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Experienced agents — confronted with a home that is not selling as quickly as anticipated — usually have a good understanding as to why.
New agents, however, are often baffled by homes that languish on the market and have no idea what to do to get it into contract. Here is our recommended 12-point checklist to identify potential issues:
1. Price
Let’s get the obvious out of the way first. The old adage “Everything has a price at which it will sell” is true. Unfortunately, that price may be lower than some sellers are willing to go, resulting in a property that will sit for ages.
Q: How does the price of this home compare to other comparable properties currently on the market?
2. Location
Again, obvious. Some homes are simply in locations perceived by buyers as “bad.”
As an example, those who ascribe to feng shui principles will typically not want a home at a T-intersection due to the belief that negative energy travels towards the home in the vehicles that come towards it at speed. Homes that are on the glide path of a major airport can also be more difficult to sell, along with those that back up to freeways, are close to high-tension power lines, hospitals, industrial locations and more.
Some may be unfortunate to have the world’s worst tenant living next door, with a rusted hulk of a car centered in the front yard partially hidden by weeds that haven’t seen a lawn mower or weedwhacker for years.
Q: Is there anything about the location of the home that might make it less desirable than other comparable homes that have recently gone pending? Has the “issue” been factored into the price?
3. Obsolescence
At its core, obsolescence is defined as “the process of becoming obsolete or the condition of being nearly obsolete.” In reality, every home ever built suffers from some degree of obsolescence due to new trends, changing tastes and external factors such as the economy, disasters or even aspects of global warming. There are two major categories of residential obsolescence:
4. Functional obsolescence
As defined by Investopedia, functional obsolescence is a reduction of an object’s usefulness or desirability because of an outdated design feature that cannot be easily changed.
As an example, many homes built immediately after WW2 had one primary goal: provide opportunities for returning veterans to buy a starter home at a relatively low cost. As a result, entire suburban communities were created where large numbers of homes were placed on small lots, featured small rooms, only one bathroom, a one-car garage and differed primarily in their façades.
As tastes have evolved over the years, the small rooms have grown out of fashion and today’s buyers want larger, open spaces. Expanded wardrobes dictate larger closets. Multicar families need multiple-car garages. Due to the physical constraints of these types of properties, newer homes are now built with larger bedrooms, including bigger closets, open areas such as great rooms and so on.
Given the opportunity, today’s buyers will frequently bypass older types of homes in lieu of those with more modern amenities and overall appeal.
There are two categories:
- Temporary (ephemeral): A good example would be older neighborhoods located near downtown cores that were, in the past, overlooked because of their age, lack of certain amenities and historical design. As urban renewal occurs, however, these homes, once disdained, once again become attractive to a new generation of buyers. Unfortunately, many of these areas, having fallen victim to urban blight and can be difficult areas in which to sell until renewal begins on a scale large enough to overcome the negatives.
- Permanent (structural): An example would be when the cost of upgrading an older property to current standards exceeds the potential return, causing buyers to look for newer homes instead. As an example, buyers looking to buy a home with a minimum of two full bathrooms would potentially not consider a one-bathroom property due to the physical limitations or projected costs to add another room. Another example would be the expenses related to replacing knob and tube wiring in an older home with a modern electrical system along with the fact that in states like California, it is virtually impossible to get home insurance for properties that have existing knob and tube wiring.
5. External
ExcelAppraise states, “In real estate, external obsolescence is the loss of value (or depreciation) over time resulting from external or functional factors.” Examples they provide are:
- Changes in fashion and style — A house that was once state-of-the-art and popular might now be considered outdated.
- Poor site location — An ideal house on the best block might be worth less than a dump on the main street.
- Inferior construction materials — A house that is poorly built, using poor quality and/or outdated materials, will have a lower value.
- Expensive repairs — Some houses need more repairs than others. If the cost of maintaining a property is higher, then its value will be lower due to the “cost” factor.
- Changes in technology — A house that has no smart or energy-conserving features could be less appealing than other homes with solar panels, storage batteries, security enhancements, home automation or other smart systems.
Q: Since every home has some degree of obsolescence, what are the obsolescence factors in this home and how might they be affecting the home’s desirability?
6. Condition
With the price of homes soaring beyond common sense, buyers, faced with putting every dime they have into simply getting a home into contract, seldom have additional funds to fix up a home after they move in. As a result, more and more buyers are looking for turnkey properties.
While there are still some out there looking for fixers, they are typically only willing to buy at substantial discounts. This means that those who are trying to sell homes that have serious condition issues need to be priced accordingly. Unfortunately, not all sellers understand this and try to list closer to a market value that’s appropriate for homes that are move-in ready.
Q: Are there any condition factors that could potentially turn off buyers?
7. Overimproved
We have all seen them — a McMansion in a neighborhood of -1,000 sq/ft homes. While it may have fit the needs of the owners while they lived there, they cannot hope to get the entire value back out when it is time to sell. This is not just an issue of dramatically more square footage than surrounding homes; it also applies to the level of upgrades in the interior. Homeowners who have installed significantly upscale interiors in a modest neighborhood cannot expect to get a full return on their investment.
Q: Has this property been over-improved in any way?
8. Odors
Dogs and cats, foods like fried fish, cigarette or cigar smoke, dirty laundry, mold or mildew … all are examples of smells that turn buyers off the minute they enter the front door. Regardless of the source of the smell, unless it is remedied, buyers — assuming that remediation could be very expensive — will bow out as quickly as possible and move on.
Having personally purchased a home that had been smoked in for 40+ years, I am fully aware of the costs associated with eliminating obnoxious odors. Additionally, many staging companies are now pushing back and refusing to stage homes with odorific conditions, knowing that the smells will be absorbed by their furniture, making it impossible to use them again elsewhere.
Q: As you walk through the front door, how does the home smell? Can you identify any specific odors? Are there any parts of the home that smell worse?
9. Bizarre
In my decades of looking at homes, I have seen some pretty bizarre things. Just this morning I showed my wife a picture of an exterior remodel of a home on the market and her comments were, “What were they thinking?” followed by, “That’s unfortunate.” Some of the issues encountered over the years could be categorized as “cultural distinctives” — items or features homeowners from various other parts of the world have incorporated into their North American homes that do not resonate with American tastes or preferences — or features that are related to specific hobbies or interests.
Depending on how extensive the issue is, it could reduce the number of potential buyers from hundreds to a mere handful. We have seen entire rooms dedicated to elaborate temples, extensive grottos in the rear yard, fully commercial kitchens that are blatantly impractical for most homeowners, garages converted to all kinds of crazy things … the list goes on and on. This also applies to bizarre paint schemes: goth black or flaming orange bedrooms, purple exteriors with green trim and more.
Q: Is there anything bizarre or “out of the norm” for this property?
10. Unique
We recently sold a single-family home that had been converted to a residential care facility, then back to a “normal” residence, and then back to a care facility. It took months to sell, due in part to the fact that every bedroom had sliding glass doors and a wheelchair accessible ramp to the exterior.
Another example would include a modern cubist home located in an exclusively Victorian neighborhood, homes in re-purposed churches, isolated homes stuck in the middle of an industrial zone and so on.
Q: Is there anything that makes this home “different” than other homes currently on the market?
11. Presentation
Given that buyers will give a seller between 7 and 10 seconds to present their home, if the pictures that show up on a buyer’s mobile device do not look appealing enough, the buyer will simply swipe left and move on. Sellers who do not take adequate preparation seriously cannot expect to reap top dollar, even in an overheated market.
This can be as simple as a fresh coat of paint in and out, or it could mean upgrading kitchens, bathrooms or flooring, new windows, removing outdated curtains or other items, improving the landscaping, performing key repairs and more. In many parts of the country, this would also include staging the home to some degree
Q: Are there any aspects of the home that could be improved to present the home in the best possible light?
12. Curb appeal
This is essentially external presentation and is often overlooked by sellers who have driven up to the property so many times over the years they do not see the obvious. I have had buyers in my car who, as we have pulled up to a home, took a look around and stated, “Let’s skip this one.” Even though efforts may have been made inside a home, items left uncared for outside or a lack of thought put into curb appeal can prevent a potential buyer from crossing the threshold.
Q: What do I see when I drive up to the home that could be a detriment to a sale?
13. Marketing
After the price, marketing is the second most important factor when selling a home. While most people think of marketing as printing a few flyers and taking pictures that are then loaded into the local MLS, effective marketing is light years more than that. Here are the key components to developing an effective marketing plan:
- Property analysis: It begins with a detailed analysis of the home followed by an effective prep plan. This is so critical, teams like ours have a Transformation Specialist who goes in after the listing docs are signed and works with the seller to do identify the issues that may prevent an effective sale.
- Prep plan: Once the issues in the home have been identified, a transformation plan is developed to begin to address the issues. In our case, Our Transformation Specialist handles the entire process for our clients by overseeing any and all trades required to get the home ready. This, in markets such as ours, is coupled with obtaining upfront inspection reports so any potential issues can be resolved long before a home hits the market.
- Disclosure package: I understand that disclosures are not an issue in many parts of the country. In California, however, the required disclosures can easily exceed 100 pages and should be made readily available the moment the home hits the market, not once the home is in escrow. This takes a concerted effort to gather all the documentation up front, which can include mandatory disclosures, inspection reports, HOA disclosure packages and much more.
- Professional staging: While not cost effective in some markets, staging provides an environment in which potential buyers can view what the home could look like after they move in. Many buyers today cannot visualize effectively: staging helps them see the potential and, to be honest, builds emotional appeal. Since most buyers buy with their emotions, not logic, staging helps. If physical staging is not viable, consider virtual staging. Make sure, however, that you clearly identify the virtual views as ‘suggested views’ or something similar. You could also have the virtual staging pictures printed on large posterboards and placed on easels in each room so visitors can look at the pictures and the room simultaneously.
- Professional pictures: We have a “no cell phone pictures” policy on our team. No matter how good you may think you are, most agents cannot take professional quality pictures. Since these pictures will be the heart of your online presence, why take shortcuts? And by the way, not all ‘professionals’ take good pictures either – to find a good photographer, browse through other agent’s listings until you find pictures that sizzle – and then find out who took them. We also employ Matterport for 3D tours, floor plans and more (we’ve discovered that other virtual platforms in our market such as Zillow’s 3D product do not work as well). Depending on the price point, we also include drone shots and video.
- Property descriptions: Do not just list features – tell a story that galvanizes buyers into action. I have seen so many agents include property details in the descriptions that are already listed elsewhere (sq/ft, bedrooms, baths, etc.). SELL the unique features, location, amenities and the feelings that are generated when entering the home.
- Open houses: There are open houses where the agent sits on the couch and watches visitors interrupt the football game … and then there are agents who understand how critical effective open houses can be and work them to the max.
- Social media: Every listing should be on social media in some way. Do not underestimate the power of social media to get your listing in front of those who may not see it otherwise.
- Printed ads: Depending on the type of property, location and exclusiveness, printed media can be helpful.
- Networking events: These include Broker Marketing Meetings, inhouse office meetings, broadcasting information to local agents, agent networking websites and … getting on the phone and calling agents at large to network and let them know what is coming.
- Email blasts: These can go to agents but the most effective use is to your database. If you have taken the time to add needs and wants to your contact’s profiles, you can sort the data and send targeted emails to those who meet the criteria for your listing.
- Listing cards: These look like a business card and while they do have your information on one side, they have a QR code link to the subject property on the other side. Hand them out everywhere – including at Open Houses. The link should go to the property profile on your app so you can see who is looking at the property and capture their information to follow up.
- Postcards: These include Coming Soon, On The Market and, once closed, SOLD!
- Be creative! While these are many of the key steps involved in effective marketing, don’t stop there – the seller is paying you to ruthlessly market their home to maximize the sale. We have an active R&D department on our team (Rip off & Duplicate) – when we see another agent doing something we like, we grab the idea, tweak it as necessary and add it to our marketing toolkit.
Q: After reading the list of marketing strategies above, what is missing for your listing?
14. Inexperienced agent
While many or all of the items listed above are commonplace for experienced agents, new agents who do not have an effective support system or mentoring environment might miss any number of the things required to set the stage for an effective sale.
While seasoned agents know their market and, in many situations, instinctively know how to respond, in the case of new agents, they often don’t know what they don’t know, which can leave them guessing and providing advice that might not be germane. It might be time to put aside any pride and go get some help from seasoned agents with a stellar track record.
Q: At the end of the day, if you really do not know what to do to get the home sold, is it possible the actual reason it is not selling … is you?
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