Why Isn’t My House Selling?: Lessons Learned From Canceled Listings

Why Isn’t My House Selling?: Lessons Learned From Canceled Listings

About List Now Realty

List Now Realty is a flat fee MLS listing company in the state of Florida. We list your house on the MLS for a flat fee so that you don’t have to pay a traditional real estate agent a 6% commission. We work with real estate investors, house flippers, home builders, and other “for sale by owner” types who are looking to save money on real estate commissions. We list hundreds of houses every year, and to date, we’ve saved our customers over $5 million on real estate commissions, which we’re very proud of.

Why We Looked At Canceled Listings

We’ve had some downtime recently due to the COVID-19/coronavirus pandemic, so we decided to find ways to serve our clients better.

What can we do to help our clients sell their houses faster, have better success when they list their property on the MLS with a flat fee MLS listing, and ultimately get their house sold?

We decided to look into canceled listings.

The majority of our clients have great success when they list their houses with us. In fact, only 7% of sellers who list their houses with us end up canceling their flat fee MLS listing. 93% of sellers who list with us sell their houses successfully.

We decided to look at that 7% group of canceled listings and see what went wrong. Why didn’t their houses sell? How many relisted with a full-service agent and what was the result?

The typical canceled listing starts off with one of our clients contacting us and asking, “why isn’t my house selling? I’m not getting any showings.” Or, “I’m getting showings but I’m not getting any offers. What’s going on? Is there anything I can do to increase activity and get this house sold?“.

Now remember, we’re a flat fee MLS company. Most of our sellers are experienced real estate investors or other experienced sellers. They don’t need their hand held throughout the process. They know what they’re doing. They usually just want us to list their property on the MLS and leave them alone.

But, we do work with “for sale by owner” types as well. We routinely list houses on the MLS for homeowners and other people who are less experienced with selling real estate. Those are typically the clients who come to us and ask why their house isn’t selling.

We want all of our clients to succeed, so if we get an email asking “why isn’t my house selling?” we’re going to look into it and see if we can help the seller out.

There are three things that we look at when someone contacts us and asks, “why isn’t my house selling?”. Those three things are pricing, photos, and commission.

Why Houses Do Not Sell, Reason #1: Low Commission

Most of our clients who list their house on the MLS for a flat fee are trying to save as much money as possible. That’s understandable. But, we sometimes see sellers try to skimp on the commission, and that’s a big mistake.

We recommend that you offer at least 2.5% – 3% commission to a buyers agents on the MLS. That’s because most real estate agents are charging 6% commission. They typically keep half of that 6% for themselves and offer the other half (3%) to buyers agents on the MLS. That’s how most commission structures work.

In fact, 89% of listings on the MLS are offering either a 2.5% or 3% commission. 2.5% is becoming more popular as people try to save money, but the overwhelming majority of listings on the MLS are still offering 3%.

Some sellers who list their houses on the MLS with us want to offer a commission of only $500, $1,000, or a low percentage like 1% or 0.5%. We always email them before listing their house and ask them if they’re sure they want to proceed with such a low commission and advice them that it would be a good idea to increase their commission to something more competitive.

Offering an abnormally low commission can seriously hurt your chances of selling your house on the MLS.

Why Houses Do Not Sell, Reason #2: Bad Photos

Many of the photos that sellers submit to us for their MLS listings are very bad. Overall photo quality is getting better as smartphone cameras improve, but we still see really bad photos submitted for listings.

We recommend that you pay $200-$300 for a professional real estate photographer to take photos of your property. It’s worth the money every time.

With 93% of buyers now searching for properties online, photos are more important than ever. Your listing photos have to stand out and entice buyers to come to see your property in person. Having bad photos of your house listed online can hurt your chances of getting showings and can even cause your house to sell slower and for less money.

In fact, the National Association of Realtors found that listings with professional photography sell 32% faster and they sell for $3,000 to $11,000 more on average than listings with amateur photography.

Why Houses Do Not Sell, Reason #3: Priced Too High

When someone comes to us and asks, “Why is it my house selling?”, most of the time it’s because they have the house priced too high. Price is the number one reason why houses do not sell. Houses that are priced right will sell regardless of condition or any other factor. If a house is priced correctly, someone will buy it.

Experienced sellers and real estate investors usually have no issues with pricing their properties correctly, and if they price it too high initially, they understand the importance of regular price reductions to get the property sold. These sellers are typically making a price reduction every two weeks if they are not getting the activity they want. They understand that every time they make a price reduction, the listing shows up on hot sheets, gets emailed to agents and buyers who have alerts set up, and gets highlighted on public websites like Zillow as a listing that has had a price reduction. All of this keeps the listing from getting stale.

We see homeowners and “For Sale By Owner” sellers struggle much more with pricing. Sometimes they’ve done some renovations to the house that they are proud of, or maybe they’ve lived in the house and raised kids there, so they typically have a lot of sentimental attachment. Many times this clouds their judgment and they price their house a lot higher than what it really needs to be in order to sell in a reasonable amount of time.

Some Sellers Don’t Take Our Advice

To recap, the biggest reasons that houses do not sell are commission, photos, and pricing, with pricing being the most important by far.

Some of our clients who ask us “Why Isn’t My House Selling” do not take our advice on commission, photos, and pricing. Instead, they’ll ask us to make other changes to the listing, like changing the public description or changing the order of the photos. None of these things work to get a house sold.

As a result, many of these sellers ultimately cancel their flat fee MLS listing and tell us they have no choice but to list with a full-service real estate agent. We hate to see it happen, but it happens. After all, 7% of our listings do not sell and end up canceling.

What Happens To The Canceled Listings?

During the COVID-19 downtime, we pulled all of our canceled listings from the past several years. We list hundreds and hundreds of properties per year, and 7% end up canceling, so we have a pretty good sized data set. We looked at the entire group of canceled listings to find out what happened to them after they canceled.

Canceled Listing Takeaway #1: Not All Houses Were Relisted

The first thing we found was that not every listing that was canceled with us was relisted with another agent. In fact, only 71% were relisted with a full-service agent. At the time of writing, 29% of them still haven’t been relisted. The sellers either sold the house off-market, possibly to a local cash home buyer, or they simply decided not to sell.

For the remainder of this blog post, we’re going to focus on the 71% of houses that were relisted with full-service real estate agents.

Canceled Listing Takeaway #2: Commission

When we looked at the houses that were relisted with full-service real estate agents, 13% of them had increased their commission amount to 2.5% – 3%. These were listings that we had advised the sellers to raise their commission amounts on. They wanted to know “Why isn’t my house selling?” but they refused to offer a competitive real estate commission.

The increased commission amounts are really no surprise. After all, a full-service agent is not going to take a listing unless they can get their 6% commission. Most of them then offer a 3% commission to buyers agents on the MLS.

Canceled Listing Takeaway #3: Photos

We also found that 51% of the houses that were relisted with full-service agents had professional photos taken before being relisted, most likely because the agent paid for it. Real estate agents know that that professional photos make houses sell faster and for more money, so they don’t mind sacrificing some of their 6% commission for professional real estate photography.

More surprising to us was that 49% of the houses that were relisted with full-service real estate agents still had amateur photos. That means 49% of the full-service agents that eventually took over the listings did not pay for professional real estate photography, which is really a disservice to the seller. If you’re paying a 6% real estate commission to a full-service agent you should be getting professional photos included.

Canceled Listing Takeaway #4: Pricing

Some of the houses that were relisted with full-service real estate agents started out being listed higher than what they were listed with us for, some started at the same price, and some started at a lower price, however, 74% were listed at a lower price when they eventually went under contract to sell. We also found that they were listed for $29,000 less on average.

What that means is that when these houses were listed with us, they were overpriced by $29,000 on average, and some of them were $100,000 or more overpriced.

When they eventually sold, we found that 80% of the relisted houses sold for less than what they were listed with us for, and they sold for $28,200 less than what they were listed with us for on average.

The takeaway here is that, on average, sellers are pricing their houses just about $30,000 more than where they should be in order to get them sold.

Where Any Of The Sellers Better Off With The Full-Service Real Estate Agent?

Because the houses were relisted with a full-service real estate agent, the sellers also had to pay a 6% commission. On average, we found that they paid $14,400 more than they would have paid with a flat fee MLS listing, assuming they listed with List Now Realty and offered a 3% commission to buyers agents on the MLS.

However, some houses did sell for more money with the full-service real estate agent than what they were listed with us for. Remember, 80% of the relisted houses sold for less than what they were listed with us for, so that means 20% of them sold for the same price or more.

So, were any of the sellers better off with a full-service real estate agent?

Even when you factor in the higher sale prices, not a single seller was better off selling with the full-service agent once the 6% commission was deducted.

Every seller would have been better off to keep their house listed with a flat fee MLS listing and simply reduce the list price by $30,000 on average to get the house sold.

Not only did these sellers have to pay the 6% commission, but they also kept their houses on the market for longer by refusing to make changes to the flat fee MLS listing, and then relisting and starting over with the full-service agent, so they ended up having their houses on the market longer as well, resulting in more holding costs.

What Did We Learn From These Canceled Listings?

What we learned for ourselves and for our company here at List Now Realty is that we need to do a better job of guiding our less experienced clients on pricing their properties correctly and conveying the importance of offering a competitive commission and having professional photos taken.

We’re going be doing a video on how to price your property correctly using simple tools like Zillow so we can send that video to our new clients and hopefully help them out. We want all of our clients to have success in selling their houses with flat fee MLS listings.

Do You Need A Flat Fee MLS Listing?

If you need a flat fee MLS listing in Florida, whether you’re in the Orlando area, the Tampa area, or anywhere in the rest of our coverage area, please reach out to us at List Now Realty. We’d love to work with you in getting your house listed on the local MLS for a flat fee. We list hundreds of houses on the MLS every year for experienced sellers, real estate investors, home builders, and “For Sale By Owner” types.

If you’re thinking about listing your house for sale by owner, you should consider a flat fee MLS listing. If you’re only listing your house on Zillow or a handful of real estate websites, you’re not giving your house the exposure that it needs to sell for market value. Many for sale by owner houses sell for a lot less than houses that are listed on the MLS simply because they’re not getting the exposure of the MLS and being put in front of enough potential buyers and local real estate agents.

When you list your house on the MLS, not only is it visible to every real estate agent who is working in your local area, but it also syndicates the listing to Zillow, Realtor.com, Trulia, Homes.com, Redfin.com, and hundreds of other real estate websites. Instead of having a different account set up on every one of those websites and having to update all of those listings when you need to make a change, you have a single flat fee MLS listing. If you need a change made, you simply email us and we make the change for you on the MLS. From there, your listing will update automatically across all those public websites without you ever needing to login in and make the change manually. It’s really convenient!

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