Top 12 Reasons Homes Fail to Sell in 2023 and How To Avoid Those Mistakes (hint: it's NOT always price)
The residential real estate market in 2023 will eventually begin to shift out of extreme seller's market territory, and more towards a buyer’s market, and more and more homes for sale will be coming off the market unsold.
As interest rates keep increasing and other things change in the world (war, inflation, stock market volatility, uncertainty in employment, etc), homes on the market that aren't selling will be much more prevalent.
When a property is listed for sale and doesn't sell during the listing contract, it is known as an expired listing.
So how exactly is a buyer’s market or seller’s market determined?
The textbook definition of a buyer's market is simple - 6+ months' worth of inventory.
A seller's market is also known as having less than three months of inventory based on closed sales, and a neutral (or balanced) market is defined as three to six months of inventory based on closed sales.
The bottom line is that it will get harder for sellers to sell their homes.
Here are the top eleven reasons why homes don’t sell and also what to do to get your home sold.
Reason #1 - The Classic Overpricing Strategy
We've all heard the axiom - price it higher because buyers will want to negotiate down. This is THE cardinal sin that can absolutely ruin a home sale, and is the reason #1 for a reason!
In today's information age, home shopping is done online before it's ever done in person for 99% of the buying population AND stats show the average buyer starts their journey on average 18 months before closing. This has created a more savvy buyer than ever before. This means buyers KNOW market values more than ever before and will instantly dismiss a home that THEY deem overpriced.
We'll talk more about first impressions below but think about this - If your ideal buyer LOVES the photos and the specs check ALL their boxes HOWEVER your asking price falls out of line with reality, they'll likely never come look at the home in person. Conversely if you strategically price your home below the competition, and there's data supporting strong demand in your neighborhood, you will very likely get a bidding war driving your price up! I know that seems risky compared to traditional thinking ("we can always come down but we can't go up"), so consult with your agent before considering that strategy to make sure there is concrete evidence of bidding wars in your specific market (measure of demand). So essentially, there are only three pricing strategies: 1. price ABOVE market value 2. price AT market value and 3. price BELOW market value. (note: if prices are declining, #2 is actually #1. As The Great One Wayne Gretzky said "skate to where the puck is going.)
Put yourself in the buyer's shoes - in what world do you go look at the most expensive thing for what you're shopping for first if you can get something as good (or better) for a better perceived value?
Placing a higher asking price on a home does NOT mean you'll sell for more. In fact, studies show you'll sell for less than what you would have had you strategically priced it at/below the competition in the first place. PLUS it'll take 2-5 times longer AND you'll have to endure painful price reductions in the process. PRICE. IT. RIGHT!
We take the time to analyze hundreds/thousands of datapoints (not JUST comps) to help our clients maximize their bottom line through their pricing strategy.
Reason #2 - Lack of a Strategic Marketing Plan for the Home's Specific Audience
Most agents' strategy includes the 3 P's of marketing a home:
- Place a sign in the ground
- Put it in MLS
- Pray that an agent brings a buyer
While that approach worked well before the information age (and, sure, also during the Covid boom), it won't cut it in 2023. For a home to not only sell, but sell for a premium in today's market, it needs a strategic plan curated specifically to the type of home, the neighborhood and its likely audience.
Solution - hire an agent who can SHOW you his or her strategic plan, both from a high level and in depth view. Who are they targeting specifically and what will they do to reach that audience (besides simply posting the home online)?
We spend countless hours studying migration patters to and from specific areas and neighborhoods, so we're already coming into our clients' homes knowing the avatar of the likely buyer. Not only do we cast wide nets (ensuring their home is fully exposed online), we also develop a strategic plan to reach the well defined micro audience with a digital (online) and physical (offline) approach. Click the links to read more about our high level marketing plans and listing launch packages.
Reason #3 - Photo Order
According to a 2015 Microsoft study, the average attention span for a person is eight seconds (one second less than a goldfish). Each year it gets shorter and shorter. And I'm sure that in the year 2023, it will be way less than eight seconds!
Most real estate apps and websites are set up to show only the first photo of a home. To get to the next one, you need to click on the next one and so on.
The problem is that almost all Realtors and For Sale By Owner (FSBO) sellers put the front of the home as the first photo. Nearly all home's BEST photos aren’t the front of the house.
The problem is that with an eight-second attention span and probably becoming much closer to two seconds, most potential buyers may never have the patience to get to the best photo or features of the home and will click on the next property.
Solution – Put at least the first five best pictures of the home as the first five photos. Seems insignificant, yet can make an absolute world of difference in the success or failure of a home sale.
Most people who have clicked through the property's top five photos will continue to click away to see the others. We take the time to maximize photo order in every listing because of this.
Reason #4 - Price Band Errors
Most homes are listed at prices that have 9's instead of whole numbers, which are similar to how Amazon, Walmart or discount stores price items.
For example, it is extremely common for a property to be listed at $499,990 instead of $500,000.
Doing this is a major mistake!
Most real estate websites and apps have price bands that end in whole numbers.
For example, Zillow’s price bands are $500,000 to $600,000 , $600,000 to $700,000 and so on.
When a home is priced at $499,990, none of the buyers searching from $500,000 to $600,000 would see the home in that search.
What makes it worse is that the lower price band buyer is at his/her limit. Whereas the higher price banded buyer would be at his/her beginning point.
If the property is on the market for $500,000, both sets of customers would be able to see the home in their search.
Solution – If possible, price the home in a way that it will be in both price bands, $500,000 instead of $499,900. Some people would argue that the "optics" look better starting the price with a 4 versus a 5, yet ask yourself if you would skip seeing a great home because of that.
Reason #5 - Not Doing Research Before Putting a Home on the Market
Rarely do real estate agents or FSBO sellers check to see if there are any open permits, violations, or additional liens on the property.
In our nearly twenty years selling real estate, we have heard so many agents tell us that they were less than a week from closing when they found out that there was either an open permit, violation, or additional lien on the home.
The sellers had already paid their moving company to move their furniture, but they weren’t able to close in the end.
Talk about a major headache and loss of money!
Solution – Have your attorney or Realtor guide you in the right direction to do your due diligence on your home before putting it on the market.
We are partnered with the best real estate attorneys and title agencies in order to get an early set of eyes on each home we sell.
Reason #6 - Thinks He/She Knows How to Market Homes on Social Media but Has No Clue
If we had to give you our best guess regarding how many Realtors or sellers know how to market on social media effectively, we would say less than one percent know what to do.
The majority of agents have very few sales that they made from a direct social media advertisement/post or know how to market to the RIGHT BUYERS looking for the home they have listed.
The main reason is that they are guessing and don't spend the time and effort to know who to engage with on social media and the web.
Solution – This solution is a lot more complicated than other solutions. To save you from reading a novel here, we'd love to have a conversation about our social media strategy!
To sum it up, we've been creating ads on social media since 2014 when ads became a thing. We've spent countless hours studying and staying up to date on the algorithms that top platforms like Facebook, Instagram and Google Adwords use to ensure our clients' homes get in front of the right audiences. On top of that, our ad spend budget each year is in the mid to high five digits!
Reason #7 - Not Spending the Time to Get the Home Properly Prepared and Staged Before Photos and Videos
Almost all real estate agents are so worried about the average days their listing is on the market before it has an offer accepted that they speed up the process to get the home online.
The majority of the time the home isn't ready to be shown, nor is it even photo-ready.
A seller only has one chance to make a first impression on buyers that have many choices to select from.
Solution – Don’t be in such a rush to get the home on the market.
If more time is spent upfront getting the home staged, personal photos removed, and decluttered, a great first impression will be made.
And, many times, the home will be on the market much less time than if it wasn’t done.
We KNOW what buyers like to see when browsing homes online, and will take the time with each client to make sure their first impression is a home run.
Reason #8 - Hiring a Family Member or Friend Without Interviewing Other Agents to See Who is Most Qualified to Do the Job
More than ninety percent of all Realtors do the same thing - put up a FOR SALE sign, enter the home on the MLS, promote the home on a bunch of websites, hold an open house, advertise ineffectively on social media, and make a brochure for the home.
As home inventory increases, doing only these things will most likely not get the home sold. If it DOES sell, it's usually well beyond the average days on market and well below what the home COULD have sold for. Sadly, we see examples of this every day.
Reason #9 - Not Having the Right Network of Buyers and Agents that Sell Homes in Your Area
The average agent will email blast every client and every Realtor on his/her list on every listing they have for sale.
It may sound like a good idea, but it is the worst idea. Almost always, there are many people on an email list that aren't interested in the email. They will look at your email as SPAM. They could live in a different area, aren’t interested in the email topic, or for numerous other reasons.
When people see emails from a sender that they aren’t interested in, they will often ignore the rest of the emails sent over time, even those they would have been interested in. If enough SPAM reports are communicated by those receiving the emails, that sender can be blacklisted, which means that their emails will go directly to the SPAM folder.
Solution – Categorize the recipients that receive an email.
For example, a person could be tagged as a buyer looking to purchase in Highlands Ranch or a Realtor that sells homes in Cherry Hills.
If the Realtor has a new listing in Boulder, it won't make sense to email the agent in Castle Rock.
Sending smaller email campaigns (also known as bursts) to relevant groups will substantially increase the open rates and cause the emails to have a much lower chance of going to a SPAM folder.
A much better way to do it is for the agents to personally call or text all the buyers and agents individually to let them know about something they are probably interested in. This is something we take great pride in doing for our listings.
One of the things that we can ALL probably relate to is getting a personalized email that is actually being sent to a group of people.
GMAIL will tell the recipient and ask the person if he/she wants to UNSUBSCRIBE from the sender.
Obviously, that is not a very effective way to communicate with someone by trying to trick them into thinking the email was personalized to them when it wasn't.
The seller interviewing the Realtor should also ensure that that agent knows many real estate agents and clients to help get the home sold.
We have personal relationships with buyers and agents in ALL areas of the United States, as well as in over 50 countries worldwide.
Reason #10 - Not Using Emotional Video and Photography
The average agent is incredibly cheap when it comes to spending money on marketing. Many will take the photos themselves on their iPhones, Androids, or at best, their DSLR cameras.
If they happen to do a video, they will usually do it on their own, do it as a slideshow with still photos, or hire a subpar videographer.
As mentioned earlier in this article, a seller only has one chance to make a great first impression.
A vast majority of agents are NOT trained photographers and videographers. Taking photos and videos without a true professional will make a negative first impression.
Solution – Spend the money! We never think about the money we are spending when we have a listing. It is not uncommon for us to spend $5,500 or more on photos, drone videos, and 3D immersive tours, REGARDLESS of the list price of the home.
There have been instances when we've been at a home for multiple days and more than ten hours just to make sure that the photos are PERFECT.
The amount of time and care an engaged couple spends on selecting their photographer and videographer is the same time and budget we use for a listing.
Interviewing agents and finding one that feels this same way will almost always help a home get sold.
Our average PER LISTING budget JUST for photos and videos is just over $1400.
Reason #11 - Poor Accessibility to View a Home
Since inventory is increasing each month, Realtors and buyers have more choices to select when viewing homes.
If an agent is scheduling four or five showings for his client and a home isn’t available to be seen with the others, the odds of that real estate agent returning on another day to see that home is low (especially if the buyer falls in love with another home that day).
Solution – Sellers should do what they can to make the house show-ready at all times and have a plan that allows the home to be viewed with just a little notice.
Give the Realtor a key to the home, so he or his team members can show the home when no one is at the house. Ask a nearby neighbor if you can hang out at their home from time to time, or just go for a walk.
We study typical showing times for every neighborhood so we can best prepare our clients for when their hottest showing windows are.
Reason #12 - Looking at the Home Through a Seller’s Eyes Instead of a Buyer’s Eyes
With so many automated home valuation sites out there, sellers and agents will often look at the site's estimates and average them out and get a list price for the home. Other times they will look at previous sales and determine the price based on those things.
The problem with these methods is that they are inconsistent.
Sometimes Zillow’s (or similar sites) estimates are too high, sometimes too low, and sometimes just right.
Zillow’s ex-CEO, Spencer Rascoff, famously sold his home for forty percent less than Zillow’s Zestimate.
Solution – It is critical to look at the current competition for the subject property, what similar properties have recently sold, in what direction the market is heading, and the overall market conditions for each submarket (not just the overall market). Hire an agent who will tell you what you NEED to hear, not what you WANT to hear. So many agents are so concerned with taking a listing, that they'll tell a seller ANYTHING in order to get his or her sign in the ground. "Sure Mr. and Mrs. Seller, it's definitely worth a million!" (last home sold for $750K).
In a market with rising inventory, it's CRITICAL to know what the current competition is for similar properties.
It doesn't matter what price a home sold for recently if there are no others like it on the market. If that's the case, many times you can sell the home for a greater number than the past sale if it is a desirable property.
On the other hand, if there are a LOT of homes for sale, there's a good chance that the next home that sells will be less than the previous one.
The most motivated buyers are looking at the market and inventory numerous times a day and know exactly what homes are selling for and all of the properties for sale.
Remember that sellers are competing with other sellers who HAVE TO SELL, not only ones that just WANT TO sell.
Interviewing agents and finding one that is aware of all of these things will help you get your home sold much quicker. Find out if the agent won't be afraid to tell you the truth, even if you may not want to hear it!
We are absolute stats nerds (just look at our YouTube channel chock full of stats videos). We help our clients not just with comps, but with a full perspective on both macro and micro markets.