Why Some Houses Sit While Others Sell

Today I want to ask the question: do you want your house to sit on the market or do you want it to sell? Well, the fundamental difference is you have to understand that just being ON the market is not the same as being IN the market. Let’s look at it this way.

Pricing and Condition

If you have all the houses in the market, you have one axis here that’s pricing. The houses that are at the top of this axis are those that are priced above market value. They’re the highest priced, so they’re not very aggressively priced. At the bottom of the axis, you’ve got the homes that are most aggressively priced. Think of foreclosures, short sales, estate sales and homes that have not been taken care of or that are in rough areas.

The other axis down here is condition. Those are the two things that add up to value: pricing and condition. On the right hand side, you’ve got those homes that need the most work; they’re in the least competitive condition and they haven’t been staged very well. As you move closer to the left of the axis, you’ve got those homes that are pristine condition. Think brand new homes, that don’t need any work.

So it’s all about pricing and condition.

So as buyers get their daily email of all the homes that are available, in just a couple of hours, they’ll sort through those based on geography and pricing, and they’ll get a subset. They will quickly determine which houses are IN the market and which houses are OUT of the market. And it’s all about the market that you’re in.

The market you’re in

Back in 2007 we had a huge sellers market – you put a sign in the yard, you got multiple offers. The market of homes that were actually in the market, the ones that buyers would consider purchasing, was huge. All those houses were attracting offers and they were selling. And the market of homes that was out, was actually quite small. You could actually price your house just outside and with appreciation, it would often be recaptured.

2022 was different. COVID and the stay at home mandates drove a housing demand the likes of which we’d never seen. People who had to stay at home all day, every day realized they wanted or needed a bigger home. What’s more, interest rates plummeted to unheard of 2% rates for 15 and 30 year mortgages. The result was a frenzy of homebuying activity that saw home-sellers getting dozens of offers, all well over list price, and many with inspection and appraisal waivers. Again, all you had to do was put a sign in the yard and pick between a bevy of offers.

Now that’s a far cry from the market that we’re facing today.

Today we have a market that is much, much different. Inflation, and the Fed’s efforts to combat it, caused interest rates to soar into the mid 7% range, and suddenly homeowners who were sitting on 3 and 4% mortgages weren’t willing to sell their current homes only to have to get into a 6 or 7% mortgage on their next home. The result is that we have a diminished housing supply that is only now starting to rebound. But BECAUSE we still have inflated interest rates AND the misconception that we’ve moved into a buyers market, homebuyers are looking for their absolute best deals.

Are you IN or OUT?

So let’s take a look – how do you know if your house is IN this market or OUT of it? It’s really as simple as showings and offers.

If you put your home on the market, and you think you’ve priced it very aggressively and you think you’ve got it in the right condition, but you’re not getting any showings, the market is telling you that you are OUT of the market.

Now here’s the tricky thing – if your house has been showing for two weeks, lots of buyers are going through but you’re not getting offers, you’re actually in what we call NO MAN’S LAND. This is dangerous territory. You’re attracting the eyeballs of buyers, but what you’re really doing is selling the house down the street. The one house out of the seven that they looked at that weekend? That was the one that was the most competitively priced and in the best condition. That was the only house that was really in the market for them.

So remember – if you’re not getting showings or offers, you’re out of the market. If you’re getting showings but no offers, you’re probably close to the market but you’re still in no man’s land . The only way that you know you’re in the market is when you get offers.

So as you work with your Realtor, look at what the market is telling you. If you’re not getting that feedback of showings and offers, work on your price, and work on your condition until you find the market. Good luck and happy pricing.