Three reasons why your house is still on the market

By John Adams

Published on: 07/13/08

If you've been trying to sell your house, you already know this is one of the most challenging markets we have seen in years.

First, you are fighting a serious excess inventory of new homes. Builders simply overbuilt, and we are many months away from a complete absorption of those homes. In addition, many builders have expensive construction loans and are highly motivated to make a sale.

Next, there is a shortage of ready, willing and able buyers in today's marketplace. I guess a lot of people are simply nervous about the economic future, and when someone is nervous, they tend to postpone major purchases. The truth is that a lot of prospective buyers are waiting to see what will happen.

To make matters worse, a flood of houses for sale is being added to the market by banks and lenders who have foreclosed against borrowers who should never have purchased in the first place. Many of these loans were made to borrowers with questionable credit and unstable incomes. Add that to an adjustable rate loan with little or no down payment, and it spells foreclosure as often as not. These distressed home sales are poisoning the resale environment.

Finally, hovering over everything, there is an air of uncertainty about our future. This lack of consumer confidence is driven home every time we fill up our gas tanks. All these things (and more) have ganged up to make this a challenging summer for the sale of your house.

Even so, it is likely that about 5 million existing homes will be resold this calendar year. If 5 million other people can find a way to sell their houses, surely you can as well.

Here are three key areas to address to make sure you are giving your home every chance for an acceptable offer:

CONDITION: In the world of real estate, there are two markets — retail and wholesale. In order to achieve retail price, the house must be in excellent condition. Anything below "excellent" will drop your home into the wholesale pricing category, and your dollars drop significantly. So don't even try to sell today unless your home is in excellent condition.

Buyers today are not willing to take on a renovation project. There is so much inventory on the market that they simply don't have to. I consider this advice so important that I would make this statement: If you are unable to put your home into excellent condition prior to selling, you might be better off postponing your sale or leasing your home until the market improves.

MARKETING: I know what you are thinking. You are sort of hoping that, because the market is so tight and because of the Internet and everything, you can just put a sign in the yard and your house will sell without an agent, right? Well, it's also possible that the tooth fairy will deliver a full-priced offer under your pillow tonight while you sleep, but it's highly unlikely. The reality is that, today more than ever, you will need professional marketing assistance to get your home sold. And the Internet is not the one-stop solution to all real estate problems that some thought it might become.

The truth is, buyers are looking in a variety of places for your home, and yes, the Internet is one of those places. But the sign in the yard and the flier at the school may prove just as effective as anything else when it comes to getting buyer attention.

If information about the features and benefits of your particular house is not reaching the prospects you hope to attract, then whatever you are doing is ineffective, and you will very likely need professional help. Failing to obtain it is usually penny wise and pound foolish.

PRICING: The price you ask for your home is critically important. In today's real estate market, there are huge numbers of so-called sellers who are simply testing the waters. Today that attitude almost guarantees an expired listing. Instead, buyers today are engaged in an exercise of comparison shopping. No one cares what it may have been worth then. Let's determine what it's worth today. And the only way to do that is to look at comparable homes that have sold recently.

Condition, marketing and price. These three factors, more than anything else, will impact your ability to sell your home. And over the next three weeks, we will look at each in more detail.