George Bernard Shaw* said it right when he said that “If all the economists were laid end to end, they’d never reach a conclusion.”
But it doesn’t take an economist to conclude that if you’re sitting with a house that won’t sell, you’re probably also sitting with a financial nightmare.
A house that won’t sell is a problem - but Tony Clarke, Managing Director of the Rawson Property Group, believes he has an answer.
He said that owners and agents will often cite three or four different reasons that appear to explain their lack of success - but that these are “almost certainly a rationalisation, a ducking out of reality, and a refusal to face the true facts.”
In Tony’s experience, these excuses include the arguments that house is incorrectly positioned on the stand; that the neighbourhood is wrong; that the property doesn’t look good; that it has security issues - “and 101 others.
“But the one basic point - the wrong price - will usually be overlooked,” he said.
THERE’S A BUYER FOR EVERYTHING
Tony said that “the simple truth is that virtually any home will sell if it’s correctly priced.
“If the price makes allowance for the negative factors which the estate agent has identified, and if the price falls in line with sale prices achieved by other homes in the area, there’s no reason why any house should stick on the market.”
One challenge, he said, is that the agent is often at least partly responsible for the problem: he or she might have suggested an unrealistic price (often in order to secure a mandate), and, once the house has been advertised, may be reluctant to admit the error.
The problem is certainly not driven by demand: the housing market in South Africa is currently strong and even improving.
Commenting on the release of the FNB Property Barometer – October 2014 – House Price Index, FNB’s Property Economist, Johan Loos, said that valuers “continue to perceive a rise in demand along with deteriorating supply,” and that this is “the perfect recipe for an improving balance between demand and supply.”
But you can do something about a house that won’t sell - as comedian, actor, author, and artist, Jonathan Winters*, said: “If your ship doesn’t come in, swim out to meet it!”
Tony warned that some reputational damage will have occurred: “At this stage the home is almost certain to have acquired an unfortunate reputation with buyers - many of whom will have rejected it due to its unrealistic price.”
Once you’ve accepted price as a reason for your property’s failure to sell, you’ll have to start finding new buyers - which could involve lowering the price (perhaps even to below the home’s true market value), changing agents, or possibly even removing the property from the market, and then re-introducing it when a new group of buyers has emerged.
“If you withdraw the home from the market for, say, four- to six months, you can use the time to carry out a thorough cleanup so that the estate agent can sell the property in its best condition.
You might have to lay out for repainting, re-carpeting, re-plumbing or re-wiring the buildings and on cleaning up or replanting the garden. “But it’s been proved that this is usually worthwhile, and that it’ll result in better offers when you try to sell again.”
Tony recommended that the house should be re-photographed after the cleanup so that your agent can advertise it anew - and that the new ads should possibly stress the improvements you’ve made.
“It’s quite likely that the home will then achieve its quoted price - or at least come close to it - provided (once again) that the price is realistic,” he said.
*Some of the quotations in this article were found on Forbes: “Top 100 Money Quotes of All Time.” It’s a wealth of fun and insight. And, as the longest month of the year draws to a close (its length being a function of all that Christmastime shopping), you might identify with another comedian - Steve Martin - who said, “I love money. I love everything about it. I bought some pretty good stuff. Got me a $300 pair of socks. Got a fur sink. An electric dog polisher. A gasoline powered turtleneck sweater. And, of course, I bought some dumb stuff, too.”*