Wondering Why Your Property Hasn't Sold?
by Wayne Chaulk
After 22 years as a Realtor handling all sizes and types of properties I think I have experienced most of the possibilities that occur or don't occur during the selling and buying process. Over the years I have evaluated many properties that I have not been chosen to list (usually because of my pricing recommendations) but I have noticed in following their progress on the market that in most instances the property eventually sold near my pricing recommendation. Certainly frustrating for me with lost business. But this historical information always reinforced my need to advise people of correct pricing.
For sellers it is all about selling their home and hopefully getting top dollar as well as selling it reasonably quickly - right? Well that opens the debate. To sell at top dollar and quickly assumes several things are present to the process: the home and property is prepared and presented as well as possible; the home doesn't have design/layout flaws or location challenges; the current market climate in an area is good and will help facilitate a sale; there are active buyers for such a property; the marketing is effective; and that the pricing is in fact correct for the particular property relative to any competition. Assuming the other areas noted are present, pricing is still 'king' in my books.
According to past CREB (Calgary Real Estate Board) statistics, up to 30 - 40% of properties that go to market do not sell during the first listing process! Often that has to do with pricing being too high as sellers want to "test" the market and try and fetch maximum dollars based on needs and using an unrealistic price, and agents want to capture listings they are interviewed for, therefore listing at the higher number the seller wants to get the listing and both then hope for the best. How many times have people seen properties go through 2 or 3 agents or more and the last agent sells the place! This is hard on the sellers and the previous agents who do work and get nothing for their work. It seems illogical to go through the pain of a long drawn out multiple listing process, but it happens if pricing is wrong.
Sometimes listings do sell efficiently. Usually all things are working together and the property is in a price range where there is good demand in both high and low markets such as the city $375 to $475K price bracket and country $700 to $950K range. But particularly for higher end properties, luxury homes, many acreages, land and city homes in the higher range pricing can be a big issue. Statistics also show how demand drops off after the first 2 - 5 weeks of a new listing when interest is highest and even further during subsequent weeks and months that it lingers on the market. Sellers can get 10 to 15% less the longer a listing stays on the market beyond average days on the market.
If your agent has done his or her homework preparing a CMA (comparative market analysis) and recommends a 'correct market price', why go higher and reduce effectiveness? This year alone I have watched several large and some smaller acreages and luxury homes finally sell out at 20 to 30% below the starting list price, some lingering on the market for a year or two and longer with multiple price reductions. We know the market is slower, but is not a desperate market, and yet those numbers are alarming. When there are multiple price reductions that often indicates no response at the higher start price. I am also now seeing some auctions (new to our market) resulting in sales 25 - 50% below initial MLS list price in a couple cases! I suspect these owners wished they started at a more correct list price from Day One on MLS before moving to an auction option!!
All that to be said, If your home has some issues (e.g. very low well rate, roof needs major work, land surface has water issues, windows and exterior needs work or other significant home or property issues) these factors will affect a sale. You can't expect buyers to pay top dollar if they have to do major work or accept a property issue when they take over, so adjust expectations accordingly if there are challenges to your property.
So my message is really to take your time to research and set your price, be more realistic, give more credence to sales statistics and reputable agent suggestions, and you will improve the chances of selling close to a more market -friendly price. Everybody will win then through a spirit of compromise. Buyers and their agents will usually be more cooperative when pricing is correct, you should get more showings, experience less 'low ball' attempts, and there should be a general speeding up of the sale process.
And finally, beware of the naysayers, those colleagues, friends and family who say to owners who sell at close to list price and quickly: "It sold fast because it was priced too low"! On the contrary, It likely sold fast because it was priced properly, presented well and thus elicited market response.