Putting your property in the market is exciting. When you think of the returns, you may glow with excitement. Selling the property is however, a different experience altogether. Sometimes, a seemingly marketable and decent property may take too long to sell, leaving both the owner and marketer frustrated and confused. What’s worse is that many of the prospective buyers may not take their time to tell you why they won’t buy. They just view and move on, leaving you to scratch your head in search for answers. It’s at such times that owners, need to evaluate the possible reasons why the property won’t sell.
The Sales Funnel
Bear in mind that when property, especially houses take too long to sell, it becomes a stale property. And the more it stays stale, the harder it is to sell and the more one spends on marketing and maintenance. It’s common for onlookers to brand stale properties as “that X property that never sells”. It’s therefore important to rectify any mistakes earlier on. But first, you have to understand the real estate sales funnel, which is quite long and complicated.
Jackline Nyaga, a realtor at Stock Brick Properties says that the funnel starts with creating awareness or advertising the property. Interested buyers will then call to inquire about it. She notes that a majority of those who inquire aren’t always serious about buying. At this point, a lot of the prospective buyers will drop out when asked to proceed to the next stage which is viewing. Viewing a property shows some level of seriousness given that a prospective buyer will spend their time and resources to visit the site.
During site visits, the marketer or owner is supposed to create rapport and win the client’s trust. In a market with so many con artists, it’s imperative that the client feels safe. After viewing, the prospects will give feedback on whether they like the property or not. Others will just disappear without a word. Still, at this stage of the sales funnel, a lot of prospects may be non-committal. Therefore, a marketer has to show one property to as many people as possible.
Those who like the property are supposed to write an expression of interest letter to the owner. The letter can be drafted by one’s lawyer or agent and it expires within seven days. The owner may accept or reject the letter. If they accept it, they will then hand over copies of the property’s documents such as title deeds or lease certificates to prove ownership and for the client to conduct a search.
Once the client is satisfied with their findings after a search, the owner will draft an offer letter, detailing all the sale details, including the payment plan. The seller’s lawyer will then draft a sale agreement based on the offer letter’s details. At this point, the buyer should have brought their lawyer on-board, who then peruses the agreement before the buyer pays a deposit. They will then proceed to make other payments as agreed.
As smooth as this funnel sounds on paper, Nyaga says that a prospective buyer, is just that, until they pay the final instalments. “Clients can drop out of a sale agreement, even after paying the deposit,” she says.
Throughout all the stages of the funnel, a seller risks losing potential buyers and below are some of the reasons why a property may fail to sell;
When the location is unsuitable, most buyers will reject the property from an early stage. Note that unsuitable could mean a lot for things for different people. For instance, Nyaga says, that the property may be perfect in advertisements and listings, but once the buyers view it, they may not like the neighbourhood, distance from their place of work or the amenities (or lack of) within the location. Such could prompt a buyer to take a pass over a perfectly good deal.
Whether the location of your property is good or bad, you still have to sell, even though you can’t move the property to a different location. Tackle this challenge by targeting the right people. Think of selling a property next to a big church. While the sermons and church bells may be a bother to some people, pious worshipers or people of the cloth would gladly take up such an offer. So target wisely.
Real estate markets are ruled by market trends all over the world and sellers can’t afford to overlook them. Today everyone may be rushing to get a piece of land in Kajiado and tomorrow everyone has shifted their attention to Ruiru. Leonard Kariuki, a valuer at Advent Valuers says each location gets to enjoy its prime time. “The perfect time to put your property in the market should be when all eyes are on it, because once people stop buying in that area, getting a buyer may take time,” he explains
Also assess the buyer’s purchasing power before placing property on sale. At a time like this for instance, Kariuiki hints that fewer buyers are able to commit financially. Therefore, your property may be perfectly fine but it still won’t move.
Also, remember to evaluate the property calendar. It is common knowledge that selling in an election year is hard, but the year after is always suitable for both buyers and sellers. The market then stays steady up until the year before elections when buying and selling declines slowly.
If a seller goes wrong from the marketing stage, getting any serious buyers becomes a wild goose chase. Once you decide to sell, set aside a marketing budget. It could be in the form of agent/realtor’s commission or charges for advertising space. In addition, come up with a marketing strategy or discuss the same with an agent.
Nyaga, above has observed that a lot of sellers take simple details like clear images, advertising channels and a property’s details for granted. “Images are supposed to be clear and a truthful representation of the property,” she says. Downloaded images, unclear photos, images of dirty homes and scanty details form part of poor marketing.
Working with too many marketers and allowing them to set their own prices may also work against the buyer. Stick to one or two marketers and be clear on your pricing. If possible, get a professional photographer to take images if the marketers are unable to do so.
When providing details of the property, nothing is too minor to leave out. Talk about all nearby schools, banks, hospitals and exact distance (In Kilometres) from towns. Sometimes, it’s that small nearby kindergarten that sells a property.
Dealing with a difficult, stubborn or rigid seller is every marketer’s nightmare. It’s about the simple things like how a seller respond to buyers’ requests for discounts or the rules they impose for viewing and other engagements. Jackie notes that every buyer will ask for a discount and sellers should be open to negotiations. Flexibility and friendliness during viewing and negotiating processes is equally important. “Some sellers may seem busier than the buyer, yet they expect the latter to hand over their hard earned money,” says Nyaga. The buyer should be accorded some level of control and power. Unnecessary rules such as strict viewing hours or general unavailability are a barrier to selling. Kariuki adds that now more than ever, it’s a buyers’ market and sellers who don’t respect the buyers’ wishes may be at a loss.
On matters pricing; “There is a lot more to pricing that just asking around for a figure and imposing it on buyers. You have to calculate a property’s market value, which is methodical,” says Kariuki. When conducting valuations, Kariuki will consider the type of property, its location, age, size (of both land and building), maintenance and renovations, everyday use wear (depreciation) and the and the kind of construction materials used. For residential properties, he uses the sales comparison approach, which entails analysing recent sales data within the neighbourhood to establish the market price. For commercial buildings, the calculations are slightly more complicated. He has to establish the monthly/annual income that the property is expected to generate, then subtract the amount spent on repairs, maintenance, insurance, utility bills and management fees. He will then capitalize the property and come up with a price. Unfortunately, most sellers lack the expertise to come up with acceptable market values, yet they shy away from engaging valuers. It’s therefore likely that they’ll overprice properties thus discouraging buyers.
Other times, the pricing may be right but the payment plans are unfriendly for buyers. While all sellers hope to transact with cash buyers, such expectations may lock out many willing buyers who want to pay in instalments. Hidden charges are also a major challenge for property buyers. They could be in the form of service charges or accrued land rates. Either way, be straightforward and honest about all the costs from the onset to avoid losing clients at advanced stages of the sales funnel.
Buying a home is always an emotional process. When people walk into the house, they want to picture themselves seated somewhere in the living room, while their children run around happily. The corners, floors, walls, windows and every other design aspect needs to be easy on the eyes. This is why Nyaga recommends sticking to neutral colours for paint and flooring options. Design shouldn’t be personalized. It should be in consideration of the target market. A cute, pink children’s bedroom may sound like a great selling but it could also be off-putting to majority of buyers.
Floor plans too have proven to be a big deal in property sales over the years. “People don’t like too many corners in a home nowadays. They prefer open plan floors,” says Nyaga. Remember, people are supposed to picture themselves growing old in a house and if the floor plans are neither suitable for their growing children or themselves in old age, they may be hesitant about buying.
Certain décor and design issues such as chipped paint can be dealt with easily, but structural issues need the input of a professional. Engage an interior designer, an architect or a structural engineer to correct any serious issues if your budget allows.
Finally, you may get everything right, from marketing, to timing, design, paperwork and location, but still you need to create room for unforeseen challenges. Who would have thought that we would be dealing with a pandemic in 2020? What about unpredictable natural disasters like mudslides or earthquakes?
But there are also other minor challenges like a buyer falling sick, losing their source of income or losing a loved one. Transactions could be cut short by such uncertainties. Both Kariuki and Nyaga advice sellers to always be open-minded and to adjust their marketing strategies fast when such things happen. Selling anything in real estate boils down to flexibility, a listening ear that takes wise counsel and a sharp eye that detects changes in the market fast.
