We often field eMail questions and/or phone calls from sellers, asking... Why won't my house sell? The information below might help explain the real estate market dynamic we are currently experiancing.
A SELLER WROTE: "...Hi my husband and I are trying to sell our home. We are selling a one story 1681 sqr ft. We are currently asking 215.000. We have had it on the market for a very long time and want something to happen. I am just wondering how you feel about the market and our situation..."
There are several factors affecting the traffic you have experienced to date, not the least of which is the sliding real estate market. It is no secret to anyone today that the real estate market hit its peak around mid-2005. It was at that point, around July/August 2005, that the market began its rapid readjustment. This had to happen. Real estate prices had raced ahead of their time by about 10 years.
For example, if you purchased your home in early to mid 2004, residential resale inventory in the ARMLS region (all
of Maricopa County and a small portion of Pima County, an area that services just under 5 million people - according to the 2005 Census) had just begun to recede from about 30,000 units available for sale, a historic
high set in February 2003, to about 22,900. Builders were holding lotteries for lots and long lines were forming in the scorching desert sun populated by anyone who wanted a piece of the American Dream, homeownership. The
party was just getting started. Residential sales inched their way upward... 8,900 units in April, 9,000 units in May and upward to 10,000 units in June. And as is typical when the holiday seasons begin, sales began to slow... down to 9,000 units in July, 8,900 units in August, 8,600 units in September, settling out at just over 6,600 units in January 2005.
Inventory continued to shrink. The roller coaster ride down the steep hill continued throughout 2004 and into March of 2005 when inventory hit an historic low of only 3,500 units. Immediately, the party was over. The period of readjustment had begun. It was as if we were riding a Japanese Bullet Train and someone pulled on the emergency break and our necks snapped from the whiplash of the sudden jolt!
In less than 30 days, the period of time from March 2005 to April 2005, inventory had tripled from an historic low of 3,500 units... up to just under 10,000 units. Inventory continued to climb and by August 2005, inventory had reached 15,000 units. The climb in inventory continued, now at an almost exponential pace making leaps of 3,000 to 5,000 units per month. By January 2006, residential inventory had reached all time record high of just over 31,000 units. The adjustment continued, well into the year each month ringing the bell for a new all time inventory high. In September 2006 residential inventory made yet another record, hitting the mark at 48,443 units. Recorded sales were declining steadily and in September 2005 were down to just over 9,000 units, but the writing was on the wall, the number of buyers no longer outweighed the number of sellers. In fact sellers were out gunned 4 to 1. This was the beginning of the growing time on market, gradual that it was.
In April 2007, residential inventory hit another milestone, toping 52,500 units. Adding to the seller's frustration was the reality that only 11% of the homes on the market sold in April 2007, leaving over 47,000 homes unsold.
Compound the market dynamic of the residential resale competition with the incredible incentives, being offered by Builders. According to the Ultimate New Homes web site http://www.ultimatenewhomes.com (Proprietary Realtor Web Site), by October 2005, Builders were already feeling the pinch. Builders began to inch up the compensation to the Buyer Agents. Buyer incentive packages began to work their way back on to the scene. By January of 2006 builder spec inventory had begun to grow out of control. Toward the end of 2005 about 58% of the builders were offering Buyer brokers more than 3% commissions. By January 2006 86% of the builders were now offering MORE
than 3% commissions. Today, we receive eMails from builders on a daily basis, offering to pay Realtors commissions of 4%, 7%, 10% and even as high at 15%, if the Realtor will sell their residential resale buyer a new
construction home. By April 2006 the builder spec home inventory had eclipsed the 2,400 units record set in May 2003 and had now skyrocketed to more than 4,100 units. That was an off the chart increase of over 1,700
units from the opening month of January 2006. The tables had turned. The builders had boxed themselves in and now they were going to have to peddle fast to undo the damage their greed had caused.
CLICK THIS LINK to view just a few builder incentives and buyer broker commission packages.
These are conditions sellers can do nothing about. The seller's home is located where it is. The seller can't change
that. The seller's home is so many square feet in size. The seller can't change that. The seller's home is usually kept in good condition and that is something sellers can control, although I'll bet that most seller's homes are kept neat to the 10s.
THE SELLER CLOSED WITH: "...We currently have a realtor but he is a friend and is not aggressive. We would want to switch if we thought it would help our situation. Please let me know what you think..."
There are several things that can be controlled by the listing agent, however. Generally, as we review homes in the MLS system and on Realtor.com, the world’s most searched real estate search engine, we find that many home's presence is not optimized. Let me explain.
First, we are Internet Realtors, or eRealtors. There are only about 1/2 of 1 percent of the entire population of the National Association of Realtors membership who can make this claim. eRealtors generate 100% of their business from their web presence and from the use and deployment of technological tools. Therefore what we tell you in the following paragraphs is fact, not fiction.
Many homes, marketed by real estate agents today, do not always deploy all of the technical tools available to our industry that will help maximize the visibility of the property on the Internet. Because of the lack of use of these
technologies, most homes will not even register as a blip on the radar screen when folks search Realtor.com. That is because the home is not optimized. At Realtor.com, properties are delivered to the visitor’s search results in the
following hierarchy. At the top of the list are homes that are hosted on a Realtor.com "Enhanced Web Page". The Realtor.com web page must sponsor a Head Line, a Scrolling Banner in a Virtual Tour, no less than 6 photos and
use the 2,500 characters of space provided for additional comments about the property. Homes that have less than these components are almost never seen by visitors to Realtor.com. The Realtor.com search algorithm simply pays no attention to properties that are, bland, in description and enhancements.
This is an example of a property that is "Optimized" at Realtor.com.
CLICK THIS TINYURL link to view one of our listings on Realtor.com
Check out some other properties on Realtor.com. If you were looking at the property displayed in the link above and one of the other properties you have found for our demonstration purposes, at Realtor.com, side by side, which one would you find more interesting? Which property would you spend more time reviewing? Which property do you think would prompt you to contact the agent to gather more information?
Additionally, and equally important is the ability for the consumer to make immediate contact with a live person. At Realtor.com, and on all of our web sites, we deploy a button or link that allows the consumer to do just that.
CLICK THIS LINK to see how fast you can reach us. This consumer contact technology is proprietary to Coldwell Banker agents. Once the consumer completes the form, the prospect information is immediately delivered, right to the listing agent's PDA or cell phone. If the consumer offered up a phone number in the contact information section of the form, the Coldwell Banker agent will call the prospect back within two or three minutes. At the very least, the
prospect's eMail address has been sent to the Coldwell Banker agent for follow up. Now... if a prospect really wants to make "First Contact", he/she can CLICK THIS LINK and be immediately connected directly to our cell phones. This technology is not part of the Coldwell Banker arsenal of tech-tools. This is something that Lori & G-II deploy as part of our marketing strategy.
We mentioned above, the Realtor.com Enhanced Web Page; the Enhanced Web Pages are not inexpensive. The system costs the agent upward of $700 annually. A Virtual Tour can cost the agent anywhere between $60 and $100 or more per Virtual Tour. It also costs an agent an additional $25 to post the Virtual Tour to Realtor.com. Making the commitment to a seller, to expose their property with the most aggressive use of tech-tools offered to the real estate community is not inexpensive. Nearly every real estate agent on the planet has a web site; that's not rocket science. Knowing how to create interest in the agent's web site, knowing how to position the agent's web site on the first page of the major search engines... now... that's exposure to the public.
If a home has only one photo shown in the MLS system, this could be very unhelpful, in terms of aggressive marketing. We often see homes that have languished on the market for 120 days, 180 days, 240 days, 360 days and more. This also translates to why the home will rank poorly in the Realtor.com search algorithm. Without a Virtual Tour and 6 photos, any home might as well be invisible to the public at Realtor.com.
Web presence is another critical factor in "Optimization". Type any agent’s name into any web browser, search window, and see if you can find him/her on the first page of the search engine. Now type Lori Klindera or type Lori & G-II into any search engine's search window. See if you can find any of our 13 web sites in the first page. I'll wager that we take up the top quarter to top half of most of the major search engines.
It is also extremely important for the real estate agent's web site to be "organically optimized" so that the web site registers high in the search results for key words, targeted by the agent. For this example, type the following (coldwell banker phoneix or coldwell banker goodyear) into Yahoo.com, Google.com, MSN.com, WebCrawler.com, AltaVista.com, Excite.com or Ask.com and notice the search results. Look for any of our webs such as
www.realestateinphoenix.net, www.homesinphoenix.net, www.iphoenixmls.com, www.airforcehomebuyer.info,
www.airforcehomeseller.com or any other webs or cross webs that we might be linked to. Try typing this, air force home buyer, into YaHoo.com, AltaVista.com, Excite.com, MSN.com or Ask.com and see if you can find
www.airforcehomebuyer.com, www.airforcehomebuyer.info, www.airforcehomeseller.com, or www.airforcehomeseller.info.
However simply ranking high on the search engine ladder is not the end all to web presence. The web visitor has to be able to make contact with the agent and... even more critical, the agent has to be ready, willing and able to respond immediately to the consumers requests. That is something we excel at.
Of course, pricing a home is very important too. Homes priced a little above sold homes, similar to their home, in their neck of the woods may not always be the most appropriate strategy. However, simply reducing the price is not the end all to getting it shown, but it is a good start. All of the components above are still needed if the seller is to have a fighting chance of selling his/her home in any reasonable length of time. Oh yes, in today's real estate world, the average time on market in the ARMLS region hovers between 4 and 5 months.
Now something to consider; if the seller has over leveraged his/her home, that is, if the seller has refinanced the
home and owes too much on his/her home... it may not be a good time for him/her to sell the home at this time. Remember, sellers often need to replace the home they are selling with another one. Today's financing arena is quite different than it was in the early part of 2007 and it is projected to become, possibly, more challenging for buyers.
One last note about today's real estate agents. It is our opinion, after being in this industry nearly two decades, that many of today's agents have never been through a real estate market like we are experiencing. This is our third time through a down trend like this. Agents who have less than 10 years’ experience have never seen this type of market. Many of them may not know how to manage their time, their financial resources or their clients’ anxieties. They simply don't have the experience. They have never been in this kind of fire fight. It is expensive to market homes in today's real estate market environment. It is extremely time consuming and... holding open houses, plopping a for sale sign in the yard and tossing the listing into the MLS simply will not get the job done.
Everything sells, eventually. The seller's home may not sell tomorrow, but it will sell. If the seller is not in a "I Gotta Sell This House NOW Mode" then he/she should simply relax. There is no pressure him/her. There is no fire to evade. There is no speeding truck to jump out of the way of and there is no falling sky. However, and while everything sells, the efforts put forth to make that period of time as short as possible is all in the marketing. Today, EVERY seller's home is one of 52,500 homes for sale. The seller's home is like a pea in a box of marbles. It will never been scene if it is not marketed with every ounce of technology available today.
If you find yourself in need of a marketing specialist, and not just another Realtor, we're happy to chat with you, any time…simply call Lori at 602-574-5674.
Bye for now... we hope this information is helpful!