What it means when the market just doesn’t bite on your home…
As salespeople, we are trained in (or at least in tune to) non-verbal communication like body language and tone. We sense it, interpret it, and try to communicate it to our clients each and every day.
But what about the communication you never get — how do you value that? In other words, how do you value silence?
Even tougher, how do you interpret a silent market?
When an agent has to convey the reasons for the lack of activity around a home or project, what are the lessons to be drawn? What do you do when silence is the only sound you hear?
Exposure
While sellers invariably equate silence with a lack of exposure, it is rarely the case.
Measuring a property’s (or project’s) exposure is far easier than it used to be. Most MLS databases can show the number of times a property appears in searches and how many times buyers have tagged it as a favorite or removed it from their searches. Trulia and Zillow also provide similar measurements and can show not only the number of times it has been viewed, but how many times it has been favorited and/or shared.
And when projects implement web and video promotion, it’s even easier to track engagement through page or video stats. When you have historical data on other projects, comparative analysis becomes far easier.
But regardless of any metric, in this day and age, exposure is rarely the issue. Between the community of agents, e-mail campaigns, MLS, syndication of MLS data to Zillow and Trulia, as well as the constant (ab)use of social platforms by Realtors, almost every property receives the necessary promotion to reach anyone who is even remotely considering a purchase.
No Market
Market caps are prices above which no one is willing to pay in a given area, regardless of the home size or features. (We’ve written about market caps here.)
You can spot market caps when you look at a specific area and see at what price point marketing times rise sharply, seller discounts increase, or the expired listing count spikes.
Sometimes, especially when the home’s price is above an area maximum or the price per foot is higher than average (or even worse, when both exceed market norms) the market simply refuses to engage the property.
This is especially common in urban redevelopment zones, properties that are overbuilt for an area, or properties that might have a great deal of unfinished square feet that artificially drive up the price per foot metric to an intolerable level.
So the easiest way to correct the marketing of the home is to look for market caps, in both aggregate price and price per foot, and see if your property is too far above the norm. If so, the only real solution is to adjust the price.
Seasonality (or other Temporal Factors)
I am always amazed by the predictability of the sales season. I am also always amazed by how little the market understands the power of seasonality.
Take a look at the following charts:
As you can see, several market inputs have not reset to pre-recession levels and are causing market conditions to become hyper-seasonal. Inventory is still less than half of what it was pre-2008 and seasonality has never been stronger.
So selling your home in October but using sales in March as your guide will not yield the result you are looking for. If the market is silent on your home, it could be that you used a pricing model that was based in a season that has no bearing on the one you are in currently.
In most cases, the only solution is to adjust the price to what the market will currently allow or to wait until the higher velocity market of spring. As the leaves change colors and the temperatures begin their decline, pricing does as well. Waiting and hoping is not the correct strategy.
Search Patterns
So the sign is in the front yard, you are professionally staged, your pictures are great, and you are priced off of the correct season’s most recent sales — and nothing happens. Zip. Zilch. Zero. Nada. Crickets.
Almost every local MLS has lines that break an entire market into smaller zones. A line in MLS is typically either a border (city to county or county to county,) a major road, or some other feature in the land (a body of water is the most common.) Most times, the lines that exist in MLS are based on a decades old interpretation of the market.
So when lines are old and search patterns established, a new or emerging redevelopment area may not be searched naturally. For Richmond, condominium projects that exist outside of the borders of Zone 10 receive stunningly few organic searches when compared to properties inside of Zone 10.
Marketing any property that is atypical for a zone is harder and requires a ton of work by the agents to raise awareness. Direct mail, a relentless e-mail campaign, and even direct calls to targeted agents is the best way to combat the issue of being in an atypical zone.
Summary
Don’t assume that the cure for a lack of activity is always more exposure. Expensive advertising, time consuming open houses, or other alternative but pricey forms of promotion may make a seller feel good but actually do little to move the needle and prevent the agent from far more productive activities.
Seek to understand the reasons for the silence and adjust the program accordingly.
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