Countless showings, but no offers? What you should do next...

Dave,

Our house has been on the market for what seems like ages! We would really like to sell it as soon as possible because the whole process is beginning to wear us out! We’ve had countless showings and even a few open houses. Why we don’t have any offers is a mystery to us. The house is in good condition and we think we are in a great location. Have you had houses in the past that just don’t seem to sell? Do you have any ideas on why we aren’t getting any offers? What can we do differently to ensure our home gets sold in the near future?

Judy and Bob, Grand Junction

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 Judy and Bob,

Fear not, you are not alone! Yes, I have had houses that just would not sell and believe me, there is no magic bullet or secret sauce to end the frustration of the house that is a chronic non-seller! There are times when, even if you reduce the price to a below market value buyers still find them unsavory and not offer worthy. I have heard it said in the medical field that the disease with no diagnosis and no known cure is always the hardest one to treat! The same is true in real estate, but ultimately in real estate there is always an answer! Keep the faith, because unless you have one of the chosen few that just stubbornly refuse to sell, I am going to be able to give you some idea of where to look and adjust to get your desired result.

I tell people all the time, I am not the sharpest knife in the drawer and I am living proof you don’t have to be a rocket scientist to be successful at selling homes. The process, when boiled down to the basics, is really quite simple regardless of how complicated people choose to make it.  You want to be on target with the three things you can control, Price, Condition and Marketing. It sounds like your agent is doing their job effectively from a marketing perspective. You have had many showings and they have even held open houses to help generate traffic and attract buyers to your home, yet no offers. It also sounds like the condition is good. If you have not received feedback that indicates that you need to make some changes to the condition in order to entice buyers, then it is likely that you are in good. Now what we have left is price. Price is always the most difficult subject to tackle for any agent or any seller!

“Where price is concerned there are a couple ways to attack it. You will either be willing to listen to the market and adjust the price accordingly or you will choose to set it and forget it and wait till you find the right butt for the saddle. ”

Where price is concerned there are a couple ways to attack it. You will either be willing to listen to the market and adjust the price accordingly or you will choose to set it and forget it and wait till you find the right butt for the saddle. There are cases that can be made for both approaches. First, statistically speaking, you should have had an offer within 12 showings (on average) all else being equal. If “countless” showings means in excess of 12 then you really need to start considering a reconsideration of your pricing strategy. If you are nearing or over 18 showings it is likely time for action. I have heard sellers say this countless times, “all the feedback indicates that the price is ok, nobody is objecting to our price so it must be something else. If the buyer is interested they will surely make an offer.” I can tell you, this is faulty (but VERY common) logic. No offers and no or few second showings means they are objecting to your price by purchasing something they perceive is a better value at a similar price. Believe me, if a buyer smells value they will pounce! The “real” feedback you need to listen to is the lack of offers…sometimes that silence provides truth.  If you decide to wait long enough one of two things will happen, the market will catch you (assuming the market is going up) or you will find the perfect butt for your seat! I have seen both methods be successful, one just typically takes a lot longer than the other and is ultimately more frustrating.

To move the process along at a faster pace, be willing to adjust your price until you get the desired result. The good news is you have had a lot of showings so you probably are not way off, probably a 3-5% adjustment will do the trick! Talk to your agent and get their input on a proper price adjustment. I would bet your desired outcome is closer than it feels! Hang in there and Best of luck. I hope this helps.

Dave Kimbrough
The Kimbrough Team

Have a question? Ask Dave!

Common closing expenses for sellers

Dave,

We are currently in the process of selling our home and it just went under contract—yay! We want to know what to expect financially from this point forward. What are common closing expenses for sellers?

 Thanks!

Cheryl, Palisade

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Cheryl,

Oh my gosh, this is such a great question and one that I get ALL the time! As a seller you have the privilege of paying the sales commission you agreed to with your listing agent, assuming your home is listed with a Realtor. Costs associated with selling your home that are the sellers responsibility are varied, but you can almost always calculate an additional 1% if your sales price is UNDER $300,000 and .7% if your home is over $300,000. If you calculate it that way you will, almost always, come up with a slight over estimate of your closing costs. 

The most common cost that is overlooked is your property tax. What most people don’t fully realize, as I did not prior to becoming a real estate agent, is that our property taxes are paid in arrears. It’s probably something most folks just don’t think much about and it often times is a bit of a surprise. How it works is, the title company will pro-rate the current taxes from January 1 to the day of closing and you will have that amount debited on your settlement sheet. The two largest debits you will see (outside of real estate commissions and your mortgage payoff) will be the taxes and the title insurance policy. Title insurance simply indemnifies that the title to the property will be passed from you to the new owner in good standing and free of any liens. For a $250,000 home you can expect this expense to be in the $900-$1000 range, these costs are on a sliding scale based on purchase price.

The most discussed fee on the sellers settlement statement is often the charge for water & sewer. The bills for water and sewer, if left unpaid, can be held as a lien against the property and thus MUST be settled at the time of close to ensure the passing of a clean title (as discussed above). In order to ensure that the amount that is owed is covered, the title companies always hold out an amount significantly over (generally around $200) your typical water and sewer bill. This ensures there is enough to pay it off and they will refund the difference back to you shortly after close. This one always creates a fair amount of discussion about how you never have had a bill that high etc…, but believe me they will refund you the difference in short order. Always remember that your other services like gas, electric, telephone, television etc. are your responsibility and you should call 2 –48 hours prior to close and let them know you will be moving and the service will be transferring to a new owner on the date of close.

One last tip. Your mortgage statement always provides a payoff for you to reference, however the day it is printed you start accruing interest so your payoff is always higher than what is printed on your statement. I always tell our sellers to just add one extra payment to the amount on the settlement statement and that will provide a safe payoff amount.  In my experience when closing day comes people are happy they overestimated and get a little money back, rather than under estimate and have to go digging for that little extra! I hope this help and by following these guidelines you should have a safe estimate of your closing costs. Congratulations on getting your home under contract and best of luck on your new journey!

Dave Kimbrough
The Kimbrough Team

Should we invest in a property near our son's university?

Dear Dave,

My wife and I very recently sent our son off to college. We are considering investing in a house near the university he is attending. We would like to know your opinion on investing in a property near a university or college. Is it a good idea to buy a house that could be used as a rental for college students or is it a nightmare waiting to happen?

Any feedback you have would be appreciated!

Thanks - Joe and Darbi - Grand Junction, CO

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I think purchasing a property is a great idea! I would suggest you check with your financial adviser or accountant, but I would bet the investment would pay off over the course of your son’s college career. I will add one qualifier, it will work out better if your son is also responsible and will responsibly help you maintain the property while living there. Let's look at a quick scenario to demonstrate how you might benefit from purchasing, rather than pouring out rent over the next 4-5 years.

Let’s say you purchase a 3 bedroom condo for $300,000 and put 5% down, which is $15,000. You then own a 3 bedroom condo with a monthly payment estimated at $1,700 which should include taxes and insurance. You only need one bedroom and surely your son has a couple of friends that he would like to have living with him. Let’s assume they would be willing to pay $750 per month, which in turn makes your monthly out of pocket shelter expenses $200, which is $500-$600 per month less than having him rent. Five years from now, assuming that your son takes a bit longer to graduate than 4 years, and let's also assume the market has improved 5% per year for your condo, it would then be valued at $383,000. Let's also assume that you have paid the principle down to $260,000, which leaves you with over $100,000 in equity when you go to sell. I know there are expenses and this is not direct profit, but at the very least you should receive a good return, rather than footing the bill with nothing but a diploma to show for it. The numbers in this scenario may not be exact, but it does illustrate the fiscal advantages to owning vs. renting for your college student.

There also is a loan specifically designed for this situation and it is referred to as the “Kiddie Condo Loan”. The requirements are designed specifically for your scenario and require that the child must live in the home and be on the loan. The financial qualifications for the loan are done off your information, but it allows your son to begin building a credit portfolio for after he graduates. There are several great things about this loan. You can qualify with only 3.5% down, the loan is assumable and with today’s low interest rates, assumable loans may be very advantageous in the future. If your son decides to stay in his college town after school, he can assume the loan from you and take over the payments or you could sell it and have them assume your interest rate. As you can see, there is a good case to be made for a college purchase, in town or out of town, for kids who are attending college.

Lastly, one of the great things about University towns, their real estate generally will not fluctuate up or down as drastically as other areas, because they have built in buyers and sellers that cycle through which generally helps ensure good demand and smooth out any other market influences. Worst case scenario would be that you have a rental in a college town that will be pretty easy to rent year after year. I say, “do it and you are likely to be glad in the long run”. Hope this helps.

Dave Kimbrough
The Kimbrough Team