Avoid Stale Property Syndrome
It's a seller's worst nightmare. You've apparently overpriced your house
because you've only gotten a few nibbles in the last three months, and now
you're fuming over a low-ball offer.
The bad news is you've probably got stale property, and that usually
translates into costly delays and additional marketing, and ultimately a lower
price, says Jim Hoekenschnieder, real estate agent with Keller Williams Realty
in Huntsville. The good news is, the situation is salvageable.
In agent lingo, stale property translates into a house that's been on the market more than four months without offers. It's an undesirable situation because it invites buyer suspicion, which usually results in the question, "What's wrong with the house?"
Buyer perception is vital toward generating interest in a property, generating competitive bidding and getting that all-desired selling price. However, this wonderful process wanes when buyers perceive problems with the house, and it takes considerably more work to restore buyer confidence to favorably close this big transaction.
"It's lost its luster," Hoekenschnieder says of stale property. "I'm not saying that you won't eventually get a sale out of it or it won't go to close, but you lose the energy that would have gotten you that better price."
So OK, you've established you're in this downer situation, now what?
"You need an agent to mediate without emotion and negotiate in the seller's best interest to get the best price possible," he says.
The agent has to commit marketing dollars to push the house at the market price, but it could take many more months before it happens and that could still result in a lower price.
Hoekenschnieder says it's time to go back to square one. The first move is to get a real estate agent, let that person set a more realistic house price and handle the marketing. The property should be advertised in the media to attempt to regenerate interest and showings, as well as to attempt to correct the situation that invited low-ball offers.
An agent will discuss the property with fellow real estate agents to get their clients in the house, and then focus efforts on dispelling buyers' concerns. The goal is to regenerate the window of opportunity that typically occurs within the first 30 days of listing a well-priced house, i.e. multiple offers or competitive bidding that ultimately drives up the closing price.
"This is not an easy task once it's been down this road before," Hoekenschnieder says. "It will cost me a lot more money to rekindle interest in that home than had we priced it right to start with."
Pricing the house right to sell is the key to a successful transaction, he says. In Huntsville pricing is even trickier, as some neighborhoods have appreciated up to 10 percent in just eight months, which means a good agent should be able to get a better return.
For example, a seller initially wanted $325,000 for a house which was well above market value, but agreed to the agent's recommended $309,000 price. The move generated multiple offers with a final amount of $312,000 within five days of listing the house. Had they gone with the higher price, Hoekenschnieder says the overpriced house might have sat on the market more than 90 days, possibly resulting in a stale property, lower price and only low-ball offers.
If you're contemplating perhaps removing the house from the market for six months and then listing it again, Hoekenschnieder says think again. While the house might appreciate in value, there are still people in town who have been looking for a house for at least a year and know the house was for sale before, so the stigma still applies.
Buyers will still pose the tough question of why it didn't sell the first time, and the red flags will start flying again. Also, the sale and listing history of a house is documented and follows it, and agents have access to that history.
On the flip side, Hoekenschnieder advises purchasers against making a low-ball offer because it could insult the seller and hinder negotiating. "I advise them to position their offer at or just below what they're really willing to give for the property," he says. "Many times purchasers make the mistake of starting the negotiating process much lower, resulting in an insulting offer to the seller, who stops negotiating past that point."
If that low-ball offer comes, Hoekenschnieder advises sellers to remain calm. But it can be hard for the homeowner, who has emotional ties to a house and is now dealing with someone who just wants to make a deal.
"It gets personal," he says. "You have to ride that wave of emotion between a person looking to purchase a home and a seller negotiating with the memories of that home."
It isn't uncommon for agents to hear sellers say they need to get a certain amount for a house. But he says market value is oftentimes very different from needs and wants.
"Houses don't sell for what a seller needs or wants to get out of a house," Hoekenschnieder says. "A house will sell at what the market is bearing for that particular neighborhood."
Also, good pricing generally means sellers make fewer concessions because the purchasers are more willing to realistically negotiate. An overpriced house could result in the seller paying closing costs. Hoekenschnieder has seen sellers have to commit 5 to 10 percent in concessions on overpriced properties, bringing the price to what it should have been from the start.
Everyone's perceived value of their property is different, but the agent is challenged with putting a real price on the house, Hoekenschnieder says.
"If the agent isn't successful, the overpriced house continues sitting on the market more than 120 days and you end up taking much less for it, especially if the seller holds out with an overpriced house."
At that point, the seller has entered the much dreaded and difficult to escape low-ball offer zone.
"A house will eventually sell at any price, but it's the eventually part that can be the problem," he says. "A good agent wants a win-win situation."
Huntsville Alabama real estate for sale
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