By: Mark Howe
"MY PROPERTY DID NOT SELL.".... The 5 Word Phrase that EVERY sincere property seller hopes to AVOID saying - and for good reasons.
The primary reasons all sincere sellers don't want to add "MY PROPERTY DID NOT SELL" to their vocabulary are: Failure and Loss of Money. The failure-to-sell has some kind of negative impact on the home owner or the home owner's family - and it is not uncommon that continued failure-to-sell often comes with some kind of negative financial consequence as well. When the consequence of a failure becomes financial, or affects your family in a negative way - it does become a subject that is taken seriously, and should be.
We want to acknowledge your time investment involved in reading and digesting this material. We have constructed this article to be respectful of your time, and make the time and ideas we'll share as productive and beneficial as possible. We have avoided the inclusion of any kind of "We're #1" and "We're The Best" real-estate-company Rah-Rah, as well as the use of confusing real estate industry "jargon". There are two primary reasons for you to be reading this material at all. You are wanting to avoid ever saying the 5-Word-Phrase "My Property Did NOT Sell" altogether - or you're already saying those words. The principles, concepts, strategies, and tactics presented in this article - have worked for over 1400 of our home sellers over the past 2+ decades.
First, and VERY briefly....who we are, and why you should listen to us.
I am Mark Howe and I reliably sell 90-95% of the homes I market and have done so for over two decades. To put this data in context - In Central Indiana, even during the best markets we've seen in the past 20 years, the highest average success rate for all sellers in our market has never exceeded 60%. And in the period of 2008-2012, many areas saw only about 1 out of 4 sellers, or 25%, selling succeessfully - and 3 out of 4 failing. The primary reason you should consider this material relevant, is because my performance statistics prove that my seller's succeed over 90% of the time - and to date, I have helped over 1400 Sellers happily add the words "My Property DID Sell" to their vocabulary. I invite you to compare my performance to any other real estate agent's provable performance statistics. I started in the real estate business in 1990. Early in my real estate career, I made it a priority to study some of the most successful real estate agents the industry had seen at that point - and I discovered the concepts you are about to read. I later taught these same concepts to 150 of my colleagues, who implemented them into their own real estate businesses with similar results for their clients. It is with great confidence that I assure you that all of the concepts I'll be sharing have been proven effective. If it sounds like the author is in "teacher-mode" at times - it's not your imagination.
It's worth noting that this information will only benefit "sincere" sellers of real estate. Here are the characteristics of a "sincere seller": Sincere Sellers desire a successful sale, at the Maximum Possible Price, in a Reasonable Time Frame, with the Fewest Hassles and No Surprises. And I can also say from experience that my home seller clients who have benefited the most from the strategies I'll be covering, also invested the few minutes necessary to read and understand the material that you are now reading.
MY PROPERTY DID NOT SELL. WHY?!
There's an interesting fact in the real estate market that I've discovered that you can verify for yourself. That observations is: There must be an endless number of reasons that properties don't sell - I've personally lost count of all the reasons I've heard from home sellers, and fellow real estate agents. So try this - if you know a person, or better yet, several people, who have attempted to sell a property, and failed.....people who can say "MY PROPERTY DID NOT SELL" - ask them this question: "Why?" Or, think back to the last few people you know who did say those 5 Words, and then elaborated to you about "why" the property didn't sell. Or possibly you can say from past experience "MY PROPERTY DID NOT SELL" and you can write down some "why?" answers. To get the most benefits right now from the information you're reading - just take a minute or two, and jot down some of the reasons for "failing-to-sell" that you've heard, or personally experienced. If you asked a few people who've been afflicted with failure-to-sell, you might hear things like "It didn't sell because of the market", "It didn't sell because the agent didn't show the property", "It didn't sell because of the neighborhood" - if you asked a dozen, you might hear up to a dozen distinctly different sounding explanations for why the property did not sell. It would almost seem that the numbers of explanations for Failure-To-Sell could be infinite.
Now, we're going to consider the "Why?" question in a slightly different way that's going to get us right into the heart of the matter. "Failure-To-Sell" is a problem with specific causes - which means "Failure-To-Sell" can be solved or prevented entirely when we understand why properties sell successfully.
"REASONS VS. EXCUSES"
There are actually only a few identifiable, specific, correctible, REASONS that properties become afflicted with FAILURE-TO-SELL. It's the EXCUSES for FAILURE-TO-SELL that are so numerous. So first, we're going to cut through the invalid excuses and find the answers, the reasons, that properties do, or don't, sell.
What is an EXCUSE for having "Failure-To-Sell"? The biggest tip-off that what you're hearing, or speaking, are EXCUSES for "Failure-To-Sell" is that it sounds like BLAMING someone, or some thing. The challenges with EXCUSES are many - the greatest challenging being that EXCUSES can obstruct the path to finding productive solutions and answers - another hard challenge is that the kind of EXCUSES I'm talking about here are almost always 100% TRUE STATEMENTS. It also makes writing about this subject challenging because just explaining this concept does run the risk of alienating some folks who will read this material. We can't completely invalidate the EXCUSES - because they are usually 100% TRUE - but we must get past them so we can find actual REASONS.
When a property has been marketed for a while, and has failed-to-sell, home seller's and their agents have certain favorite people and things they commonly "blame" for the Failure-To-Sell.
In a nutshell, common targets of blame by home sellers: Their Agent, Other Agents, The Market, The Economy, Time of Year, The Neighborhood and/or The Neighbors.
Common targets of blame by the real estate agents who have listed a property that becomes afflicted with Failure-To-Sell include: The Market, The Economy, Location, Lenders, and The Seller.
And did you notice who shows up on the Seller's Blame List and the Listing Agent's Blame List? - EACH OTHER! Are you seeing it? The Property has Failure To Sell.....and the Seller and the Listing Agent are, at least silently, blaming each other....while the property, which is failing to sell for actual reasons, is like the sick patient that isn't getting any care.
This next story is going to bring the difference between EXCUSES AND REASONS
into clear focus. I was teaching this concept to a room full of other real estate agents and I realized that I wasn't getting through to them about this concept. I also realized that if I didn't get though to them on this point, all the other strategies that follow would not work well either. So I asked how many agents in the room had at least one listing that had been on the market for at least 5 months, and was looking like it would fail to sell. By the response, it was clear that almost every agent in the room had at least one listing that fit the profile. (In real estate training classes, most agents jump at the chance to share a problem they need to solve - that's natural - it's also something to avoid when teaching a class because there can never be enough time to dissect every problem in a room full of real estate agents AND also teach necessary skills and concepts.) Solving Failure-To-Sell requires some serious actual work and effort to discover the REASONS.
I called on a young man in the back of the room, I'll call "Jim". He was in his second year in the real estate business. He had done well in real estate in less than two years - closing many sales. I also chose him because I knew his disposition and that I could press and challenge him and he wouldn't easily take offense under the pressure. Jim explained that the time on his 6 month listing contract with a particular seller was going to be running out soon. The property was priced at $225,000. He proceeded to explain all the time, effort, and money he had spent marketing the property - and the amount of work and effort and money that he had poured into marketing the property was impressive - AND the property was still failing-to-sell. I asked the agent why he thought the property had failed to sell, so far, and he started repeating again all the efforts he had made. So I pressed him a little more for some REASONS the property had not sold and he went for the EXCUSES: "I think the market is just down"....."You know interest rates have gone up some and that probably has something to do with it"......"And it's not the best time of year to try to sell anything, right?"..... "Oh, and when the seller built the home they made the kitchen too small" etc. etc. etc. Then I asked Jim - "What reasons do you think your seller would give for the property not selling?" He paused, and then speculated that his sellers would probably give some of the same explanations...."economy, time of year, etc." I asked Jim: "Do you think they are blaming you at any level?" He responded: "Maybe.....they keep telling me how they've never had a problem selling any of their other homes quickly....and the last few times we've talked, the sellers seemed a little more distant and a little standoffish to me." One other student in the class looked back at Jim and said "Yep, they're blaming you."
I explained to Jim that he had not suggested one thing that he or the seller could change that would solve the Failure-To-Sell Problem. I went down his list - you cannot change the economy, interest rates, time of year, size of the kitchen. I went down his seller's list and explained that his sellers could not change any of those things either - but that there was one thing on the seller's list that they, the sellers, could easily change - Jim! So just before time for a classroom break, I summarized what I had heard from Jim - "So Jim, so far we know that you've worked your tail off - and that you personally don't have a history of being afflicted with Failure-To-Sell, you've closed many sales successfully. And we know that you sellers don't have a history of Failure-To-Sell - they've sold other homes successfully. The house you're talking about is showing symptoms of Failure-To-Sell, and between you and the sellers, the only possible change/answer that exists for solving that condition, is getting rid of Jim?"
At this point, I had pushed things about as far as I could with Jim, and about as far as he was good-naturedly going to allow me. He spoke up: "Look, I raised my hand because I need answers and I don't have them - I have no more bullets in the gun".
I thanked Jim for allowing me to put him on the spot in front of his piers. I explained that we were going to take the question of his listing in a whole new/fresh direction and approach - - - but that before we could do that, we needed to be able to differentiate from EXCUSES and REASONS that properties sell, or don't. Now, we must push all these excuses aside, so we can find some real possible REASONS. So, I asked Jim to find a computer during the break. I asked him to find out how many other properties had sold, since his listing had come on the market, within 1 mile of his listing, where a buyer had paid between $200,000 and $250,000.
When class resumed - I asked Jim what he had found out. He reported that since he had listed the subject property, 8 buyers had purchased homes between $200K-$250K within 1 mile of his listing. He also mentioned that he noticed that when he started looking closer at those 8 sales of competing properties, that he recognized some of the agents who represented the buyers in those sales - and that at least 6 of those agents had also shown his Failure-To-Sell listing that we had been talking about.
Jim had found what we would call a "warm trail" to investigate. Jim had identified at least six other properties where buyers had chosen those homes over Jim's listing.
I explained to Jim that it sounded like his listing was actually helping other sellers sell their properties. He agreed.
Jim's assignment for the following week's class was to get the answers to a critical question:
"Why did all those buyers buy the houses they bought, instead of buying your listing?"
I advised Jim to study the other properties that had sold to find clues - what did the buyer's pay?....what type of financing did they use?....what features did the properties have?....what was the condition of the property at time of purchase?....were there any special arrangements of any kind that were appealing to the buyers? And finally, I explained to Jim that if all else failed, to go directly to the houses that had sold instead of his listing, and literally ask the new owners why they purchased what they did and why they hadn't purchased his listing since they had seen it.
So, one week later. Jim entered the classroom with a totally different perspective. He had studied the successful sales in his listing's area that he had found - and he had actually went to all 8 sold properties and talked to the new owners. He had gone about as straight to the source as any human being could - and he asked them why they bought what they did and asked them to be totally blunt about why they hadn't bought his listing - and what he learned was priceless. Jim had already met with his sellers and communicated what he had learned about these buyers who had bought other properties. Jim had some ideas for a new pricing strategy, some suggestions for the seller that would make the property show better, some new financing alternatives that could be offered - in other words, Jim had learned the real REASONS his listing had become afflicted with Failure-To-Sell, and now he was getting much closer to fixing the problem. When another week had passed, Jim arrived in class reporting that his "Failure-To-Sell" listing was now under contract with a qualified buyer. Failure-To-Sell had turned to SOLD! And within about a month, a majority of the agents in the class had performed a similar examination of their own listings that were symptomatic of "Failure-To-Sell" and had seen similar results.
KEY CONCEPT - 5 CORE CRITICAL ELEMENTS OF A SUCCESSFUL SALE.
While the excuses for Failure-To-Sell are probably endless, there are actually ONLY 5 CORE CRITICAL ELEMENTS OF EVERY SUCCESSFUL SALE. When Jim and the other students went playing detective to discover the real reasons that their troubled listings were not selling - they had also learned the 5 Core Critical Elements of every successful sale. When Jim was given the assignment to find out why 6 other buyers had bought other properties, he went armed with this concept that helped him keep his search for answers focused on ACTUAL REASONS, so that excuses wouldn't blur the picture.
The 5 Core Critical Elements of Every Successful Sale:
Notice that we call these the 5 - "CORE" CRITICAL ELEMENTS OF A SUCCESSFUL SALE. They are the CORE Elements because under each of those 5, you'll uncover hundreds of details and decisions that are involved in handling each of them.
For Example: One item of the 5 CORE CRITICAL ELEMENTS, "CONDITION". There are usually dozens, if not hundreds, of details that we cover with every home seller with respect to how the property can be best presented/staged for visiting buyers, and at minimal or no cost to the seller if necessary.
CRUCIAL UNDERSTANDING: Every reason and answer that any property sells, is contained within the 5 Core Critical Elements. When the 5 Core Critical Elements are all addressed as completely as possible, the natural result is a successful sale.
Each of the 5 Critical Elements actually stand for a question that must be asked in order to completely cover all 5 in a Successful Selling Effort - here they are:
LOCATION - Key Question: "What are the best location benefits of the property that must be promoted (bragged about) in the marketing for the property?" We ask all of our home sellers to tell us the Location Benefits that they've appreciated most about their home, that they believe the next owners will enjoy most too - and we make sure prospective buyers are aware of those advantages. Above all, we must accept the fact that a property's location is what it is and that it's probably not going to be cost-effective to move the house! The very best that can ever be done, with respect to the LOCATION element of the 5, is to assertively promote all the Location Benefits of the property to buyers.
CONDITION - Key Question: "What is necessary to make the property appealing enough so that a buyer will buy it?"......A.K.A. "How do we make a buyer love this home?" When Jim went and talked to the 8 people who had recently purchased a property, and he asked them why they purchased the home they purchased - he heard a lot of different reasons - but all of the new owners started their answer the same way. They all began with something like: "When we saw it, we loved it!" And then they proceeded to tell Jim what they loved about it - which ended up being a long list of all different kinds of reasons. The only thing that was CONSISTENT from all the buyers was: "Oh we saw it and just loved it!" So the challenge for Jim was to help his home sellers find all kinds of ways to help buyers "just love it" so one of them would "just buy it"! Those buyers proved to Jim a fact that is too often overlooked - the buyer's initial interest in a property is always an emotional experience, first. "We just loved it", 8 times, got the message through loud and clear to Jim that it's always an emotional thing in the beginning. Jim helped the sellers with some new ideas on furniture placement, lighting, mood, and encouraged them to freshen up the paint in a couple key areas of the home. Pretty soon the sellers were burning candles a few hours a day, leaving soft music playing during showings, cookies on the counter for the people coming to see the home - and the list of little details went on and on. It's not uncommon for the process of preparing a home for market to take a little time and effort to bring a home to what we call the Peak of Buyer Emotional Appeal - but the time and effort does pay off with great regularity.
TERMS OFFERED - Key Question: "HOW are buyers buying homes like this one?" Now this one changes the subject matter entirely. And it changes the focus from one that involves the buyer's emotion, like the previous Critical Element of CONDITION. Real Buyers proved to Jim that in the beginning stages of all affirmative buying decisions, buyers first buy emotionally - "Oh we just love it!" But that's not the point that the sale "happens" - in other words, Jim could not realistically expect a rational human being to walk into his $225,000 listing and say: "Oh, we just love it Jim, we'll take it, write it up!" No no - real breathing human beings with $225,000 don't make $225,000 buying decisions that way.
This Item "TERMS OFFERED" becomes most important, when a buyer is closest to buying a property. When a buyer has narrowed their search down to their favorite two or three properties - a big part of the buyer's decision making at that point becomes logical. And almost all buyers, in some way, will "weigh the pros and the cons" of two or three different properties - comparing them to each other to see how they stack up. Among the things buyers will compare: Types of financing that can be used on competing properties so a monthly payment can be calculated, any incentives or inducements like Home Warranties, inclusion of appliances, how much utilities will cost, and multiple other considerations. Here's the critical point to understand about TERMS OFFERED - at the point when a buyer is making their final decision between two or three properties, there is no middle ground - the buyer either ends up buying your property or your property ends up helping some other seller sell their property instead.
PRICING STRATEGY: Key Question: "What is the Precise Price Point that will result in the highest possible sale price?" Nothing short of a Market Evaluation, using the format of an appraisal, is sufficient, to START answering the key question above. Prior to placing a property on the market, we use the appraisal process to find the "Provable Value Range" for a property, and then we do an in depth study of the competition (other homes on the market for sale). The Goal is to beat the competition and sell at the Highest Possible Price - and our Market Evaluation Process does provide those answers with accuracy. The fundamentals of Pricing Strategy are HIGHLY VARIABLE - and that makes this Pricing Strategy a difficult thing to write about, and a difficult thing to teach. Correct and effective Pricing Strategy never happens exactly the same on any two properties. I'm going to give you two different real world examples of how effective pricing strategy comes together - and how an understanding of buyers in the market is always the best guide.
Pricing Strategy Example #1 - Remember Jim's listing that was running out of time? Jim spoke with 8 other buyers who had purchased homes like his listing. I asked Jim what those buyers said about how good of a value their home choice was. Jim confirmed that all 8 new owners had mentioned that they believed the home they purchased was a decent, or good, value. None of the new owners talked as if they had gotten a "great buy", none of them said things like "Oh, we stole this place!" Jim had uncovered another important characteristic of the buyers of homes like his listing that was failing-to-sell - - - those buyers all believed that they had paid a fair amount for their home and had gotten a good value. Jim became focused - he now understood the importance of selling his listing as a "good value" - because that's what were buying. Jim, with the help of his sellers, began looking for every little way possible, not only the LIST PRICE of the property, but in the property's CONDITION, TERMS OFFERED, as well as the comments in the property's MARKETING (The 5th of the 5 Critical Elements) - - - they brainstormed for every possible thing about the home that made it a good value. Once Jim understood the expectations of the buyers, figuring out the best courses of direction became much easier. So that's the key lesson here - DO EVERYTHING YOU CAN TO MOVE TOWARD THE EXPECTATIONS OF THE BUYERS. Jim's MARKETING of his listing, not coincidentally, started bragging about multiple different things that made the property a good value.
Pricing Strategy Example #2: Lori and I arrive at a seller's property. The owner explains to us that he purchased the property at Tax Sale a few weeks before, sight unseen, for only a couple thousand dollars. The owner is concerned because he's afraid he'll never be able to sell it at all - he asks if we've ever seen an uglier house in our lives. The home is located in an area with a high concentration of foreclosures - so there are plenty of cheap houses for sale - and some of them have been selling recently. Now, to properly paint the picture -the property is marginally "livable" - and the owner's assessment that it is one ugly property, is true - the place practically barks at cars when they go by. When we perform the Market Evaluation, and study the buyers who purchased other ugly houses - we find a common expectation of those buyers - those buyers expect a REALLY GREAT BUY.....the kind of GREAT BUY where a buyer can make a profit by fixing the place up and either selling it or renting it. By now, you're getting it - - - this property must be marketed as a PHENOMINAL VALUE where the buyer can achieve high returns on their investment - - - because that's what buyers expect when they buy "HouseZilla"!
MARKETING: "Key Question": How do we get the attention of the Most Qualified Buyers? There are actually 2 critical answers to this question.
First, MARKETING TOOLS - I promised you a limitation on real estate company "rah-rah" at the beginning of this material. Lori and I are affiliated with RE/MAX for many reasons, but the primary reason is that RE/MAX agents are representing more buyers in real estate transactions than the agents of any other company. Not surprisingly, RE/MAX agents also have access to the latest and best MARKTING TOOLS in the industry. It is our goal to sell our seller's properties - so our affiliation with the company that is representing more buyers than any other is a natural fit.
The Second Part to the Key Question about MARKETING - ("How do we get the attention of the most qualified buyers?") - takes us back to the concept of the 5 Critical Elements. When all 5 are addressed completely, and thoroughly, as this material has discussed - the natural movement of the property is TOWARD THE MARKET. When all 5 are working like gears in a well-oiled machine, the Marketing Tools offered by RE/MAX literally come to life with results.
During our daily real estate day, sometimes Lori or I come across the listings of properties that have been on the market with other brokers, that didn't sell, and the property catches our eye for multiple reasons - in other words, multiple items in the previous listing that, according to the concept of the 5 Core Critical Elements, could have been improved. Several years ago, we decided that when we came across a property that caught our eye like that, to do something old fashioned and just write a letter to the owner of the property and share with them that we may have found some specific answers about why their property didn't sell. When those owners contact us, well over 90% of the time, we've cured the property's previous "Failure-To-Sell" condition.
The first step of our process for implementing the 5 Core Critical Elements with every seller, is to make an initial visit to the property so we can gather all necessary information to complete the MARKET EVALUATION described above. Within about 2 business days, we'll meet back with the home seller for a more extensive meeting. At the Second Meeting, our goal is to paint a picture of what a Successful Sales Process were implemented using the 5 Core Critical Elements as a foundation.
We want to THANK YOU for the time you've invested reading this material - your knowledge base of the fundamentals of a successful real estate selling process has greatly increased. We look forward to hearing from you, and the opportunity to serve you in the future.
Best of Everything,
Mark and Lori Howe
RE/MAX Real Estate Group
Mark: (317) 714-7744
Lori: (317) 714-6518
Mark Email: firstname.lastname@example.org
Lori Email: email@example.com