Many years ago, when I first started in this business, a guru told me their are only 3 reasons why a house will not sell in a 'reasonable amount of time'. Those reasons are:

1. House is over-priced for the market.

2. House has not been marketed properly

3. House needs major repairs (ie. roof caving in)

In your market, if you were to list a rental house for sale and at a below market price,...what would be considered a 'reasonable amount of time' before you got a contract on that house? 3 months, 6 months or longer?

I make this post since I am considering selling one of my rentals.

I listed one last week and had 4 showings and 2 offers on it so far. This is a large single family though.

The question is kind of tough to answer because it really depends on the building. 3 bedroom Single families will always sell quicker than a 10 unit of a 400 sq ft 1 bedroom. The buyer pools are much smaller for the latter.

The main reason I see places sitting is because they are over priced and the owners won't drop. There's a 7 unit listed fsbo locally for $325,000. The owners on crack. There are 2 mls listings, a 6 unit for $180,000 and a 5 unit for $230,000. Both will SIT AND SIT AND SIT, because they're too high.

I think you could add a #4 to your gurus list too.

#4. Reason for selling?

Thanks NE for your answer. I would agree that most houses on the MLS are over-priced.

to elaborate on what NE says, if someone doesn't need to move , they can list high and keep living there until they get the offer they want. Seen this a couple times.

But in my market, you have a lot of houses being on the market because the owner moved into a nursing home, passed away, moving somewhere else , etc. and the result is a vacant or about to be vacant home and noone wants to keep paying the bills and taxes on a home thats vacant

David (MI)

All RE is local. That is the reason I asked for information pertaining to your local market.

I was referring to the MLS in my market. I do know that all RE agents in my city only sell 30% of their total listings. That means the other 70% get returned back to owners unsold. Why is this?

Also, the last time I looked at comps for a neighborhood, the average Days on the Market (DOM) was 180! That is an eternity.

60 days for an investor type and priced for an investor. Now if it was a rental and now trying to sell to a homeowner at homeowner pricing.....that is another matter.

As you said, Roy, it depends on your market. Right now, average sale time in my town is 75 days. under 30 is fast. 90 is borderline reasonable....anything over is slow.

If oil is discovered near your town...1 hour will be fast, 2 hours reasonable, 3 hours slow.

As you know most Class C hoods will only attract investors (who are notoriously cheap....thank yew) or blue collar folks who can't afford anything in a better hood. How are those two groups of buyers doing in your area? Good blue collar jobs? Robust REI club(s)? These types of properties require more than just standard exposure on the MLS and a yard sign. An agent should be target marking to his/her list of investors and also posting on Craigslist, signs in grocery stores, at the local community college, on bulletin boards at Lowes/Home Depot, etc. First time home buyers / white collar will be looking for the same house, but in a Class B hood. They are not your target, and they are the ones using the MLS primarily.

Be prepared for Buyers wanting owner finance. Perhaps be willing to offer sale via a lease-option (no installment sales, no contracts for deed, no land contracts) with a short term (no more than 2 years). Even a small change like that can dramatically increase the speed at which a property sells.

But like most things...PRICE is factor # 1. Price it right and it will FLY.

That proves my point,...most houses here on the MLS are over-priced.

And today, I may be making an offer on one these over-priced MLS houses. The owner made an attempt to FSBO at $60K but got no takers. She then gets an agent, drops the price to $45K and now expects this house to sell quickly on the MLS. The only problem here is the house needs $20K in repairs!

I just listed one of my for sale, and took it back off the market after three months. Reason being? It needs painted. Can't pass FHA. Here FHA kind of rules.

Ah, Roy my friend....you continue your time-honored strategy of revealing pertinent info AFTER we agonize over the details. (grins) And now we are discussing BUYING vs you SELLING. No worries. I enjoy this about you...it gets my creative juices flowing!

Okay so I was an agent once for 2 whopping years. As you can tell, I never made it big enough to stay, so my advice in this might not be worth the electrons it took to post. but I DID learn something in those 2 years...some SELLERS are irrational! It doesn't matter if the unit is over-priced, or needs $20K in repairs, or they could not sell it themselves. Logic plays no role. They want what they want and won't budget...failing to calculate that if they eat 12 months of vacancy costs (mowing, utilities, taxes, insurance, etc) that it would have been cheaper to just drop the price a few thousand and get the deal done!

I literally saw some houses sit for 3 YEARS on the MLS. My guess is the agent was just a friend who listed it to humor someone and never expected to sell it. You and I both know the holding costs on a property like that. Nuts!

How overpriced is she? $10K or more, I wouldn't fool with it now. She needs to be "wallet trained" and have it sit for another 90 days--costing her maintenance, upkeep, taxes, worry of break-in/vandalism, etc--so that the inescapable logic that she is overpriced is proved by the market. If the price is off by less than that...maybe you can work some magic.

My strategy would be to try to arrange a face-to-face with the Seller. The listing agent can come along to make her feel safe. Talk to her. Find out what she wants to do with the money after the sale. If she has no immediate use for it but just wants to dump it in a CD (certificate of depreciation!)...maybe she sells it to you on a 2 year lease-option, with an option price of 20% below what she's asking now (or whatever % is a good deal). You sublease to a tenant for 2 years and let their rent cover the lease payment. At the end of 2 years, if this is really a good hood...then the value should be above what it costs you to exercise your option and close the deal. Or maybe an all cash offer whittles down her stubbornness. I don't know. All I know is that agents like to get paid, and if this place is overpriced the agent knows he/she isn't going to get paid and might help "educate" the Seller on the facts of the market.

That said...some Sellers are just stubborn. Some are illogical and think, "I paid $X for it...cousin Lenny sold his house that is nothing like mine last year for $Y, so I should be able to get $Z and anything less than that someone is out to cheat me." Yes, I had a few sellers like that. Part of the reason I got out of RE sales after 2 years. I couldn't figure out how to deal with those folks. Nowadays I would just move on and let them list with someone else. Overall, if it takes more than 1 hour of negotiation...move on. Easier fish to catch. Come back in 3 months and see where it is then.

Good luck!

Sid hit the nail on the head. In my short time as a Realtor I would list a property, it wouldn't sell because what the seller wanted wasn't anywhere close to what market value was then they would jerk the listing in 60 days & rent it or rent to own it. The other reason the 70% aren't being renewed is because the seller is under water; they'll shop it to a different agent who will tell them the same thing the first agent did. No one has cash to bring to closing. It will sit until the seller gets an offer they can work with or the seller has cash to close. Which means someone else is buying the property & will be under water too & the cycle continues.

Sid,

I apologize for throwing curve balls at you (after the initial post) but I have a lot going on right now. I am trying to break out of my comfort zone, which is Class C neighborhoods, and get more into Class B hoods. (NE made a post about this situation just last week).

Here are more details about the $45K house. The owner is someone who inherited the house from a deceased relative which means ANY money she gets for the house is pure gravy.

Also, the owner lives in another state and I can't contact her because she has a contract with a listing agent on this house which is who I will have to make offer through. Last week, when I first met this agent, the agent tells me someone else has made a full price offer on the house but that offer is pending upon getting bank financing for the entire amount. Today, I will find out if this other person gets his financing approved and if not,..I am next in line to make an offer.

I told the listing agent my offer would be an all-cash offer with a quick closing and you will not have to split your commission with a buyers agent. That statement got her attention.

Ken,

The owner lives 100 miles away in the state of Georgia (tax records). Going behind a listing agent's back and dealing directly with her client (the owner) is not good. It would piss off the agent and back-fire on me.

Roy, keep throwin' those curves. Life and real estate are all about hitting curve balls. I don't mind at all. Rather, I kind of like how the story evolves. Keeps me guessing and nimble.

Inherited house...yep, you'd think she'd take easy money and walk, but again...logic doesn't matter to this Seller. Or at least OUR brand of logic doesn't.

Maybe in her mind this is Dear Old Aunt Tilly's house, and to honor DOAT's memory (and make a few bucks), she has to sell it for "$XX,XXX" because "that's what Aunt Tilly always said it was worth." Oi weh! Ask me about relatives and estates. Logic go so far out the frickin' window you might as well be trying to fly from New York to New Zealand on a cattle plane. Or maybe it's her childhood home and she mas "memories"....memories don't sell for cheap until they get too expensive to hang onto.

Let's talk about the other offer. 100% finance? Is it going to be a rental or owner-occ. If a rental, doubt it will go thru, but either way you come in strong with a certified bank check attached to your offer. I would go ahead and present your offer NOW, with a 72 hour acceptance on it. Let her see you and the agent see you are serious. That agent is obliged to present ALL offers, even if there is another offer and/or contract. That assumes this agent is scrupulous. (wink)

One more thing in your favor regarding the other guys' offer. With 100% financing, the house won't appraise out if you are correct that the listing is overpriced.

Actually your guru is wrong. There's only one reason... priced too high.

If it's priced right, and in MLS, agents will find it and show it to their clients.

Marketing only becomes an issue when you have to justify your higher than expected asking price.

Repairs are just one of the factors in pricing. If it needs lots of repairs, then it's an issue if it's priced too high. If it's priced at the low end of the market then those needed repairs create an opportunity.

Roy,

Flies has it. EVERYTHING boils down to price, even the emotional reasons.

That REPAIRS category can also include obsolete layout (open floor plans are the hot thing) and bad location (my brother shopped a home next to the city's parking lot where they stored the garbage trucks at night)

Selling: A local flipper's agent is using "Coming Soon" to build interest before the home is ready.

My local agents are busy with $385,000 new construction with 7% commission so the smart ones are not wasting their time on $30K houses at 6%. If you do the math, after commission splits the agent is lucky to bring in $500.

First time buyers (30%?? of the market) are in the $180K range and demanding absolute PERFECTION.

The idea of a "starter" home has changed due to low interest rates. Boomer parent are encouraging their millennial kids to snatch up a big house while rates are low so they have a big house to sell when THEY downsize.

Other whys?? Just keep making more offers. Don't let one offer slow you down. Deals are ALWAYS out there!

Sid,

If the $45K house needed no repairs, it would sell for approx. $55K (it is a small 2/2/2 brick house). From a business standpoint, I can't justify paying anymore than $25-$30K for the house. In addition to the selling price of the house, the listing agent's commission ($2,500.00) and closing cost ?? will have to be negotiated also.

Now, if the seller will accept my $25K first offer, I "may" offer to pay the RE agent's commission and $500.00 dollars towards the closing cost. This way the seller can walk away with $25K at the closing table.

Roy,

Buying: Deals on nicey nice houses are are as plentiful as the scrappy little shacks. Just gotta use different bait to fish in that pond.

Easy to buy the little ones with cash on hand. Just save up and buy a nicer house with cash.

Challenge: go back and add up how much you have invested in those shacks (purchase plus repairs) and you're looking at a nice home price.

BRAD

Brad20k,

This brick house is the exact same fixer-upper type house that I normally pay $10K in a Class C neighborhood. However, this one is located in a Class B neighborhood (think better tenants and higher rents), however, it has a higher list price than I am accustomed to. Even though I hate making offers through RE agents, in this situation I don't have any choice,..it is what it is.

The most I have ever paid for any one house is $25K and that was a house was in a good neighborhood just like the brick house mentioned above.

My thought is it depends on who your target audience is.

If you are selling to a retail buyer......4 to 6 months you should have activity on it if it is truly below market price.

If you are selling investor to investor, it might take longer as a duplex is a niche product with a limited number f buyers

If you are trying to whole sale flip a property or a prehab project, having it for sale for more than three months is a problem.

If you have something that is a rehab, you might be listing it too early for a buyer to see what you are planning on doing