How long has your home been on the market?

0
1116

 

By Ron Wynn

It sounds like an innocent, trivial question, but it doesn’t take a rocket scientist to know, a buyer here is looking for “motivation” and is trying to guess if the price might be flexible or if the seller may be hungry for a low offer. Searching for motivation is always a factor both from a seller’s point of view and from a buyer’s point of view. Let’s take a few minutes to examine motivation and how to play it out.

First, let’s position ourselves as a buyer in today’s market. Here, on the Westside, most homes sell within the first three weeks for anywhere from 5 percent below the listing price to 105 percent above the listing price. A buyer who spots a new listing these days needs to focus now on how to have appeal to the seller. Does a buyer reveal he is desperate to buy this home, show that he has a more than enough cash, has a preapproval letter exceeding the price he has offered and will reduce the contingency period significantly after making an offer that is already $100,000 above the listing price? We now even see buyer offers written to state: “Escrow period can be the seller’s choice, of 30 days to 6 months.” An offer might give a seller 30 to 45-day rent back for 1-dollar total rent. And recently I received an offer (as the listing agent) that said, “Price to be $20,000 above seller’s highest offer (limited to $200,000 above the asking price as an outside limit). Is this crazy? This is a buyer’s motivation in full color and without any hesitancy.

Now, what if it was a property that has been on the market for 90 days, the listing price has been reduced 3 times, and the MLS and Zillow history shows that the property has fallen out of escrow 3 times? Do you think a buyer would be jumping at this listing in the same way as for a new listing in mint condition priced to attract multiple offers? Of course not. When a home is a new listing and a “Hot Property,” a seller is in the driver’s seat completely.

Now let’s look at a property with a history not so favorable. This scenario is entirely another story. Perhaps there may be several buyers who saw this property, but recognize it is way overpriced. In the beginning, the seller may have appropriately said to their agent, “these people can’t afford my property so find me a buyer who can appreciate and pay for all of the amazing improvements I have made. After 90 days, sometime after 180 days, the house remains unsold and the seller may come to a realization that their home is overpriced. Now the choice is up to the seller whether to chase buyers with a price reduction, to lease their home out rather than sell it, to remain on the market without a price reduction, or to remove the home from the market.

A seller may need to sell, eliminating several of the options which allow a buyer the leverage they have been waiting for. Some buyers look specifically for homes that have been on the market for a long period of time and can eventually ware a seller down to a very attractive selling price: A seller who has purchased another home noncontingent on the sale of their home, a seller who has already moved out leaving their home vacant, a seller in financial stress or default,  a seller who has accepted an out-of-state job position, a seller who has health issues forcing them to relocate, or a family selling the home of a parent who recently passed away may be some of the seller scenarios a buyer is hoping to bump into when it comes to searching for motivation. These cases still exist.

In Conclusion, there are far more cases currently of motivated buyers than distressed and desperate sellers, but both certainly exist. My advice to a buyer is to offer your best and stop trying to get a bargain. My advice to a seller is to price your home competitively and expose it to the market with the guidance of a good real estate agent who is professional, ethical, knowledgeable, and who has your best interest as their priority. Be sure to discuss a variety of strategies before making a commitment to an agent or to a price.

I’m always happy to answer questions and make referrals. Call me at 310-963-9944 or email me without obligation ron@ronwynn.com.

Ron Wynn is an agent with Coldwell Banker at 1531 Montana Ave., Santa Monica. He ranks as one of the top .5% of Brokers nationally.

How long has your home been on the market?