Why Your Neighbor's House Isn't Selling
Have you noticed that homes have been sitting on the market for much longer than they were just a couple years ago? Perhaps you have noticed your neighbor’s for sale sign sitting in their front yard week after week. Gone are the days where homes were going under contract with multiple offers a mere handful of hours after hitting the market. This is because we have now shifted into a buyer’s market. Although your neighbor’s house may seem perfectly nice, if it is not currently the best value on the market, it will likely not go under contract quickly. In this blog post, I will break down why and what can be done about it.
In any kind of market and for any good or service, a majority of buyers are interested in purchasing a product that is the best value. In real estate, a home that is the best value is a home that is listed for its true market value and a home that makes the most of its potential presentation. Although many areas are experiencing a buyer’s market and homes are taking longer, on average, to go under contract, a home that buyers consider to be the best value will still go under contract quickly. And for sellers, this matters greatly because the longer their home sits on the market, the less potential profit a seller will make on the sale of their home.
In a strong sellers’ market (think end of 2020), the time that it took for a listed home that was the second or third or fourth best value to go under contract was quick! In today’s market, buyers know that they can take their time considering whether to submit an offer on all other homes but the one that is currently the best value. Buyers understand that their fellow buyers are also savvy and will still move quickly on the one listed home that is the best value.
Now, let’s break down “best value,” as it pertains to homes, a bit more. First, in order to be the house on the market that is the best value, a home must be listed at or below its true market value. Sellers need not worry, at least along the Front Range where demand for homes is strong, if they take the strategy of listing below their home’s true market value. The market will self-correct for a home that is priced low. This home will ultimately still sell for the maximum amount that the market will bear so long as it is listed on the open market.
As for the second component of what contributes to a listed home being the best value among other listed homes in the area, we must consider presentation. A home need not be the most high-end listing in an area to still be considered the best value. Certainly, a newer or nicer looking home will be listed for more than a neighbor’s house that is not as nice, but buyers are still able to distinguish which house is most worth their money and therefore worth submitting an offer on. Most buyers are still attracted to the home that is the best value; a home that offers them the best deal for their money.
Each home will vary in terms of its potential to make the most of presentation. When listing your home, it is important to stay mindful of recouping a positive return on your investment (ROI). One could absolutely gut and fully remodel their home and sell it for hundreds of thousands of dollars more than if they had not done the remodel. However, the difference between the sale price and the money invested will almost always be in the red for the average homeowner. If you would like help knowing which kinds of projects are most likely to lead to a positive ROI, I encourage you to watch this video. I spend a lot of time breaking down multiple scenarios and providing insight on how to approach potential updates.
In nearly every scenario, it will make sense to spend a certain amount of time optimizing your home’s potential presentation. If you have an agent with a background in interior design and construction like me, I encourage you to make use of their expertise to figure out what to minimize, how to optimize your furniture layout, and what to update or neutralize to appeal to the widest audience possible. There are plenty of projects that will not be worth your money or time and yet there are many key changes such as rearranging a room layout, minimizing unnecessary furniture in your home, or updating a porch light and refreshing the paint on a front door (the kinds of projects I regularly take on for my sellers!) that will make a world of difference when it comes to the buyer’s perception of the true value of your home.
In conclusion, in a buyer’s market, only the home that buyers perceive to be the best value will go under contract quickly. While other homes take time to go under contract, those sellers will lose on their total potential profit due to extra time paying bills and mortgages and sometimes buyers stigmatizing a property because it fails to go under contract quickly. In order to have your home be considered the best value when you hit the market in your area, your home must be priced no higher than its true market value and you must make the most of your home’s potential presentation.
To achieve this, I strongly encourage you to work with a real estate agent who will help you do both. As a former economics teacher and data analyst, I am excellent at scrutinizing the market data to help us arrive at list price that will reflect the true market value of your home at any point in time. As an interior designer for the past decade, I know how to make the most of furniture layouts so your home appears as functional and as inviting as possible. I know which updates will appeal to the widest buyer pool as possible and which will not lead to a positive ROI. And as an avid DIY’er who has built and remodeled homes, I am the kind of agent that regularly rolls up my sleeves and helps my clients take the extra step to make their home show ready. Whether it is installing new door hardware, painting a tired vanity, replacing a broken porch step, or planting some flowers by the front door, I have done all of this and much, much more.
I hope this article helps you take a more critical look at what it takes to sell your home for its highest potential profit in this buyers’ market. If you are thinking of listing in the near future and live along the Front Range and would like to discuss these strategies to selling your home, you are welcome to get on my calendar and we can talk over Zoom about what steps would be most beneficial for you. Either way, I wish you the very best in selling your home!
Katie
