John McGrath - Why some properties don’t sell and what to do! | McGrath

John McGrath - Why some properties don’t sell and what to do!

John McGrath
John McGrath
09/05/2022 | 3 MIN READ

Auction clearance rates are down about 10% nationwide on this time last year, which is no surprise as our two biggest auction markets – Sydney and Melbourne – continue to slow down after a phenomenal period of growth. CoreLogic’s latest report for the month of April also reveals the lowest monthly growth rate in the national average home value since October 2020.

So, in other words, not as many homes are selling. Some urgency has gone out of the market, especially in Sydney and Melbourne, and buyers are being more discerning as to which properties they are willing to compete for and what they will pay for them.

So this week I’m going to discuss the three reasons why homes don’t sell – and none of them have anything to do with market conditions. These reasons ring true in hot or cooling markets.

The three reasons are price, presentation and marketing.

If the price is wrong, you can have a booming market and superb presentation but the property can sit unsold for 12 months.

If it’s poorly presented but well-priced, it will still sell, but there’s definitely a positive emotional impact in having a well-presented home that looks and feels right. And marketing? Well, if you don’t get the right buyer to the doorstep of your property then you’re not going to sell it. If your home is well-presented and well-priced but you haven’t stimulated enough buyer interest, again, it’s going to sit around.

So you should put your efforts into pricing the home well, making an excellent presentation and ensuring you have a good marketing program.

If your property isn’t selling, you need to take stock of what’s gone wrong. Sit down with your agent and have a look at the variables. Was the presentation up to scratch? Did you achieve sufficient coverage with your marketing? Was your asking price realistic?

From my experience, price is the culprit in 80% of failed sales. By the time most vendors get their property on the market, it’s presented as well as it’s ever going to be. And they usually have an adequate marketing program, especially if it was an auction sale.

So you’ll need to ask yourself whether the asking price was too optimistic. What were the offers that came in? Often a vendor will be a bit scathing when an offer comes in. Perhaps they’re expecting $600,000 and someone offers $540,000. They’re disappointed and perhaps a little anxious. But if no one else has made an offer they might want to start considering whether $540,000 is really what the home is worth.

You should also look at your agent’s performance. Has your agent done everything possible? Did they fulfil all their promises? Do you feel they represented your property with enthusiasm, energy and integrity? Don’t be too hasty to blame the agent, though. They’re paid by commission, so every single day they’re focused on getting a result that works for you. But if you’ve lost faith in your agent or they didn’t deliver on their promises, it’s probably time to move on.

Once you and the agent have debriefed, you can consider the options for going forward. But before you commit to doing anything, it’s a good idea to pause for a breather because you’re probably a bit flat and have lost momentum. You need to recover your positive energy or your lack of enthusiasm can negatively impact the sale. Taking the home off the market for a few weeks is sometimes quite effective.

If your pricing has been out of whack, you can continue the sale via private treaty with your new asking price, or you can go to auction. Vendors who have already had their home passed in at auction may be reluctant to go through the experience again. But back when I was an agent, I actually had huge success re-auctioning properties.

When the price, presentation and marketing are right, offers will start to come in but they won’t last forever. By the time a buyer puts in an offer for a home, they’re really excited about owning it. But in the face of rejection or procrastination by the vendor, their enthusiasm can quickly fade. They’ll often start talking themselves out of it. So it’s a good idea to respond to any offers promptly.

When it comes to weighing up offers, a good agent will come into their own – they’ll guide you. When I was an agent, I would often receive what my vendors thought was an acceptable offer, but sometimes I’d recommend not accepting. If I believed the buyer would go higher, or there was serious interest from other parties, I’d recommend the vendor wait a bit longer.

If you’ve chosen the right agent, they won’t let you undersell your home. They’ll make sure you hang in there until you get the best price.