Jim Valentine on Real Estate
One of the things buyers always bring up when looking at a property is how long it’s been on the market. Whether they are a neighbor and have seen the sign in front of the home for months, or they are simply looking at the Multiple Listing Service (MLS) data, it is something they look at often with the eyes of a predator.
What does it really mean if a property has been on the market for an extended time? The answer isn’t always that it is overpriced or has a problem. It could be a newly constructed home that was listed when they broke ground. It isn’t unusual for such homes to be on the market for a while before they take shape, and somebody buys them. The marketing time then encompasses the entire construction and escrow period – 6 to 9 months. It is just the timing of the offering, not an indication of whether the home was priced too high.
Sometimes a home sells right away, but something goes awry, and the escrow falls apart. It could be the buyer had an unexpected credit problem, lost their job, etc., but one of the consequences is the extended marketing time as the property has to be resold.
Most agents will make a statement in the MLS about why the escrow canceled if it was not the fault of the seller or the property, but buyers don’t always read the details. They will look at the longer marketing time and think they see an opportunity.
Once in a while a property stays on the market for an extended period due to improper marketing. It could be lousy photographs, property was put in the wrong area in the MLS, or key features weren’t highlighted. If there are no interior photos buyers can get suspicious.
It might be as simple as the fact that the tenant doesn’t want their possessions to put out on the internet, but buyers look at that as if something is being hidden from them. If people don’t look at a property it can be hard to get it sold.
If the property isn’t a “cookie cutter” it can easily be misunderstood. This is another area where agents can make a mistake in marketing, or the buyer misinterprets what they are looking at. This usually involves zoning and what can be done on the property, topographic challenges, Deed Restrictions (CC&Rs), setback issues, maintenance matters, or any number of other intangibles.
People looking for opportunities based on Days on Market (DOM) often won’t touch a new listing that just hit the market. That could be a missed opportunity if the seller was looking for a quick sale due to their personal circumstances or preferences.
They may be ready to contract and close quickly at a good buyer-price. Everyone has heard, or maybe even experienced, the story of the first offer being the best offer. That will be in the back of the seller’s mind when you make an early offer.
Many things affect pricing, and they can change in a minute as sellers’ circumstances change. Don’t rely too heavily on the time on the market if you don’t know the back story. Your agent can call the listing agent and inquire about the marketing history to help you.
Have they had offers? Was it in escrow? What happened? Why do they think it is lingering on the market. Is the seller serious about selling? You should be able to gather enough information to determine if your contemplated offer has a chance of success.
Don’t hang up on one component when you are evaluating a property for acquisition. Many things enter into the equation as you are pondering and in the end it will all come down to one thing… your “gut feeling.”
Trust your intuition and go for it. That is usually more accurate than all the cerebral efforts you can conjure up while you are trying to outthink your counterpart in the negotiation.
When it comes to choosing professionals to assist you with your Real Estate needs… Experience is Priceless! Jim Valentine, RE/MAX Realty Affiliates, 775-781-3704. dpwtigers@hotmail.com.