3 Reasons Your Home Isn’t Selling in 2023

(Michael Holt | Holt's Monthly Market)

Benjamin Franklin said, “By failing to prepare, you are preparing to fail” and it's no difference in selling real estate. Developing pricing, marketing, and presentation strategies are vital with each honestly deserving their very own in-depth blog articles. In this article, I will identify and explain to you the 3 reasons your home isn't selling in 2023 (problems you may easily run into which could very well be the cause as to why your home is not selling) which are a market problem, price problem, or product problem. Of these, both market and product problems lead to a further emphasis on the pricing problem which is generally the most painful as it is the one sellers care about the most since it directly impacts their mission in selling at a maximum. Correctly managing the market and product challenges will lead to fewer if any problems with pricing.

Market Problems

Market problems are issues affecting homes for sale due to the current and upcoming market conditions. There are times what I call black swan events which for example include natural disasters, terrorist attacks, and market crashes that we never see coming. This causes rapid and aggressive adjustments however outside of these events most of the time there is a clearer picture of where the market is and where it is heading. Today there is a macro issue in the United States (and very much the rest of the world) of high inflation. This is due to the FED's efforts to stimulate the economy by printing of money and lowering rates to encourage spending. The effect on assets from stocks to real estate is typically a positive one that increases their value. To decrease inflation the opposite must occur which is the increase of interest rates and the halt of printing money. This is why the dollar increases in value but also decreases buyer demand and consumer spending. It is difficult to avoid recessions during these times. As a result, this generally lowers stock prices overnight while taking much more time for the lowering of the value of housing.

Today buyers are trying to wait on the perfect time for lower housing prices and the decreasing of interest rates while sellers are hoping to avoid the housing decrease by the time interest rates lower to once again increase demand which will support the higher price they're looking for. In Manhattan real estate the market has been relatively volatile over the past year going from a seller's market before the rise of rates, dropping to a buyer's market as rates increased (this was especially true leading to the end of 2022), while today the market has slightly shifted back to neutral.

These subject matters lead directly to pricing strategies which I will get more into towards the end of this article.

Product Problems

Potential buyers often look for homes that are move-in ready and won’t require extensive repairs or renovations (especially during times like these when there is less cash available coupled with higher interest rates). There's generally always less demand for residences needing work. When there is less demand for a certain type of product one can always expect it to take longer to sell even at a lower price. Of course, you might be an owner who doesn't want to go through the hassle or maybe doesn't have the funds or time to renovate. In this case, you will want to;

Make sure all necessary maintenance is done before listing the property so that it appeals to potential buyers. These are the small things such as paint, cleaning, and decluttering.
If there are any necessary repairs or renovations that need to be done, consider having them completed prior to listing so that you can potentially increase the value of the property (like leaks and water damage for example).
Stage the residence. The results in staging are night and day in comparison to selling a vacant home. This makes the home seem in better condition due to the enticement of expensive furniture and decor as it gives potential buyers the vision and feeling of what it is like living there. This can reduce time and increase the sale price significantly.

Product problems lead to even more emphasis on pricing and correctly choosing comparable sales. For example, first-floor apartments generally sell for a lesser price in Manhattan than higher-floor apartments (even appraisers take this into account). This is due to several parameters including light, air, view, noise, and privacy.

Price Problems

Pricing your home correctly is one of the most important factors when it comes to successfully selling your home. You want to make sure you set a price point that reflects current market conditions, and recent comparable sales but also allows you room for negotiation with potential buyers if needed.

A wise broker will tell you to price ahead of the market. In Manhattan real estate, the Living New York advises clients to price 3-5% ahead of the market depending on how strong of a pulse it currently has. For example, in a buyer's market, we advise our sellers to price about 3% below the current market value. This generally is a good strategy that prevents sellers from chasing the market down by standing out from the competition. Remember that in every market there is an average discount price for the comparable product being sold. If a property is comparable to many others that have recently sold you can expect that property to trade at a similar discount. However, if the property is priced lower than where those comparables last listed you can expect the discount to be less than average. This should result in an identical price as to where the recent comparables sold however the main objective that is accomplished is the time of how long it took to sell. This is why the strategy of selling before chasing the market down works so well.

Similarly, when in a seller's market, The Living New York advises pricing at a 3-5% higher than recent comparable sales (depending on how hot the market) to maximize the profit for the seller. As of today (Jan 13th, 2023), it is a tricky time for Manhattan real estate as the market is neutral. The wise thing to do would be to slightly underprice a residence by 1-2 % to increase traffic and bids. Finding the correct comparables is paramount. An analysis of listed sales going back to 2004 — nearly two decades' worth of data — shows that the highest median discount for units priced at the market with a contract signed in less than 30 days was 3.6%, and that was at the height of the great recession in 2009. This was at a time when properties were trading up to a near-average discount of 13%.

A biased but logical suggestion

Use an NYC real estate broker. Interview 2-3 to make sure they are experienced, prioritize you, and resonate well with you. I also recommend asking for testimonials. The Living New York is amongst the top real estate agents in NYC and knows Manhattan real estate like the back of their hands. Our 5-star Google reviews speak for themselves in working with both buyers and sellers. To see how we made a difference in selling apartments when other real estate agents failed to do so view our Success Stories by clicking here. For a free property valuation or to track your equity buildup view our Equity Tracker page by clicking here. The Home Equity Tracker gives an accurate estimation of the amount paid on one's mortgage (both interest and principal), refinance options based on today's rates, equity buildup, and how much one would net if one sold or refinanced. Tracking equity is a smart to-do as you'll have confidence in knowing where your valuation stands as the market shifts & rates change.

To conclude;

Selling a home requires careful consideration and preparation work if you want successful results from your efforts. It’s important to take into account product problems (necessary preparation work for selling a home; potential renovation needs; location issues), market problems (impact of COVID-19 on real estate sales; other disruptive events), and price problems (overview of pricing strategies; benefits of pricing slightly below current market value). By taking these key considerations into account before listing your property, you can ensure a smooth process with successful results. Invest your time and money wisely!