Is your home not selling? Well here are 15 helpful tips and tricks for when your house doesn’t sell!
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We are currently in a difficult housing market for both sellers and buyers. In an attempt to tamp down inflation, the Federal Reserve has pushed interest rates to levels not seen for the last 20 years. This has increased the 30 year fixed mortgage rate, which is the most popular loan that Americans use to buy houses. At the time of writing, the current rate is around 7%, which is a marked increase from last year when you could get a mortgage for well under 3%.
This has made the cost of borrowing money much higher, making many homes too expensive for a lot of buyers. And though housing prices have fallen nationally about 6 percent, the real estate market is still expensive. This combination has been a one-two punch for housing sales, which have fallen markedly all over the nation.
This might be an opportunity for buyers who have the cash to pounce on good deals, but it’s been a nightmare for sellers.
Our Los Angeles house didn’t sell
This all hits quite “close to home,” so to speak, as my family recently moved from Los Angeles to Memphis, TN. We decided to put our house on the market to give us some free cash moving forward and listed it in September. We rushed to get it on the market even before we physically moved out of the house, since knew that the traditional seller’s market was rapidly cooling off.
Now three months later, we’re ready to admit defeat. A half dozen open houses and a price reduction of $50,000 were not enough to get even 1 offer on the house. We even used most of the things on the list below, but in the end, our home was just unaffordable with today’s interest rates.
As a real estate investor, I have looked at hundreds, if not thousands of homes for sale. I’m usually on the buying side of the equation, but we’ve sold homes as well. This has ranged from a desirable two bedroom home in Los Angeles to a three bedroom rental home in Alabama. With this experience, I can reassure you that there is some good news. You have options when your home doesn’t sell!
So what do we do now? And what should you do if you’re in a similar situation?
Here are 15 things to do when your house doesn’t sell
- Use a licensed real estate agent
- Consider a price drop
- Improve your home’s curb appeal
- Use a professional stager
- Use a professional photographer
- Make sure potential buyers know about your house
- Make sure your home is in good repair
- Have another open house
- Relist your home as new
- Turn your home into a long term rental
- Turn your home into a short term rental
- Drop your asking price again
- Cover more of the seller’s closing costs
- Consider accepting “creative financing”
- Consider a short sale
I’ll go through each point separately below, or click on the links above to go directly to that particular section.
Use a licensed real estate agent
I’m a big fan of DIY (do it yourself), but I personally believe that if you’re buying or selling an asset as expensive as a house, you should use a professional. A licensed real estate agent has literally spent months studying and preparing to buy or sell real estate. Not only will they have access to important tools to sell your home, like the MLS (Multiple Listing Service), but they know specific strategies to sell your home fast. Furthermore, a local real estate agent will be up to date on the real estate laws specific to your region.
Especially in today’s tough market, I think a good agent is worth their weight in gold. They are financially incentivized to keep their client’s best interests at heart via the commision system. The higher the sale price, the higher their commision will be.
So do yourself a favor and find a good real estate agent to help you in this process. To do this, I recommend talking to your network. Word of mouth is key here to ensure that you find an agent that is experienced, ethical, and motivated to sell your home.
Consider a price drop
This is one of the first things to consider for a reason. It’s the simplest and arguably the most impactful thing that you can do to improve your home’s chance of selling in the current market. The listing price is the most important part of a buyer’s search for a home. It’s usually the first thing that they’ll use to filter through the many similar homes available to buy. If your home’s list price is too high, a buyer literally may never even know your home is for sale, since it might now show up on their radar. If you drop the price of your home enough, rest assured that your home will sell.
But how much should you drop the price of your home? This is a sensitive topic, and only you can know the true value of your home. After all, you’ve lived there and know your home’s best features (and the worst features). But of course, there are tools to help you with this decision.
Make sure to discuss comperative sales with your real estate agent. He or she will give you a list of recent sales in the area to help guide your decision. You also have to consider how much you owe on the home, and how much profit you hope to receive from the sale. Finally, take a look at the other homes for sale in your neighborhood and the homes that have sold within the last 3 months.
Do you think your home is already priced fairly? Well let’s move onto the next suggestion.
Improve your home’s curb appeal
Curb appeal refers to how attractive your home is from the exterior view. It’s an important part of selling your primary home or even renting out a rental home. Local buyers will comprise the majority of your pool of prospective buyers, and many of them will be personally driving by any home that they’re seriously considering.
A fresh coat of paint is in my opinion one of the most impactful ways to improve a home’s curb appeal, but it can be expensive or labor intensive. I know personally how much work it is to paint a house, so I understand this point well.
But if your house doesn’t sell, there are so many things you can do to quickly improve its curb appeal.
- Water your lawn so it’s green
- Mow the lawn and trim the hedges
- Move (or hide) any junk on your property
- Get a new welcome mat
First impressions are very important, and minor cosmetic changes to your property can make a big difference here. I’m a big fan of the new welcome mat. It’s $20 at Walmart, but can make an immense difference in how people feel as they walk into your home.
Use a professional stager
The same logic also applies to the interior of your home. Within a few seconds of walking into your home, a potential buyer will form a first impression and opinion about their desire to buy it. Interested buyers will try to picture themselves living in your home, and this is much easier for them to do if your home is staged. Professional stagers are experts in arranging your furniture (or bringing in new furniture and decorations) to present your home in the best possible way.
Professional staging is certainly an added expense, but it’s been proven time and time again to improve the chance of your home selling (and for more money).
If you can’t afford professional staging, here are a few general tips to improve the interior of your home:
- Make your bed
- Clean up any clutter
- Remove family photos
- Remove furniture that creates crowded rooms
- Add furniture to empty rooms to highlight their potential
- Add plants (artificial or real) to add atmosphere and charm
- Open the window shades to add natural light to rooms
Use a professional photographer
This next tip is in my opinion is almost as important as your home’s listing price. I’ve looked at too many listings that are “for sale by owner,” with listing photos that look like they were taken by a 1999 flip phone. No wonder their house doesn’t sell! Bad lighting, blurry pictures, and strange angles are just some of the things that will hurt your home sale.
Especially in today’s digital world, many home buyers are starting their search online. And if your home meets their price criteria, they’re going to be spending a lot of time poring over your home’s photos.
Just like professional real estate agents are trained to buy and sell homes, a professional photographer is worth their weight in gold. Through high quality cameras, lenses, and knowledge about lighting, a good real estate photographer will be able to present your home in the best light to buyers.
The cost of a professional photographer is usually covered by your real estate agent.
Make sure potential buyers know about your house
This point might seem self-evident, but it’s an important one. A buyer can’t purchase your home if they don’t know that it’s for sale. Just a “For Sale” sign on your lawn doesn’t cut it these days. You want to make sure that as many people as possible know about your listing to give it the best chance of selling.
A good listing agent will put the big sign on your front lawn, but will also advertise your home’s listing on the Multiple Listing Service, via mailed advertisements, and via social media. If your agent doesn’t have a coordinated plan for advertisement, push them to step up their game!
Make sure to also activate your network. Don’t be embarrassed to let your friends know that your house is for sale. You never know who might be looking for a new place to live.
Make sure your home is in good repair
If you house doesn’t sell, you also need to look critically at the status of your home repair.
This is a tip that takes some interpretation. If you’re selling your home, it’s probably not the best time to do that big kitchen or bathroom remodel. But you want to make sure that your home seems to be in good condition. This means that all of the visible aspects of your home should be clean and functional.
So tighten up your cabinet fronts. Make sure the doors are firmly on their hinges. Repair broken windows. Make your home feel like the safe, solid, and welcoming place that you know and love.
You don’t have to go crazy, but you should repair any visible signs of deterioration. This will also help a potential buyer feel excited about purchasing your home.
Have another open house
This tip might seem quaint, but your real estate agent should be having open houses. No matter how good your pictures are online, most people will not buy a house without standing in it at least once or twice.
The best way to get the maximum amount of traffic into your home is via an open house. During this four hour block of time, different agents and buyers can stop by your home. A buyer’s visit is often unplanned, and you never know if a random passerby will fall in love with your home.
So if your home is listed for sale, make sure that your broker has open houses planned. If there are none planned, you should ask why. Perhaps your broker has too many other houses to sell at this time of year, and they’re just too busy. If this is the case, they need to tag team the listing with another agent.
Or perhaps there are already serious buyers lined up to come take a second look, and your broker doesn’t feel that another open house is necessary. Either way, you should know what is going on.
Relist your home as new
Your broker may suggest this trick, but if you’re competing in a hot market (or the overall market is slow), relisting your home may help drum up interest. Many serious buyers have automatic filters set on sites like Redfin.com to notify them when new listings come onto the market in their price range. By relisting a property, listing sites may view the property as a new home and notify buyers again via email.
This option is sometimes frowned upon, so defer to your realtor’s advice here.
But what if you’ve tried all of my suggestions above, and your house still doesn’t sell? Well, perhaps it’s time to become a real estate investor!
- Why I’m investing in real estate over stocks – Part 1
- Tax benefits | Why I’m investing in real estate over stocks – Part 2
- Leverage | Why I’m investing in real estate over stocks – Part 3
Turn your home into a long term rental
There are many people who’ve become accidental landlords. This means that they ended up becoming the landlord of a property that wasn’t originally intended to become a rental. Sometimes this comes about by an inherited property, or sometimes it’s because a home didn’t sell.
In my situation, since our Los Angeles home didn’t sell, we are planning to rent it out at least until the housing market turns around. We are unwilling to accept less than fair market value in a sale, so we don’t want to drop the price endlessly. (You never want to “catch a falling knife!”)
Also, we have very favorable debt on the home, so our monthly mortgage payments are relatively low for a home of its quality.
If you’re considering this option as well, you have to crunch some numbers. Will your property be cash flow positive as a long term rental? Or will it be a perpetual drain on your checking account every month, because the rent you can demand will not be enough to pay for the mortgage payments? When you think about the numbers, you must also consider other recurring expenses like property tax and maintenance.
Also — who will manage the rental? Will you do it yourself, or will you enlist the aid of a property management company? How does the property management fee change the numbers?
If the numbers work out, perhaps your home will turn into the foundation of your real estate empire!
Read more: $325k Annual Gross Income | Anno Darwinii 3.25
Turn your home into a short term rental
Another option if your house doesn’t sell is to turn your home into a short term rental (like an Airbnb or VRBO type rental). This can be a good idea in some markets, but will not work in others. A good way to help make this decision is to look at the laws in your city. In some areas, you are not allowed to operate a short term rental unless you’re living in the home as your primary residence. Other cities ban short term rentals altogether.
It also may not make sense to operate a short term rental if there’s not a sufficient guest pool for a business like this. And don’t get me wrong — operating a short term rental is a real business. An STR can command a higher price per night than a long term rental, but it carries a significantly higher level of service expectations. Also, you will pay for utilities when you operate an STR, as opposed to most long term rental situations, where this is covered by the tenant.
But if the laws are accommodating and the daily rental rates are attractive, turning your home into a short term rental can be a fun, rewarding, and profitable business. Indeed, it might be the highest cash flow opportunity out there in real estate today (if done well).
Read more: Entering the Broken Bow Short Term Rental Market | Building the Empire
It can also offer significant tax savings for savvy investors. If you combine a short term rental with a cost segregation and accelerated depreciation, you can write off enormous amounts of income!
Read more: How a Cost Segregation with Engineered Tax Services got me a $105k Tax Refund
Drop your asking price again
If all else fails and you’re desperate to sell your property, just drop your asking price again. There is literally almost no property that will not sell if the asking price is low enough. I’ve seen half burned down homes sell for a good price.
Depending on your mortgage situation, this might not be an attractive option. After all, you don’t want to walk away still owing money on your mortgage. But if your house doesn’t sell and you really need to make a deal, desperate times sometimes call for desperate measures.
Again, your real estate agent will be a good advisor in this situation. It’s always a good idea to keep up to date on your competition and see if similar properties have also dropped in price. You may be able to slightly undercut the market and give a new buyer a great deal.
Cover more of the seller’s closing costs
In a competitive environment when your house doesn’t sell, you can also consider offering incentives to potential buyers. There are a lot of expenses involved in purchasing a home, like an appraisal, inspection, mortgage fees, title fees, and prepayment of tax and insurance. If you want to make a quick sale, you can offer to pay for these costs, even though they’re usually the responsibility of the buyer. Little incentives like this can cost you a few thousand dollars (or more), but they can go a long way to making your listing more attractive.
Never underestimate the perception of a good deal!
Consider accepting “creative financing”
We’re getting down the end here, but you can always be flexible with financing options if your house doesn’t sell. While most people will either buy a property outright with cash or a traditional mortgage, there are other options out there.
For example, a buyer might not have the ability to get a mortgage, due to a lack of down payment or poor credit, but you can offer them a “lease to own” contract. In this scenario, you can create a special contract that allows the potential buyer to lease the home from you for a number of years. At the end of this lease period, the buyer will have to option to purchase the house from you at a preferential price. Hopefully in this time, the tenant has used the opportunity to save money and improve their credit score.
Another creative option is called “owner financing,” where in essence, the seller is acting as the bank. Instead of taking out a mortgage from a bank, the buyer forms a contract with the seller. They pay a down payment of your choosing, and then they pay a monthly mortgage payment to the seller for a certain amount of time. After that time is up, the contract matures and there is a “balloon payment,” which means the seller pays the rest of the mortgage balance to the seller.
This scenario works best if the seller has no mortgage on the property, as there are sometimes some tricky legal hurdles if there is an existing mortgage in place at the time of sale. I’d make sure to involve a real estate lawyer to craft all contracts related to creative financing.
Consider a short sale
By far the worst option if your house doesn’t sell is something called a short sale. In this situation, a seller is intentionally selling a property for less than they owe to their mortgage provider. This can be a good chance for a buyer to get a home at a fantastic price, but it can financially devastating to the seller.
A short sale is similar to, but not as bad as a bankruptcy. It will create a negative stain on your credit for years.
The option of a short sale is a measure of last resort, but might be the best option if you’re in a bad financial situation. The short sale was used to a great extent after the housing crisis of 2008, when many homeowners found themselves underwater on their mortgages.
So those are the 15 things to do when your house doesn’t sell! I hope that when you decide to sell your house, we’ll be back in a seller’s market and it’ll go for a great price. But if you’re selling anytime in the next two years, you’re likely to have a rough time due to higher interest rates.
Hopefully these tips and tricks will help empower you and help you to sell your home despite the housing climate.
Personally, I’ve utilized tips 1-9 already for my house in Los Angeles. We will be going with tip #10 and will try to lease out our home instead. Wish us luck!
— The Darwinian Doctor
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Upgrading windows and doors to a more sophisticated and better security can increase the value of your home greatly
Great post on how to handle the current difficult housing market for both sellers and buyers! It’s helpful to read about the personal experience of your family not being able to sell your Los Angeles house and how you were able to handle the situation. The 15 tips you provide are very practical and informative, especially for those who may not have considered all their options. Your recommendation to use a licensed real estate agent is spot on, and it’s important to note that a professional can make a significant difference in this tough market.