Is there really a buyer's market in many areas or do some listing agents simply do a better job than others to get homes sold? The rising tide of expireds in many markets suggest that sellers may be failing to face market realities.

"All properly-priced listings offered by a motivated seller will sell; it's how the market works," says Milton, Ontario broker Chris Newell. "If listings aren't selling, there are only a few reasons why, and they boil down to marketing, price, condition and motivation. If those four things are not in line at the outset, a professional wouldn't take the listing."

According to Newell, in his MLS, 51.66 percent of listings expired last year, yet 81 percent of all listings taken went on to sell. "There are obviously a large number of agents out there taking over-priced listings," suggests Newell, "or listings from unmotivated sellers."

Linda and Fred Lanham market the Addison and North Dallas sectors (Z-10) of the vast Dallas-Fort Worth area. Since the beginning of 2003, there have been 314 expireds, while 371 homes have sold in Z-10.

"We are having to be very insightful about the condition of property and the degree of updating when pricing a home to go on the market or we will be chasing the market down hill," says Fred Lanham. "Buyers in our area are largely local buyers making lifestyle changes or commute changes as money is so cheap and readily available today; however, they do not have the time or confidence to update a fixer upper."

He explains, "If you have the home presented very well and priced to the “perceived market value” – we use the term perceived market value to describe the current buyers – they have access to sufficient information about the area, they have the knowledge that they are in the driver’s seat and will wait until the home they want comes on the market and then they will compete to purchase that home."

Not all homes have to expire, notes Lanham. "We just sold a home that was very nicely updated for 97 percent of asking price in 15 days for cash to a buyer that was moving less than two miles to be closer to grandchildren. We also had more than 60 people through the open House on a hot Sunday afternoon. This is not our greatness as listing agents, but it is what the market is today."

So, one broker says agents are taking overpriced listings while another says the listings that sell are the ones that are updated and in good condition.

So whose fault is it that so many listings expire?

Atlanta broker Jim Crawford says that when he and his wife Ellen moved to the Atlanta area in the early 90s, that the market was bad. He and Ellen chose to work expireds, and he draws a lot of parallels between that market and the current buyer's market.

"In the Atlanta area the total on MLS sold was 44,000 homes, but there were also 40,000 expireds last year," says Crawford. "To break it down a step further, is to find out how many of those previously expired listings went on to sell again.

"You will find in every MLS, there are statistics will tell you the actives, pending, and a person should look at percentage of active vs those pending. There has to be a ratio of actives to solds, and they will learn what percentage were previously listed. I would run the expired list and run the active list, and then I would look at the individual expired. If I'm looking at a $150,000 neighborhood, and a $180,000 listing that didn't sell, then I know that condition, price and appearance is why it didn't sell, and possibly the location. You can paint a house, but you can't change its physical location, but all objections can be overcome by pricing and appearance."

The Crawfords specialized in expireds in a market when homes took 145 days to sell. "We found we paid a lot of attention to detail," says Crawford. "There is always a reason - threadbare carpet, fixtures or appliances that the average buyer can't overcome visually. The seller who avoided making any changes other than price, will find that the buyers will avoid making those changes, too."

Crawford says there are agents who will "buy the listing" and refrain from telling the seller that their 30-year-old shag carpet is going to turn off buyers. "That is wrong and it is unprofessional," says Crawford. "The agent needs to tell the seller the whole truth."

He says that the picture is even worse when you consider "withdrawns." Withdrawns are a category of expireds, says Crawford. While some listings are withdrawn legitimately, it is the strategy of some agents to physically remove the listing from the system before it expires, and then remarket the listing as an active listing, which lessens the days on market to unsuspecting buyers.

"If you can find out that a listing was previously listed, it can change the true days on market from 80 to 120 days," says Crawford. "That is a substantial thing that should be taken into the equation when listings don't sell."

Are buyers simply reacting to the aging of housing stock? "No, it is appearance. If the housing stock was the problem, you would never have a market for 300-year-old homes like you do in Europe," scoffs Crawford. "Older homes are frequently in the best parts of town, by all the activities and everything."

No, it's about the "cancer" listing, says Crawford. And inexperienced agents, he says.

"When I go into a database and find a house that has been on the market five times before," says Crawford. I know there is some issue. There is an unreasonable seller, structural defects and the truth about the home is maybe not being told. If I need sunglasses to walk through a house, or there is shag carpet, I feel the need to tell the seller. I tell them I can't guarantee that I'll sell their home for them, but that if they will participate in a team effort with me and tackle known and obvious objections to their home, then we have a much better opportunity to find a buyer. But if the house has structural damage or backs up onto a freeway, what is the point of listing it? I'd rather my competitor get the listing and get bogged down with it."

Published: June 4, 2003

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