Why Your Home Isn't Selling

I get asked a lot of questions both from fellow real estate investors as well as potential private money lenders whose only familiairity with real estate investing is what they have heard on television. “Isn’t this a bad time to be investing in real estate? “ is a common question.

My response is always the same. "The market is the market. You have to sell and buy real estate in this market, not last year's market, and not the market you wish it would be."

I think what separates my company, Local Guys (along with other succesful real estate investors) from others is that we "get it" about what kind of market in which we find ourselves in. That alone gives us an advantage over most of the buyers and sellers who are trying to move from one property to another.

I would hope that your phones are ringing regulary (another subject entirely), but here are a few of the most common statements that seller's put forth when trying to convince Local Guys to purchase their property:

Some property owners will reply to the question of why there home hasn’t sold with “I have advised my agent to hold more open houses and to advertise more."

Do you know what your best advertising is? A property that is priced correctly for your market.

Some homeowners tell me something to the effect of: "If I don't get (they will spout a number), then I just won't sell."

The truth is: That is their ego talking. What this boils down to is they have their house overpriced and will die in it rather than drop the asking price."

I need "X" (number of dollars) from the sale of my house."

The reality of the situation is (however sobering it may be) that to a great extend, it really doesn't matter how much you "need."

While at the end of the day, I think of Local Guys more as “problem solvers” than a real estate transaction company, the bottom line is that the market determines the sales price of a house.

Just this week, I was visiting a person who had a beautiful house that he was 13 months behind on. Including his back payments, he owed $282,000. His home had been for sale with a realtor for over 6 months. The house was going to the auction steps in 2 weeks, but he insisted he still needed $380,000 for it. This seller doesn’t understand that his personal “need” isn’t going to get his house sold.

On the other hand, we have a property that we have recently reduced twice in the last 60 days. We really did “need” to make the profit from the original asking price (which was $20,000 lower than everything else in the neighborhood). However, if we want to sell the house and move it to preserve the greatest amount of profit, it is better to make less and move on.

Just like other real estate investors, our best opportunity is to deal with motivated sellers.

Some sellers will try to justify their price by saying, "I have a bigger lot."

My response is that is something that is akin to…”So what!

While the size of your lot will make the property more desirable (for some buyers), it doesn't necessarily mean it adds more value in a buyers market. Overall, prices are set by comparing houses that are similar to yours. They really don’t judge the value by similar lots. Otherwise, my lot that has a tear down on it would be worth substantially more than your house because it has a much bigger lot size. This fact is especially relevant in subdivisions where the lots are mostly created exactly alike.

Many times I have seen property owners let their home sit on the market for months thinking, "There's one special buyer out there … ."

That goes to the “next biggest sucker” theory. And in some cases, this may be true. Usually though, If you have priced the property correctly and the home is in good condition, there are typically several buyers for your property.

Overpricing a property and waiting for a stupid buyer ends up at the least of taking a lot of time to sell. When I get that comment, I will ask the property owner to consider the cost of making the mortgage payment each month, how their family feels about having their home on the market being a phone call away from showing it, and the reality of agents looking at the number of “days on the market” reasoning that there is something wrong with the home.

I also point out that while all this is going on, their is the cost of not being able to find the home you want to live in or their inability to get on with their lives.

There are three determining factors of the salability of a house: , price, condition and location.

Price is what most homeowners are battling in today's market. If a house looks great and is over priced it will not sell. Even some "fixer uppers" I've seen these days are overpriced. They may be asking for less than other homes in the community (which are also overpriced), but they're still not moving because there's a great looking house in the neighboring community that sold for the fixer upper price a week earlier.

Just because a house has more amenities than the competition, this doesn't automatically mean it's worth $30,000 more. In today's market, it may mean it's just going to sell faster.

The condition of a property is vital to the salability factor. I have taken to asking stubborn sellers to drive around with me to compare their house with those that are already on the market. When I have been able to coax the homeowner to do this, reality usually sets in (not always that day I might add) and their price comes down substantially.

Finally, in areas where commuting is an issue, location definitely makes the property more desirable than a house miles and miles away. Location may also mean the location in the desirable community. The former model home facing the four-lane highway may be in great condition and be in the right community, but the location on a busy road could adversely affect the salability of the house.

The bottom line to all this is that sellers who understand the current market and price accordingly are able to cash out and move on with their lives.

John Panico is an active investor of properties throughout NE Georgia. He is the General Manager of Local Guys Equities, LLC, one of the fastest growing real estate investment companies in Georgia. John founded the NE GA Real Estate Buying & Investing Group and wholesales properties to real estate investors around the country. Feel free to contact John about selling your house or other information.