We’ve had a very healthy spring market in the Washington area. Of course, some areas are faring better than others, and pockets in the District and in some of the nearby suburbs are seeing multiple offers and homes selling for more than list price.
By almost every measure, this is a seller’s market. And in a seller’s market, everything sells — right?
Well, not exactly. Despite a strong spring market, there are still plenty of properties that have not sold, and there are three market indicators that can help explain why the wannabe sellers are not getting their homes sold.
The first is the fall-through rate. Those are the homes that go under contract and, ultimately, do not go to settlement. As hard as this may be to believe, one in every eight homes that have received ratified contracts this year has not make it to closing. This may be due to home inspection issues or purchaser financing. But whatever the cause, 13 percent of sellers who initially think they have their home sold find that is not the case.
The second market indicator is homes that linger on the market. Right now, there are more than 3,000 homes in the immediate metro area that have been on the market for 90 days or longer. And it is not just the homes at the upper end of the market. More than 500 of those homes are priced under $300,000.
The third indicator is homes that are removed from the multiple listing service (MLS) without selling. In April, there were almost 1,000 homes that were on the market for at least 90 days that had expired as unsold or were withdrawn. Some of those may be relisted. However, to put it in perspective, there were just over 4,000 homes that went to settlement in April and 1,000 that were taken off the market.
Here are some tips for sellers with homes lingering on the market:
• Condition: Make sure everything is in ready-to-show condition. All the appliances and systems should be working properly, and the property should look great. Most buyers aren’t looking to take on projects, and a change in the condition of the home will have impact on marketability.
• Marketing: Sit down with your agent and take a fresh look at how the home is being marketed. If the condition of the house has changed, get new photos in the MLS and on the Internet.
• Consider taking the house off the market: Homes that have been on the market get “stale,” and buyers may think it isn’t selling because there’s something wrong. Let’s face it: People like what other people like and are wary if others haven’t made offers. In our market, taking a house off for at least 90 days resets the calculation of days on market in the MLS. That isn’t going to fool many people, but when it comes back on there will be a fresh group of prospective purchasers.
• Price: There’s an old saying that price fixes everything, and it does. Take an objective look at how your home stacks up against the competition, and get the price right. (If it had been priced right, it would have sold already!) Don’t do modest, frequent and incremental price reductions, because that actually hurts your chances and communicates to prospective purchasers that they can wait until you get it to a price they like. It’s harsh, but the house isn’t worth what you think it is — it’s worth what a ready, willing and able buyer thinks it is. Price your house to be able to say “no” to offers you may not like rather than not seeing any offers at all.
Does this mean that the market is shifting? No. In fact, we continue to see positive indicators across all jurisdictions. However, it does mean that proper marketing matters. Negotiating skills matter. And above all, price matters.
The price at which a home comes on the market is critically important. That requires careful research by a real estate agent and a seller who is willing to avoid the trap of believing that everything sells and they can ask whatever listing price they want. It requires listening to what the market is saying and making a price adjustment sooner rather than later if an offer doesn’t materialize.
Yes, it is a very good market, but don’t go in assuming everything sells. An appropriately priced home is guaranteed to get the seller’s home off the market faster.