to scare off buyers.

#9 -- Location, location, location.  I've found that remoteness makes a home hard to sell. With today's high gas prices, it can get really expensive to live far up a canyon or out in the plains. 

What are your reasons?  If you would like to add to this list, use the comment section below to offer additional reasons that some homes don't sell.

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