What Really Sells a Home?

Chances are sellers are not going to like this article.

The number one thing that contributes to the sale of a home, in any market, is the price of the property.  That’s it.

Location, features, benefits…all of those have a price tag.  What that means is, if I had a dump of a house in a dump of a location, it would sell if the price was low enough.

That being said, what’s low enough for a buyer to want to buy may not, in fact, be low enough for a seller to want to, or be able to sell.  Yes, that was simple economics at it’s best and it lends to explaining much of what has gone on the last few years…the price a seller would/could sell a house for far exceeded the price a buyer would (and sometimes could) pay for the house.

Now, let’s get back to the reason you, and most sellers, might not like this article.

I always want to get as much money as possible for my sellers, and do my absolute best to make that happen.  But just because a seller WANTS a certain price doesn’t mean they’ll get it, or, in most cases, that it’s even realistic.  I’m sorry if the seller paid $400,000 and owes $350,000.  If the comps say it’s worth $275,000 then that’s what it’s worth.  Listing it at $400,000 so the seller can feel like they broke even does NOT mean the home is WORTH $400,000.  Nor does it mean they will get anywhere near that.  In fact, in my example, with it being so far overpriced, if there isn’t a significant price reduction, the house likely won’t sell at all.  How is that protecting the seller?

The only true test of what a home is worth is what a ready, willing, and ABLE buyer is willing to pay…not what the listing agent or the seller thinks its worth.

Agents who sell a lot of homes know how to SELL, and know that their job is to SELL the home for the most money possible.  Agents who don’t sell a lot of homes typically aren’t good salespeople, don’t actively prospect for buyers and sellers and think their job is not as a real estate SALESperson, but rather a real estate MARKETINGperson. I sell a lot of homes!

Simply put, I can market a house to the hilt, but it will NOT sell if the buying public thinks it’s overpriced.  In fact, today’s shrewd buyer who combs the internet and does their homework, won’t even look at home that they feel is overpriced; unless they think they can get a tremendous low-ball deal. 

So, let’s investigate some of these marketing ideas:

Staging - Staging is one of those tools that doesn’t sell a house.  Yes, the house should always look its best.  And, yes, if you stage a house, it will look better than the competition.  BUT…staging only works better to sell your house versus the competition if the home is priced competitively.  Let’s say you’re in a development, and two identical houses on the same street are for sale.  One is for $350,000 and NOT staged.  The other is for $425,000 and is staged.  The seller or agent who paid for staging of the $425,000 house doesn’t know anything about sales or economics and wasted their money.  No amount of staging in the world can trick a buyer into grossly overpaying for a house.

Open houses - This is the biggest real estate scam ever perpetuated on sellers.  And the funny thing is, many sellers will fight tooth and nail for the right to leave their house for multiple weekends in a row so that you an agent park themselves there for 4-6 hours at a time and put balloons out front.

Broker opens -   It’s usually not worth doing a broker open until well into the listing term, and is most effective to get a price reduction for the seller by having the agents write their pricing opinions on a survey card (darn, there’s that pricing thing again).  And here’s the fundamental flaw - top agents, you know the one’s doing 90% of the business, are typically too busy to stop at broker opens.  So you’re exposing the property to a handful of agents who have nothing better to do than to eat a free lunch.  Look, I know I’m sounding harsh, but my big concern is that many agents think their job duties entail hosting and going to things like broker open houses and working on making a pretty brochure…things that DON’T help sell a home.

Advertising - Here’s another scam on the seller.  NAR reports a very small percentage of homes are sold as a result of being advertised.  I will admit they also report a slightly higher percentage of homes are sold as a result of the buyer calling in on a different home, so advertising can help (but the home still has to be priced right).  For the sake of this article however, I want to stick to the specific house you have listed, and I’m talking about advertising over and above the norm.  I mean the type of advertising where the agent thinks it’s the solution to why the home hasn’t sold in the last 90 days.  We all know that every agent does some form of advertising, whether it’s the MLS itself, the various websites that agents/companies have, the websites that pick up listings from the MLS, or the newspaper ads an agents company provides.

Here’s the flaw:  If your local grocery store paid for circular ads in your town’s Sunday paper, and advertised premium, no-filler, turkey lunchmeat at $50 a pound, how many people would buy it?  The answer is nobody.  Two things would happen.  People might still visit that store, but they would buy another brand of turkey lunchmeat (congratulations, you’re overpriced turkey ad sold the competition), or people will go to another store all together to buy that brand at its normal price.  In any case, the store could have spent millions of dollars on ads all over the place and it wouldn’t matter a lick in regards to the sale of that brand of turkey.

Yet sellers and agents all think that more advertising will equal a sold home.

The bottom line is that my job as a listing agent is to educate the seller and list the house at a price that will cause the home to sell.  I am willing to say “no” to the seller, and walk away from listing the home if they insist on overpricing it.

You’ll be doing yourself a huge favor, I promise you.  Even if another agent lists the property at an overinflated price, don’t worry, it’s not going to sell.  Look at your market.  Look at any market. 

The bottom line..Overpriced listings don’t sell. 
Why do you think there are so many listing that expire?