Why Your Home Doesn't Sell

The time has come, someone must tell you the truth on why your house isn’t selling and I guess it will have to be me.  I know you did your homework, talked with several real estate agents and made your choice of the agent who will do the best job at selling your home.  Maybe you read all those books on how to sell your home in less than a week or selling your home to the ignorant and thought to yourself; anyone can sell a house”.  Your house has been posted on several bulletin boards online, you placed ads in the newspaper and the only inquiries you received was from agents trying to get you to list with them or the old tire kickers just being nosy; now what?  You watch reality TV shows with people going around with glamorous agents, looking at homes and watch happy buyers making offers on houses. You can’t believe the kind of offers being made on those properties, when yours is so much nicer, (in your opinion).  Your home has been on the market for a long time and not one qualified buyer even looked at your home, let alone have an offer being presented.  What’s funny, your house is nicer than all the other homes in the neighborhood and it definitely should sell for more than the other homes, (or so you think). You may have listed it with a very successful agent; so why can’t the other agents see your house demands a higher price?  The flyer box is constantly being replenished, yet your home hasn’t been showed once by any agent.  You lowered the price several times and still, not one showing; and you ask yourself, why can’t I sell my house?

Let me break it down for you; do you know what sells a home?  The price is what sells your home.  I know you and your agent took lots of photographs, posted the information on every available web site, third party websites, which is blasted out to other national web sites and here lies the problem. People are looking on the internet and they look at the estimated value placed upon your home, by an entity that has never been inside your home or in your community; so where did they get their price from?  Your home is not worth more than the other homes in your neighborhood.  If you have the nicest home in the neighborhood, you are in a bad situation, because the homes around you set the selling price.  If you still believe your house should bring a higher selling price than your neighbors; then read onward.

 I’m sure you know more about your neighborhood than I do and you have to separate your emotions from reality.  I teach people how to buy with math, not emotions, and yes, buying a home is a very emotional purchase for almost every buyer.  For me, as an investor, contractor and Realtor; I have to look at the reality of your neighborhood, if I bring an offer acceptable to you and you accept it; will your home appraise?  That is the bottom line.  I am reluctant taking overpriced listings, and if I do, there will be an agreement to start systematically reducing the price to a level where it starts gaining attention.  So now let’s assume is priced right and there is still problems gaining attention.  Now we can get to the meat of this pamphlet.  My information will be based upon the median priced home for the average home buyers or the average sale in your community.

What’s Happening in Your Neighborhood?

Where does your home stand among the short sales and foreclosures within your neighborhood or community?  Have you toured other homes in your neighborhood or neighborhoods to see how your home compares or looked at new homes for price comparison?  Has your agent toured homes in your neighborhood to compare your house to the others?  What does the third party website estimate the value of the surrounding home to be?  Are investors buying in your neighborhood and creating a rental climate?

 

Short sales are bringing values down in many neighborhoods as well as foreclosures sitting idle and not maintained for months or years.  Vandals seem to scour neighborhoods seeking opportunity to strip condensing units, aluminum, copper and appliances from vacant short sale or foreclosed properties. When vandalism or theft is reported, a police report is initiated and now your neighborhood has an increased crime rating.  Many people, in the short sale mental, decide not to keep up with the deferred maintenance and the curb appeal for an entire neighborhood will diminish. When buyers drive through neighborhoods and see this, their impression often is; neighborhood values are decreasing.  Many buyers will just turn around and find a better maintained neighborhood or newer subdivision to drive through. 

I am not going to discredit the investors for buying low, creating positive cash flow for their future.  I'm an investor and I have always held our properties to a higher standard.  I have also flipped homes and created increased values for the neighborhood, but I am an exception to most investors.  With a buy to hold investor; they are looking for positive cash flow for five to seven years and when they see or feel the market about to turn, they will improve the property for a quick sale.  So, meanwhile, you may be stuck next to an investor property which will only be maintained to a minimum standard, if at all.  So how do you resolve living next to an investment property?  Fencing and or lower the price of your home to meet the value of the neighborhood.

Pictures tell the Story

Pictures tell a story of your home. If your home is twenty-five years old, it may be too outdated for the buyers of today, even though it may be maliciously maintained.  Over fifty percent of the homes being sold in our market are first time home buyers.  They are between 25-34 years old. They want energy efficiency, new appliances, new cabinets, granite counter tops, walk-in closets, smaller yards and limited landscaping and maintenance.  What do the photos of your home show?

The old flat panel wooden doors that are stained, showing the veneer wood grain is not what the buyers of today want to see.  Formica cabinets and counter tops were popular twenty-five years ago, (and I know it was good enough for you when you bought it), buyers don’t want it.  Wall to wall carpet throughout is another detractor.  Common areas with tile or wood floors are what is in demand.  If you have different types of tile butting up to one another, that is another detractor.  Laminate flooring that has been mopped or over exposed to high humidity will have slightly exposed seams and is a huge detractor for buyers.  Old style ceiling fans with tulip globes are not in demand and when the pictures show them, the first thing that pops into a buyers head is; we’ll have to replace that immediatly.  Do you have blue or pink carpet? What color are the rooms in your home?  If your home isn’t neutral, buyers have other choices from sellers who chose to neutralize their home.  Many homeowners are very proud of their décor but many buyers will turn their nose up at it. 

Do you have a pristine and over landscaped lawn? Many first time buyers don’t want to spend every weekend working in the yard or want to spend the extra money maintaining the lawn.  What color is your house or does it show how much maintenance will have to be done to maintain the home?  Yes, what was top dollar twenty-five years ago is now resting quietly in homes that are not selling or in the landfills from homeowners who chose to upgrade after buying their house at bargain basement prices.

Do You Upgrade or Lower the Price

Take a look at other similar priced homes, see if they are updated. Compare what a new home sells for and start subtracting the remodeling cost for your home.  All the estimates are based on a typical 1600 square foot, heated and cooled area with a 400 square foot garage. (Prices are estimated and could be higher or lower depending on quality of product, workmanship and your community)

Older roofs may appear sound but only have a total lifespan, in Florida, of 15-20 years.  To replace a roof on a median size home is around $6500.  To give you an idea of how to estimate the cost and the square footage of your roof; take the total square footage under roof and multiply it by 1.25.  Divide that figure by 100 and round that figure to the next whole number.  That will give you an estimate of how many squares of shingles it will take to roof your house.  The cost to replace your roof differs from location but a good figure to use is $285-$350 per square to remove the existing shingles and install new shingles.

Kitchen cabinets tend to fade and wear out.  Many home are built with composite material with a picture or thin wood veneer over top the composite material.  As the cabinets age and are exposed to humidity, they start to deteriorate.  Screws seem to back out, drawers start to fall apart and the rails break from the load or overuse.  Splash-blocks near the sink start to expand and cause ugly gaps along the finished edge of the counter.  Some granite tops may have had a hot pot placed upon them and caused colored rings to appear or someone used the counter top as a cutting board and deep scratches are evident.   Contractor grade appliances, typically, are not energy efficient and don’t have a very long lifespan.  Even without installing granite counter tops, you can expect to pay $15,000-$20,000 for a kitchen upgrade with appliances. So do you upgrade or lower the price?  Do not expect to get a dollar for dollar return on kitchen upgrades.

Bathrooms are a key selling point and if yours has not been upgraded, has green or gold fixtures, it’s time to upgrade.  You can expect to pay around $8500-$12,000 to change fixtures, upgrade plumbing valves, change tile, lighting and install a good ventilation fan to code.  We know you don’t need a fan in a bathroom if there is a window but how many people actually open their bathroom window to ventilate the moisture out?  Those old light bars with the old incandescent light bulbs are a thing of the past and the buyers of today want modern and energy efficient.  You may not have to remove the old tile if it’s in good condition, you can save around 40% by having your tub and tile re-glazed by a professional.  Do you still have wallpaper on your walls? Guess what, today's buyers hate it!

Carpet and flooring has a life expectancy of five years and if your home has ceramic tile over 15 years; it’s probably out of date and worn.  A minimum cost to take up the flooring and install new vinyl and carpet, $9000-$14000.  Here’s a quick formula to determine the cost of flooring replacement; take the number of square feet and multiply it by 1.05. Take that figure and multiply it by $9.  Keep in mind, $9 per square foot is contractor grade basic flooring, (bottom end), and many buyers are attuned to what contractor grade is.

If you have different color paint schemes, you can figure the home will need to be repainted inside and out, (nobody buys pink, purple, red or blue houses). If you have wall paper anywhere; get rid of it and figure having the wall finished to match the current texture of your walls.  If you have walls that are just taped and sanded, you’ll be fine but if you have any type of texture, expect a different finish which causes buyers to turn their nose.  A painting bid of $4500 would be a reasonable bid for interior and another $3000 for the exterior painting for the median house. If you paining over dark colors, several coats will have to be applied and the cost to paint increases dramatically.

If the HVAC system is original, it probably not very energy efficient or on it's last legs and will need to be replaced with a new unit, with a minimum 13 SEER, figure $4500 for a new system. If the lines in the attic have collapsed or are not sealed, the cost will increase significantly.  Buyers are asking for copies of utility bills during the inspection period and depending on how you monitor your utilities could mean the difference between selling your home and putting it back on the market after a buyer backs out of the offer.

Electrical upgrades with hard wired smoke detectors, GFCI’s, arc-fault outlets for the bedrooms and new lighting fixtures, $3600.  Most home inspectors are calling for upgrades and if you were to change from a gas HVAC system to total electric heat pump, you could be looking for a complete upgrade.  Fixtures of twenty-five years ago do not fit into the modern fixture wanted by the current buyers. They may be in perfect condition but they are twenty-five years out of date.

Energy efficient windows and doors will save a homeowner hundreds of dollars a year and to change the single-pane aluminum windows, sliding glass doors and install a good insulated fiberglass exterior doors, $8000.  If you have insulated windows and doors but have fogged panes, the cost to replace them will put an inconvenience upon you or the buyer.  In some instances, it can take up to a week to order in and replace the panel.  Do all the window ballast work properly, do they seal properly and lock?  Do you have all the screens and do they fit properly? Please keep in mind, little things that may not bother you may be significant to your buyer. 

Insulation code 25 years was R-19 and an energy efficient attic should have an R-30 insulation rating and to blow in additional insulation, you can figure $800-$1200.  This is an area many people do not understand when blowing in insulation as a D-I-Y project. The area where the trusses or joist meet the top plate, needs to be clear so the attic will ventilate.  If you have restricted airflow, excessive heat will build-up, causing mildew inside your home, shingles will break down and lose their seal, decking begins to rot. These are just a few items or ideas to bring to your attention.  If you plan on blowing insulation into your attic, make sure baffles are installed to keep air flow through the attic.

Why Doesn’t Anyone Show my Home?

How available is your home for showing?  Do agents have to make an appointment to see your home? There are many other homes available which appointments aren’t necessary, so you may be missing out.  Does the listing say; “owner must be present to show”?  Do you have pets and have to be notified before showing, for you to store or remove your pet or making notice of your pet being secured in a specific room and not open the door?  Do you request specific times to have a showing?  Do you live in a gated community and the code is not available?

Many buyers drive through prospective communities, early in the morning with the hope to find a home that appears to meet their needs from the curb and the safety of their car, (without the pressure of a real estate agent). Once a home meets curb appeal, the next event often comes when the prospective buyer attempts to contact the listing agent.  When an agent finally returns their call or answers their phone, a request to see a home is made.  After a series of questions pass and the prospective buyers are often asked to come to an office to be qualified before showing and in the meantime, the agent attempts to contact the seller for an appointment.  Weekends are weekends and people still have lives to live, other than attempting to sell their home, and often time the house is not ready to show or the owners did not answer their phone and the home was not available to be shown.  The buyer arrives at the agent's office, gets qualified and because other homes are available, the agent finds a couple other homes which seems to meet the buyers' needs, they make an offer and the deal is closed.  Because your home requires an appointment, you lost an opportunity to have qualified buyers look at your home.

  Nothing is more annoying to buyers and agents, who want to view a home, and the owner wants to tell everything wonderful about their home.  It’s a quick walk through and get the heck out before they start negotiating price concessions.  Many people don’t want to see homes with pets or walk in a yard where there are pets.  You, as the seller, may not notice a pet odor, but others will notice the pet odor, regardless of how clean you are.  Nothing is worse than showing a property and while walking through the back yard, the prospective buyer steps on a natural landmine and spends the next 10 minutes with their shoe under a spigot with an often failed attempt to remove the stinky substance from the cracks in the sole.  The other nightmare is having a seller’s pet nip or attempt to hump a potential buyer’s leg with the seller apologizing comment; “I don’t understand, he never does that”.  The room where the pet is locked in, is often semi trashed and the potential buyer feels the seller is hiding something and often checks the house off their list. 

  It seems like a great idea to establish showing times but may not be convenient if a buyer wants to see other homes prior to yours.  Some may think; just schedule the showing to meet the sellers need”.  I’m sorry, there are many other properties and if it fits our schedule, then it get shown, if it’s a time consuming process, sorry, we’ll pass.  Remember, we are attempting to maximize the buyer’s opportunity within their time constraints, not the seller’s. 

  The last thing a buyer wants to do is drive to a gated community, only to find the code doesn’t work.  Often after several attempts to contact the listing agent to get the code or the sellers are unavailable to accept calls, I will just pass on the showing your home for a later date.

Why should you have to make your home not yours?

Is your home nicely cluttered?  Do you have a lot of furniture with walls covered with pictures and displays?  Are you proud of your accomplishments and display them on shelves and your walls?  Do you have specific political or religious affiliations displayed in your home?  Here’s a suggestion; clear it out; neutralize your home so people can vision their stuff.  Buyers need to envision their stuff in the rooms.  Your plaques and trophies may be a sign of pride for you, reality is; nobody else cares.  With every political environment, there is always a heated topic. Put the pictures of you, with your favorite politician away.  This sounds horrible but, you need to neutralize your religious beliefs.  There are still religious zealots out there who would turn their nose at someone’s home because of their beliefs.  Keep your home as a display and store your stuff off site.  Keep the minimum maintenance yard equipment available in the garage or storage area so not to scare those first time buyers away because of the amount of maintenance your home really requires. 

It’s your home, but please leave!

If you happen to have an agent make an appointment to see your home or advise you of a showing; leave.  Nothing is more annoying than have a homeowner try selling their property to a prospective buyer and waving off the selling agent.  You may have an emotional attachment to the house but let the potential buyers create their own opinions of the property.  Prospective buyers are not there to become your friend and very often, if an offer is made and inspections prove to find negotiable recessions in the price, buyers do not want an emotional attachment to the seller.  Don’t shadow the realtor or prospective buyers, you can almost guarantee they won’t make an offer.  Now you can probably figure out why For Sale by Owners get less for their property than listing with an agent.

Open up and let the Sun Shine in.

Do you have heavy blinds, curtains or both?  Open up and let the light shine in so a prospective buyer can see what’s there. People looking as they drive by will see a closed up house and are often reluctant to inquire about the home.  Get rid of the 20^th Century Drapes and sheers.  If the blinds are stained, steel, rusted and flaking, get rid of them.  Blinds are inexpensive and will show a more modern effect with the right window treatments.

First Opinion is a Lasting Opinion.

What does the yard look like?  Are the bushes trimmed and did the kids leave their toys and bikes scattered about.  If the yard looks cluttered, chances are the interior looks the same.  Yes, little things that are normal to you may cause a prospective buyer to drive on by to the next property.  What color is your house?  You may love the color and all your friends told you how wonderful it looks. Truth is, they are your friends and they don’t want to hurt your feelings.  If you have a purple, bright yellow, lime green, hot pink or any other not normal color coating your house, truth is, you may like it but reality is, it's not going to help you sell your home.  It doesn’t matter what the interior looks like, if potential buyers can’t get past the exterior decor. Find soft contrasting colors with the body painted with a satin finish and the trim with a semi-gloss and paint your house.  Only thing worse than a bright paint job is a paint job that is faded out and flaking.  Paint is the cheapest way to increase the value and marketability of your home.  Good preparation of the body is essential, make sure gaps are caulked loose paint is scraped away and raw wood is primed before applying the finish coat.  Never paint over grass, insect nests or dirt and expect prospective buyers won’t see it.  Don’t worry, the inspector will and once an inspector finds poor maintenance practice, they will start looking closer.  I know, I have done hundreds of inspections.  If your yard has dead spots, cut the area out and re-sod the area or re-seed the area so it appears healthy.  If you haven’t fed your yard in a while, apply some weed and feed fertilizer and water as much as needed.  If you have dead or overgrown landscaping, remove it and plant appropriate plants to accent your home.  Keep the yard mowed, toys and clutter away from the street view.  If you have small children, give them another place to chalk draw other than the front drive or sidewalks.  It may be cute to some but detracting for many.  Insure you have a clean driveway, free of oil-spots and if you have an automotive project, put it in the garage or move it to another location.  The main focus should be that valuable first impression and the desire of the potential buyers to pick up the phone to want to see the inside and hopefully make a reasonable offer.  If you follow these few step, you will have less negotiations and concessions to make when it comes to negotiating the final contract.

Can’t Afford to Sell?

I do not give legal advice, I’m not an attorney but I can pass information to you that I have experienced that I will share with you.  You do have several choices; straight sale, short sale or foreclosure. If you can afford to sell the home out right but may walk away with limited cash or even go to closing with your checkbook to pay the difference between what you owe and what the sale price is, do it. If your credit is important, pay the difference and start clean somewhere else. 

If you can’t afford to pay the difference, you may need to short sale?  You may not have a choice, depending when you bought the home, you may be so far upside down in value that it may take five to ten years to break even.  The real question is; where do you need to go and when do you need to be there?  Remember this, in a short sale, you don’t pay the agents commission, the lender does. Make sure you work with an experienced agent who has extensive experience with short sales.  A rookie may have good intentions but can cost you a lot of time and frustration.  Just because you find yourself in a hard spot, don’t expect people to be sympathetic to your situation or settle on what you settled on when you bought the home.  Times have changed, buyers are changing and believe me; financing has changed.  Take a serious look, make an honest comparison and decide what the true, real market value is, from an honest, hardworking agent. Keep in mind, you may accept an offer from a potential buyer as a short sale, but the lender doesn’t have to accept the offer.  Short sales are not named for taking a short time for the transaction to close, it has to do with the sale being closed short of the amount owed.  We have had short sales close in as little as six weeks from a local lender to over three years from a major lender.  I suggest you be patient and hope for the best and start planning what it will feel like when you get to start fresh. 

Sometimes lenders don’t cooperate with other lenders which leaves you little option other than foreclosure.  I encourage you to speak with all your creditors as well as a financial counselor as well as an attorney before going down that road.

 

Final statements

 If after reading this, you still believe you can sell your home for more than the rest of the neighborhood and do, I want you to join our real estate firm, you’ll make a fortune in the real estate business.  Real estate has changed back to where it was before the madness of 2002-2007.  I have given you the insights from an Investor, contractor and Realtors opinion, with over thirty years of buying and selling real estate as an Investor all over the US.  I wrote this piece to be in your face about the reality of the real estate market. Many publications soft sell the notions of trying to sell your home and the snake oil salesmen are out there trying to make a quick buck from your inexperience and ignorance, to sucker you into a scheme that will do nothing more than remove large amounts of cash from your bank account.  If you want to pay a real estate agent a flat fee, with no representation, to list your house on MLS, chances are, I won’t show your house.  I find it difficult dealing with people who don’t understand the legalities of a real estate transaction or the responsibilities of disclosure.  If I have to make an appointment to show you home, chances are, your home will be last on the list.  If you have an overpriced listing, I’m not going to waste my potential buyer’s time as well as my own to show your overpriced listing and I will provide a market analysis as well as a cash flow analysis of the property to prove my point, (but if they actually fell in love with your overpriced home, who am I to keep they away from it).  If you have pets, I’m going to warn my customers ahead of time and if they still choose to see your home, it too will be last.  When I work with investors and buyers, I give them a contractor’s cheat sheet to evaluate the cost of remodel and if your home is out of date and needs future major repairs, it will reflect in their offer based upon my cheat sheet.

  Despite what you hear on TV, read in the paper or other published media of “How Hot the Real Estate Market is”, If your home is not priced right, in a prime location and is not in top condition, it will linger on the market.  Real estate is a commodity and like the stock market, it has its ups and downs.  You will either buy smart or follow the path of many who get stuck with an overpriced investment you can’t sell when you need to.  Appreciation rates differ in every community and you can possibly gain 2-4% appreciation on a median priced neighborhood. The cost to sell your home ranges from 4-10% and the average cost of maintenance is 2% per year.  If you do the math, you should be able to figure out what the real value of your home is and determine your profit over the time you owned your home.  Just because you put a $30,000 pool in your back yard, spent $25,000 for walnut cabinets with #4 granite counter tops doesn’t mean your house is worth $55,000 more than what you paid for it.  It might make it more marketable for those who want those things.  You may also be limiting your market for the people who don’t want to maintain a pool or for those who don’t cook.  Take a look at an appraisal form and see where it shows the value of an improvement; it doesn’t.  It does have an area to post a comment of; over-built for the neighborhood or over-improved. If you bought in the buying frenzy of 2002-2007, you know what you have to do to sell your home and just like trading in the stock market; you just have to accept a beating from time to time.  I have often told people; “your home is not an investment, it’s where you live”.  Make your home as comfortable for you as you want, decorate it the way you want and spend as much as you want to make it your home.  Just don’t expect the buying public to repay you for your pleasure.

About the Author

Terry Martin-Back is a State Certified General Contractor, Real Estate Broker and Co-owner of the Exit Realty Producers franchise in Gainesville, Florida with his wife Debra, who is the Broker of Record.

Terry is a combat veteran of Operation Desert Storm and spent 20 years in the military, traveling across the US and buying homes instead of living in base housing.  Terry and Debra started investing and flipping real estate from their very beginnings and have over 30 years’ experience of real estate investment.  They have developed a real estate investment group called “Invest Gainesville”, where they teach the public how to invest in real estate the right way. Terry is a public speaker and a member of the National Speakers Association, He is an author as well as an active member of the Alachua County Florida Community.  He was appointed by the County Commission to the Alachua County Codes Enforcement Board as well as the Alachua County Veterans advisory Board were he served for six years.