Today, I found 228 homes in Washington D.C. and Northern Virginia that have been listed on the MLS and on the market for more than 365 days. An entire year or more on the market! 29 of those homes have been actively on the market for over 2 years! Can you imagine? Two years of keeping your home clean, having a lockbox on the door, and leaving the house on Sundays so a REALTOR can hold an open house!
That is a very long time even in today's slower market.
While 86 of these homes are over $1 million (which you might expect to be on the market a bit longer anyway), over 60% of these long-time listings are under that price.
How do this compare to the average time for sale? Well, of the 1,847 homes that have sold so far this year in D.C. and Northern Virginia, the average days on market was 53.
WARNING: You Don't Want Your Home on the Market Forever!
One of the first questions buyers ask is "How Long Has That Home Been on the Market?" More often than not, buyers will use this information to determine how much they wish to offer for the home. That is, if the buyer even makes an offer at all. The longer a home has been on the market, the less chance it will get an offer from buyers because they will often think something is wrong with the house that's been on the market for so long. In reality, the only thing wrong with the home may be the price!
If when checking out these homes, I notice that there have been no price reductions or very small price reductions, it becomes obvious to me that the sellers are not very motivated and unlikely to negotiate. Chances are there were some offers for the property early on, but that the sellers refused to lower their price to get the deal done and the house sold.
When working as a listing agent representing the seller of a home, I do not want my seller's home on the market for more than a year with no price reductions. We'll often agree upfront to scheduled price reductions after set periods of time without an offer to get the home sold. The better strategy is to just price it right at the beginning.
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Amazing and sad at the same time. It seems that many sellers simply cannot connect the dots between sales price and holding costs not to mention opportunity costs that are unknown had they simply moved on with their life.
This would all cease if agents would learn how to price properties and learn to say NO.
Lenn is correct. Pricing is everything. Listing agents can take a listing promising what the seller thinks they can get but ultimately it is your name and reputation that is at stake. What do you tell your potential seller when you meet with them for a listing presentation? Do you tell them what your average DOM are before it was sold?
Hi Brian,
We've got those too and the backstories are often that the sellers refuse to list for less. They get offers but are all insulted because the offers reflect fair market value.
I'm with Lenn on this. If the agents were doing their jobs these homes wouldn't even be listed. But these agents think the signs will bring them more business - which doesn't work anymore given our educated consumers.
Great post!
Pam.
Brian, I understand your point completely....I just wish that expired were factored into days on market. I have seen numerous houses lately that sold within 3-4 weeks of listing but in fact were relists that had been on the market for 6 months to a year before. It really does skew the numbers.
I don't understand why the listing agents that have the listings you are talking about extend the listing as opposed to letting the listing expire and relist it for a new term. When a home has 300+ days on the market good offers are not coming.
Brian, I just did a quick look in our market and we have 267 single family homes that have been on the market for more than 365 days. I didn't do a good job of breaking it down like you did though!
Our little county in Colorado has 9 houses on the market for over 1,000 days!
One home has been on the market for 1,346 days !!!
( Who was the President back then? )
We have houses on the market for YEARS! Re-listed, price increased, price reduced..good photos, bad photos...It's only really worth what someone will pay for it!
Pricing the house right from the start is key. I try to get scheduled price reductions signed (with no price) at the listing table so as to let the seller know we have to be pro-active and not chase the market.
Brian I'm not a statistician but someone who spends a lot of time memorizing the MLS-did you take out the new construction listings that linger for extended periods of time? Might skew the numbers just a little bit.
Brian, congratulations on the Feature. Like some of the other I totally agree with Lenn.
In the Houston MLS (www.har.com) there are 1328 properties listed for more than 365 days. In Crosby, my main beat, there are 7. Of those 7, I know 5 of them well. 2 have major issues, such as the ac/heat unit was stolen, no doubt for scrap metal. Now those properties will not qualify for FHA loanss. 2 are actually commercially located on the main road, and therefore wildly overpriced for residental, and the other was particially built, then fianancing fell through, so this house is not completed, and is a huge mess.
There are 2 I haven't been in, but they are the biggest, most expensive houses in the area, and are waterfront. I do not know if they are overpriced, because of the access to the water and golf course, and their grandness. The finest houses in a neighborhood are the hardest to sell, especially if they are priced too high.
Crosby is not a high crime area, but theft happens more for properties near busy roads, and both properties that had the ac/heat stolen are on busy streets and were vacant. It is really sad, because both properties have lots of potential. They just need the right person to come along and pay cash and give them love.
Brian,
I agree with most everyone here....sellers need to price there homes accordingly to the market conditions. Unfortunately, here in Charlotte we have a lot of the same issues...Most of it is the agents will not say no your house is only worth X then it expires after six months and the next agent does the same....
Funny thing is I did a listing presentation for a few expireds this month. I went back and looked to see what the total days on market were. Funny thing is of the five I went on; 3 were on with multiple agents for over a year....
You hit the nail on the head. Agent's need to say NO ti unrealistic or unmotivated sellers. Having a listing for that length of time generally leads to unhappy client's and agents
The sad thing about this is that the prices have continued to decline. If the house was priced lower last year, then it probably still would have sold higher than it would sell for now. But, sellers still think they know more than realtors (even when you show them the comps), and they think their house is still better than all of the others. And, then there are those who bought when prices were going up, and they do not want to (or cannot) go to closing with the difference. They also do not want a SHORT SALE. So, there are numerous reasons for the overpriced homes that have not sold.
There are many homes locally that are overpriced and have sit on the market for literally years, one I know of over 2 years! Listen to the market, obey the market!
I think that educating the Seller from the beginning is key. We are all used to the psychology of the Buyers, Sellers and the Real Estate Market due to experience. But Sellers need to be taught that. We understand that pricing a house right and presenting it well from the beginning is key. But we have to explain to Sellers that we get the best Buyers in the first 2 weeks. And Buyers are much more savvy than they were 10-20 years ago. They know when a price is right for the market. The big thing, though, is that once the listing gets stale it is twice as hard to sell. Sellers need to be educated on that because they think that they can just drop the price after 2 months and it is ok. But if too much time passes and it becomes stale-there is a premium for that. Anyways, my philosophy is educate,educate,educate!
Brian: I see this more and more. Real sellers, but unrealistic prices. They have no concept of what an appraisal means to buyers, or why they should be concerned. It's like they have stuck their fishing lines in the water and are waiting to catch a cash buyer with more money than sense.
Brian, thanks for the reminder of a very true fact. It does not make sense to have homes listed that long.
Cal
Pricing is key! Your area has a great days on the market at 53! That is very encouraging.
All we can do is be honest with our sellers, if they don't get it by now their not going to get it later. They're paying us big$$$'s to do as we say. Once I point that out they listen.
It used to be said; Location, location, location... now it is price, price, price...
In my market the only properties that are on the market that long are short-sales which by definition never seem to be 'short'. I just checked my zip code and the oldest was listed on 10/26/07.....
Brian,
Would you really call them sellers? I might call them sign poster homes!
They obviously are majorly in denial or really are not motivated to sell.
In Atlanta there are some price points, such as over $2 million that have 10+ years of inventory.
That is definitely not the business I am looking for. I want to sell, not list without results.
All the best, Michelle
Yes, but the agent told them about the absorption rate. So, it should sell any day now. LOL
Brian, Good Post! Homeowners who want to sell, need to realize Realtors don't make the real estate market. A listing agents job is to interpret market conditions and coach the sellers on their options. All the best marketing in the world won't get your home sold. Any Realtor who would list a home significantly higher than current market conditions is looking out for themselves, not their seller. Keep in mind your Realtor is going to get a lot of calls off your overpriced listing that they can take down the street to a home listed at market price. Today's buyer have access to online stats, tax records, and data from multiple sources. Buyers can spot overpriced houses FAST! They will pass you by with the blink of an eye.
Great post Brian. As to a long time on the market, you sure I don't...?
The house across the street from us just sold. It had been on and off the market for 5 years...
I had an agent tell me recently that I was underpricing my listings. My response was that I have been tutoring my sellers and if they plan to list for a year, keep the price high. We're competing with foreclosures and short sales..... in order to stay in the game, you must compete.
I have a few overpriced ones myself at the moment. The problem I have is that I'm right on the borderline of a short sale or a regular sale. I'd like the prices to be lower to get activity but they are priced realistically now, but aren't a "steal" so to speak.
I just read/heard somewhere:
"There's absolutely nothing wrong with a property that price won't fix"
Not to mention the fact that the market has dropped since then, and there is a likelihood that the home would have sold for more then than now...
Hi Brian -- Analyzing the data and your conclusions, while it makes sense, should send a huge wake-up call to sellers. Some sellers can't lower their price without a short sale, and they may not need to, but nonetheless, it still creates an artifical constraint in the marketplace and buyer agents really need to do their homework.
Who knows what this market is going to do over the next six months. I have been in hot markets in Florida, Texas, and Hawaii when properties went on the market on Friday and would be gone by Monday. I was also in those areas when properties dropped like a lead balloon. Think of how confused sellers are right now. How quickly could a market turn? A builder I work with has refused to reduce his last two houses again. He leased them on a month to month and only has to supplement them a small amount each month. He knows that if he drops his price 20,000 it will force a sale, but his explanation for his refusal is that he can pay that extra money each month for several years to meet the loss of 20,000. It is not always the agent not pricing correctly. As for not taking a listing, I agree that if the price is totally unrealistic, an agent should refuse, but keep in mind, how many sales in a community can occur before the prices increase dramatically. I keep hearing that some parts of Florida and California are heating up to bidding wars driving the prices up, again.
Pricing is critical for serious Sellers. Those 228 were just dabbling.
Brian - Over two years? Amazing, huh? I'm guessing that falls into the "fully unmotivated" category.
Brian - well it just clearly points out the value of correct pricing. Who really WANTS to have to deal with having their home on the market this long. Clearly the motivation is NOT there. I'll have to look in my area out of curiousity.
Jeff
Yikes -- that is a *very* long time. That's not doing anybody any favors.
WoW.. what a large number of homes ! This is a HUGE number for sure ..
It doesn't do a seller any good to have their homes on the market for lengthy periods of time. It usually winds up in them selling it for significantly less than they would have if they'd just priced it propertly to sell quicky.
I agree that this is a REAL BIG PROBLEM!
If every agent just said NO to overpricing a home!
We would start getting serious sellers!
Thanks,
Tom Davis
Hi Brian~ That is a lot of homes on the market for a very long time! Reductions really are important!
I have to agree. There is no benefit to be listed forever. If it's not selling within the first month or so...it's overpriced and becoming a time waster.
Brian - hard to believe that any agent would want a listing for over a year...obviously the sellers are not motivated. What a time and money waster for the agent and I would hate for my sign to be up in a particular neighborhood on the same house for over a year! What must the neighbors think?
Its all about pricing the home right and knowing the market. True, homes are on the market longer today. But we, as Realtors need to be mindful of our pricing strategy prior to listing the property.
Brian, I find it amazing that sellers will put up with such long listing periods ... it's NOT FUN (as you've pointed out). Just price it right and get it gone!
This is why it is so hard to use days on market as an accurate tool. These kinds of listings skew the numners to the point it is more about the agents than the market conditions. You have to filter this type of listing out.
Another problem with listings on the market past six monts in the Dallas/Ft Worth area is that most agents use the standard search page to find homes. The problem with this is the form automatically sets a six-month cutoff date so any house in that area on the market for more than six months becomes invisible.
Good post! The only problem is that "priced right" can be interpreted by sellers to be "their" price. It has to be the market price.
Great post Brian... I agree on all fronts!
When we take listings we automatically schedule price reductions at intervals that are pre-agreed to. We don't want listings languishing on the market. We also use tools to show how much advertising has been done so it's never for a lack of exposure.
Don't forget about presentation of the property. Properly priced is important however recently we staged a home that had been on the market and the new listing agent (yes, the sellers changed agents) actually recommended raising the price $20K after it was staged and it was SOLD in 78 days - in that time it actually had an offer they refused, another offer that didn't work out and several other second showings. While pricing is an important part of the process, it's not the whole thing.....
saddly we have homes as low as $200k that have been on the market for well over a year to three years - sometimes it is the house, sometimes the marketing, sometimes it is the location - and the over abundance of inventory.
Some houes take a long time to sell - consumers look at the days on the market too and ask what is wrong or low ball the offer. Take the house off the market for a while - do some improvements and put it back on to get those days on the market down. Not a good sitation.
It's only worth what you can get for it. Makes me wonder if it becomes a short sale if the price is reduced and the seller doesn't want that. I see lots of homes on the market that end up with reduced prices as a short sale here.
Brian,
Wow, makes you wonder what these sellers and their goof ball agents are thinking. I think I going to do a feature article about 365 + day listings in my latest market report. Thanks for the idea.
kp
Brian, for whatever reason, condition or price, you don't want to see this happen. It makes no sense.
Great post!
Life would be perfect if every listing we had sold within the week of listing it. I make it my goal to get my listings sold within a reasonable period of time and when the listings don't sell within a reasonable period of time, I get my brain in gear and try this or that until something clicks. I don't lose sleep over a listing that I have tried everything in my power to get it sold when it is a good location and priced right, the right Buyer will come along when I least expect it. Maybe I am not the salesperson to sell it in my lifetime, then, I'll ask if I can refer their listing to another salesperson and hopefully that salesperson gets it sold and I get paid something for the time I spent on marketing the listing.
I see this all the time. Homes 300+ days on the market and my buyer clients always say, "There must be something wrong with the home. Let's look at other homes." These long DOM situations can be a disaster...
Brian,
Some homeowners refuse to accept what the market tells them, that's one thing, but real estate agents should also turn down listings that are clearly unsaleable due to unrealistic pricing.
We have a FSBO here that has had a sign in his yard for more than 4 years. I think he just likes meeting new people, mostly agents that try to get him to list with them. They always leave with more information than they came with..........and no listing.
I have a listing that has been on the market for almost a year - it belongs to a good friend who is in no hurry to sell - if somebody comes along willing to pay her price she will sell but otherwise is content to rent it out - that is something I would ONLY do for a friend, since she has no expectations that I will do any more than keep it in the MLS for her -
In reviewing comps for an offer that I wrote this morning, I ran across a home that had been on the market for 802 Days! I almost feel off my chair! Who am I kidding, I actually fell off my chair!
Good points. I am trying to convince some sellers now to lower their prices before their homes become shopworn and it is like pulling teeth.
They should know the reason as well, it isn't rocket science as to why a home isn't selling in this market.