“What’s Wrong With This House?”
By Sean Current – Windermere Homes & Estates
In part one of this series, I discussed what I believe is the number one reason a home sits on the market a long time and doesn’t sell: it’s priced too high! In part two, I will discuss another reason for a listing’s long market time: what I call “History.”
Some homes for sale, unfortunately, suffer from a prolonged market time due to circumstances that are often outside the control of the seller or the listing agent. Often I see listings that have long market times because they were in a previous escrow (or a couple) that cancelled for one reason or another. Each time the listing status is changed back to “Active” in our local Multiple Listing Service (MLS), the market time continues on from the point the listing was originally activated.
An escrow can cancel for many reason, most of which are related to the buyer (but not always). Each reason can create a domino-effect causing the “family tree” of the escrow to branch out into more areas for disagreement between the various sides of the escrow parties. I won’t go into too many details of all the possibilities, but will hit on the major ones here.
Lending or Financing Issues: Sometimes a buyer cannot get the lending they need in order to buy the home, for credit reasons, loss of employment, insufficient downpayment, etc. Even a cash buyer can run into problems with sources of financing which may lead to a cancelled escrow. Hopefully all parties can work together amiably to reach a solution, but sometimes a solution just cannot be reached and the parties have to cancel the escrow.
Property or Negotiation Factors: Other reasons for why an escrow can cancel can include problems with the property, such as unsuspected issues arising from title, or issues that affect a buyers’ desire for the property after further inspection and investigations, such as easement issues, a seller’s disclosure of past issues with the property, such as plumbing issues or drainage issues, or conflicts within the neighborhood. As well, an escrow can also cancel for the simple reason that the buyer and seller could not agree to certain terms of negotiations during the Request for Repair process: perhaps a buyer requests the seller fix something that came up from the buyer’s inspection report, but the seller refuses and the two parties simply cannot agree.
Short Sale: Another reason for a longer market time is a short sale. Although not as common these days as a few years ago, they do still exist out there in our market. A short sale, as many now know, is when more is owed to a lender(s) on a property than it can sell for in the current market. The sale of these properties involves getting approval for the sale from the lender (or lenders), who will take the loss. This process is very long and tedious and can take months to get approval. In such a case, the market time for the listing will be very long indeed. List agents will try to inform other agents of this in the MLS within the confidential remarks that agents can see, but the public cannot.
In any case, each of the above reasons can cause a property to have a long market time, which can erroneously lead a buyer into believing there is something wrong with the property or that it is a bad deal. Any of these reasons can be discovered by a good buyer’s agent who reaches out to the listing agent to learn more about a property’s specific history. Knowing beforehand can often help lead to a smoother, new escrow in which all parties feel they are entering with eyes wide open and expectations managed.
Next: Part 3-Aesthetics