It might sound like I’m writing this blog post as a secret message to my sellers, but that’s absolutely not the case here! I’m writing this post because if your like most sellers, you are likely going online to see when it’s time to drop the price of your home if it is sitting on the market. If your house isn’t selling, it’s more than likely you are a little bit nervous about having that conversation with your real estate agent. So I will have the heart to heart with you here.
You might be wondering why your home isn’t selling, even though you’ve priced it according to the market. There are several factors that would impact why you aren’t receiving any offers.
Reasons Why Your Home Isn’t Selling
1. You’re testing the market: There are sellers who will list their property slightly above what the market value would suggest. There’s also a lot of agents that will take your listing at whatever price you say, simply to get a sign in your lawn! If you have priced it above the actual market value it’s a no-brainer that you need to drop the price on your home relatively quickly or else you will miss out on qualified buyers.
2. Active inventory: If there are a lot of homes that are listed on the market which are relatively similar to yours in style, design and square footage, it is going to be a lot harder for you to achieve a sale. This is because buyers have a lot of inventory to choose from. You see this often in suburban areas that have a downtown core, like the Mississauga condo market. Your sale price is often very much tied to what else is actively listed on the market and if there’s a listing even $5,000 below what yours is asking, then it could prove to be difficult for you to achieve a sale.
3. Marketing: While I am a firm believer that your house is the biggest brand, it is true that marketing plays a huge role in the ability to sell a property. Realtor.ca is usually the first place that people will go to search for listings, but a reputable and active real estate agent will have a strong marketing campaign behind your property. This could include their personal website, paid ads, just listed flyers, open houses and a bevy of other ways that they could attract buyers to your property.
4. Minor Aesthetics: A lot of homes sit on the market for the little things that are an easy fix. Something like dated cupboards or flooring could really make a property sit on the market for a while. This is even if you’ve accounted for those factors in the price of your home. Before considering a drop in the price of your home, try some of these options first.
5. Accessibility: If you are not open to showing your house, you might be missing out on potential buyers. If you are only showing your house two days a week, or between the hours of 3 p.m. to 7 p.m., then it is unlikely that you’re going to get as many buyers as you could have if you opened up your viewing times.
6. Location: I’m not referring to the actual community that your home is in. What i’m talking about here is your location on the street, because it does play a factor. For instance, if you are at the cross section of a three way stop sign a lot of people will be turned off by that because there’s a light flashing into your house at all hours of the night. This could also be the case if you’re on a main artery road in a community.
When it’s Time To Drop The Price of Your Home
1. You’ve been on the market for more than 3 weeks: While not an exact science, the highest level of interest in a property is typically within the first 3 weeks of being listed. When a listing is new, real estate agents are bringing in their active buyers. They are typically going to do that right when it goes on the market. If you haven’t had an offer within the first 3 weeks, it is an indicator that buyers are not willing to pay the price you’re asking and you need to drop the price.
2. Other similar homes are selling: If there are home similar to yours that are selling in your community since you have been on the market, then there might be an issue with your pricing.
3. You’re comparing your home to ACTIVE listings instead of SOLD listings: You should know what all homes are selling for in your community. If the average selling price is $600,000 and you’re asking $620,000 for the same home, it’s unlikely that you’re going to achieve that price because buyers know what else has sold on the market. It doesn’t matter what the guy down the street is listed for, it matters what he sells for!
4. Your days on market has exceeded the community average: The days on market is a good indicator to see what is happening with other active listings. If the average days on market for a listing is 15 and you have been on for 25 days, it means you are sitting idle and need to drop the price of your home.
5. You’ve already purchased another home: If you’ve already purchased another home and you have an upcoming closing, you better drop the price of your home and you better do it fast. The last thing you want to do is be on the hook for having two properties. You might be able to get bridge financing from your lender, but if you can’t and you’re not able to close the property that you’ve already purchased, you might get sued by the seller!
6. A change in mortgage rates: It is always good to keep track of what is going on in the mortgage industry. Lending rates play a huge factor in a buyer’s ability to purchase a home. If you know there’s an impending mortgage rate increase, then you want to be selling your home prior to that increase or else it might affect the value of your property.
The Most Important Factor of Knowing When You Should Drop the Price of Your Home
The most important factor is really your level of motivation and emotional needs. When you first list your home, you’re just looking at numbers. What you don’t realize is that under the surface there’s a level of an emotional needs that you are looking to have met. You truly have to sit back and think “how much do I want to sell my home? What does that mean for me? What does that mean for my family? What does that mean for my future?”.
Deciding on the amount of a price drop on your home will definitely be tied to your emotional needs. A colleague of mine who I respect dearly once said to me you could be either one of three things: On the market(you aren’t selling), in the market (priced well), or ahead of the market(priced better than the competition). Your level of motivation will lie within one of those three criteria and will ultimately help you to determine what the best strategy is for dropping the price on your home.
It can be frustrating process and make you feel defeated, but I can assure you that there is no better feeling than selling your home when you have a bright and exciting future ahead of you.