Listings, Shelf Life, & "The Ennui Factor"

How Much is Too Much
Time on the Market?

In most walks of life, qualities like patience and persistence are virtues.

So when are they vices?

In the housing market -- at least one that's not strongly appreciating.*

That's because homes that sit, unsold, for too long become shopworn.

Buyers naturally start to wonder why the home has sat so long, and start to zero in on shortcomings instead of overlooking them (if they come to look at all).

Meanwhile, Buyers' attention naturally turns to new listings, where the excitement and energy level are higher.

"The Ennui Factor"

Which is the other reason time on the market is the enemy of home sellers.

Most Sellers do a very good job having their home "market-ready" the first weeks and months that it's listed.

Ten -- or 50 -- showings later, not so much.

Lights that might have been turned on to greet a prospective Buyer earlier in the listing, aren't.

Ditto for dishes in the sink, freshly vacuumed carpeting, the (formerly) spotless windows, etc.

Or the home is now vacant.

All those factors diminish a home's appeal -- and therefore it's value.

As a result, whereas a modest price reduction earlier in the listing might have been sufficient, as time wears on, a dramatic one is often necessary to re-ignite Buyers' interest.

*In a market that's strongly appreciating, eventually an overpriced home will be market-priced (unless the owner raises their asking price -- which I've also seen).

Home Sellers Who Shoot Themselves in the Foot

Unforced Errors

Given that home sellers typically want (need) to maximize what they net on the sale of their home, you'd think that they'd do everything in their power to increase the odds of that happening.

But they don't.

On the contrary, they often shoot themselves in the foot not one but multiple ways.

Here's a partial list:

--Mis-pricing
--Failing to do cost-effective repairs
--Not staging
--Hiring the wrong Realtor (or none at all)

A subset of "hiring the wrong Realtor" would be "insisting on a too-short listing contract."

That's because good Realtors invest most of their time and money selling a property at the beginning of a listing.

That's when they work with the owner on staging, market prep, and required disclosures and municipal inspections; oversee photography and drafting (and proofing, and proofing) the marketing materials, both print and online; and network the upcoming listing to other Realtors and the public.

Recipe for Failure

So guess what happens when a client insists on a 60 day listing (vs. a more realistic six months-plus) for a $500k house in the Twin Cities?

Most Realtors would decline, because they know the odds of collecting a commission -- and therefore covering their expenses and making a living -- are unacceptably low.

Too often, the Realtor who will take a listing on such a client's unreasonable terms protects them self, financially and time-wise, by not doing all the things needed to sell a home in today's Buyers' market.

So guess what happens next?

The Realtor does next to nothing to market the home.

The 60 days come and go.

And the owner is on to Realtor #2 (or #3 or #4) who, if they're honest, will tell the client that they now need to discount the asking price of their home to overcome their "false start" and re-attract prospective Buyers.

How Long Should a Listing Contract Be?

Realtors' Investment?
Skill, Time, & Marketing $$

How long should a listing contract be?

The short answer:

Long enough to sell the property being listed.

How long that is -- assuming that the home is well-priced, staged, and marketed -- is typically a function of price.

Under $200k in the Twin Cities today, you'd estimate 2-3 months of market time.

For a move-up home ($250k - $450k), 3 - 5 months.

As homes cross mid-six figures ($500k-plus), average market time locally can easily be six months now; double that for homes over $1 million.

For each of the above categories, add extra time for properties that are especially unique, or only appeal to a narrow slice of the market (automatically the case for homes over $1 million).

Step 2

Step 2 of calculating a contract term is to allow additional time for the home to close, once it's under contract.

From the time the last addendum on the Purchase Agreement is signed off on, that's typically about 10 days to remove the Inspection Contingency, than another 4-6 weeks for the home to appraise and the Buyer's loan to be finalized.

Bottom line: to sell a $399k Twin Cities home today, just as an example, I'd typically ask for a six month listing.

Listing Contract "Subtext"

Why not a shorter listing contract?

Or none at all?

That's certainly possible, but that really isn't fair to the Realtor -- at least one who is conscientiously doing their job.

That's because much of the Realtor's investment of their time (and marketing dollars) is made upfront.

That's when the Realtor conceives and implements their marketing plan -- making sure the home is staged to maximum effect; professionally photographed; and all the marketing materials proofed (and re-proofed a couple more times).

Of course, before any of those things happen, many Realtors work closely with their clients making sure that their home is in good repair, and advising "strategic" (cost-effective) updates, if that's indicated.

While all that's going on, a good Realtor is already doing what's called "pre-list marketing," i.e., promoting the home to prospective Buyers, and building market awareness.

Sprint -- or Marathon?

Hopefully, all those efforts produce a quick sale at a good price.

If they don't, however, it is the Realtor's job to support the listing with ongoing marketing.

That means making sure that the home continues to look fresh -- both online and in-person; and keeping the home in front of prospective Buyers by continuing to "plug" it at Realtor meetings, through email, ads, etc.

Too, it is incumbent upon the Realtor to tell clients when a price reduction is indicated -- then aggressively market the new, lower price.

It's certainly possible to have a client extend an about-to-expire listing in the middle of all that.

But it's preferable -- and easier -- to simply ask for the right amount of time in the first place.

Realtor Dreams -- and Nightmares!

Don't wait -- procrastinate now!

--Ellen Degeneres

In college, I used to dream that I was barely halfway through an impossibly long and difficult final exam, and time was just about to run out (sort of the academic "running in quicksand" nightmare).

As a lawyer, I used to dream that I hadn't done my time sheets for months.

(Note to non-lawyers: lawyers track their time in increments of one-tenth of an hour -- literally, 6 minutes -- and typically turn their timesheets in weekly (or did, way back when I practiced).

So what do Realtors dream about? (At least, that I can tell you about)

I dreamt that I had signed a listing (home for sale), but couldn't remember where it was, find my interview notes, or even the house key I'd been given!

Note to clients: Don't worry, I've never really done that!

P.S.: my favorite college test story was about a student in a huge, entry-level math class who repeatedly ignored the Professor's announcement that time was up, and to hand in his exam.

He finally complied, and raced to the front to turn in his exam.

Mary Sunseri, the Professor (and a Stanford icon) said, "I'm sorry, I can't accept this --- it wouldn't be fair to all the other students."

The student paused and asked her, "do you know who I am?"

Sunseri shook her head "no."

The student shoved his exam into the stack of hundreds she was carrying, and ran out!

(Give him an "A," at least, for quick thinking -- and no, it wasn't me; I distinctly remember getting a "B-" in the class.)

Hot Listing . . or Hot Potato?

Be Careful What You Wish For -- RE Version

I got a courtesy call from an acquaintance the other week to let me know that they were "going to go with another Realtor" (yes, it happens -- even to me!).

I knew the owner was contemplating selling, but didn't know when, and also knew that one of their neighbors and close friends was a Realtor.

So it wasn't exactly a shock.

And believe it or not, I do appreciate such calls, because: 1) you like to know where you stand; and 2) it gives me a heads up on an upcoming property that one of my Buyers may be interested in.

Whatever disappointment I was harboring quickly turned to relief when I saw the home's listing price today.

In a word, "Yoww!"

The price is easily 25% over market, and going toe-to-toe with at least 3 other, similar properties literally priced $100k-$200k lower.

The homeowner's chances of selling for anything close to their asking price, in this lifetime: zero. At least IMHO, as they say ("in my humble opinion").

In the meantime, you can speculate that a couple things will happen.

The owner will get increasingly annoyed that "nothing's happening," and suspect that the Realtor "isn't doing enough" (on this second score, they may even be right -- see below).

The Realtor will get increasingly annoyed with the Seller, whose inflated expectations defy all manner of negative feedback.

The Realtor's time and marketing dollars -- assuming they intend to commit any -- will be wasted, because the property is unsaleable.

And the home's time on the market will steadily mount, making prospective Buyers even more critical -- and aggressive on their offer price (assuming they offer).

As Realtors like to say, "if I can't be your first Realtor . . . maybe I can be your last."