The Costa Mesa House I Didn’t Sell

I am good at what I do, and I typically will sell all the homes that I list in Costa Mesa. But not always. I recently came across some beautiful marketing material I had for a home in Costa Mesa, and I chuckled. I laughed to myself because the marketing material was really good, but I did not sell the house that it was promoting.

As we have written about on multiple occasions over the past few years, the Costa Mesa real estate market has been exceptionally good to sellers. Most homes have been selling within 2-3% of asking price. But as good as the market has been the past 4-5 years, there are things you can do to prevent your home from selling.

My recent experience is probably similar to other real estate agents when the home they have listed does not sell. It started as any other listing typically does, with a listing appointment. I walked through the house, got a sense of what upgrades were present from the last time the home was on the market, then sat down with the homeowners and reviewed the comps of recent sales. I noted, since I have been in the business for about 16 years, that the lasttime this home was on the market it did not sell. That was a slightly different market in 2012, a market that was in rebound and on the way up. But it still did not sell then – the price was reasonable, but something about the house did not appeal to people at that time.

As I noted the fact that the home failed to sell, I also noted recent comps would support a certain price. That’s important, because an appraiser will typically enter the picture when a buyer is using a loan to verify the value and safeguard a bank’s loan value. The sellers saw the number I was projecting the home should sell at, and balked at the number. They felt the home should sell for $300,000 more than I recommended. Why? Because it just “felt” like it should happen at that number. I should have ran then, looking back now. It did actually get a bit worse however. The sellers wanted me to list the property on the MLS without offering a commission to a cooperating broker (buyer’s agent). Most every property you see listed online allows a buyer’s agent to bring a buyer into see a home and receive a commission if their buyer buys the property. In this case the Seller (in my opinion) was hoping to save paying a large commission to a buyer’s agent. The Seller wanted in this case for me to work through connections to sell the house, which is fine, I have done that in the past.

This home had a significant lack of upgrades to justify the $300k+ overpricing. In fact, I think the only thing this homeowner did was a bit of painting since they moved in. I always recommend adding furniture staging to a home when the price is steep, because that is the best way to take the buyer’s eyes off of the lack of upgrades, and more onto how the home could feel or could be like for them. That idea also got thrown out – too expensive! (It’s not for what it’s worth, it’s a super savvy idea for those trying to get the most money for their home).

So anyway, off to market! We listed the home for what the seller desired, and with no changes to interior, went on the market. We were relying on the fact that the market was hot and “someone will want to buy it”. I did a full marketing package with short film, professional photos, multiple postcards, advertisements, magazine ads and other clever ads ( the usually treatment for what I believe needs to be done for high end marketing). We got the usual traffic at our first broker open house. We had some traffic during open houses. We had a few appointments for people that wanted to see the home. In all cases, people came in, thought the home was “just OK” and immediately asked how we got to our price. And what are the comps for this price? Buyers are way more educated on the market than sellers give them credit for. The typical buyer will have looked at more than 100 homes online, and usually more than 10 in person. They really understand what values are like after watching a micro market for a couple of months. Sellers usually jump in and compare their homes to others that have sold and might not really be apples to apples comparisons.

So how does the story end? I spent a good deal of money advertising the home in a variety of traditional and electronic media formats. All for not much in terms of showings or appointments or any interest in the house. Small price drops over a few months did little to effect those results. At the point where the seller got frustrated and thought “Why is my house not selling?” “It must be the agent!!” is when I cordially withdrew from the listing and allowed the seller to go with another agent.

And it’s hard to admit I failed – it is. But I think I failed to recognize warning signs, and my belief was the red hot market would somehow take care of selling the home. But looking back, it’s a good lesson because I realize how flawed that thinking is.

After another year on the market, this home is at this writing still languishing on the market. At least I can feel better know that maybe it wasn’t me.

What are the takeaways for a Costa Mesa seller who may be thinking of selling your Costa Mesa home? If you are thinking of selling, I would say:

Take your Real estate agent's advice seriously. If they do business in your local market, take their opinion on price as expert advice. Pricing a home well beyond comps is a seriously bad idea unless you have an incredible reason to do so.
If an agent tells you to make reasonable changes in furniture, staging, or outside areas, take that advice or reduce your price accordingly so that a a typical educated buyer may overlook what might be objectionable.
Buyer’s agents will ignore your property if you don’t offer a commission. Trust me, they are aware if you are not offering a commission- they all talk about it at the water cooler. You don’t want to be the subject of that talk, trust me.
Staging with outside furniture does work to bring more money to the sale, regardless of your interiors.
Reducing your price does work – it needs to be adjusted pretty quickly if you are way off base from when you start your listing, however.
Buyers are significantly smarter than you think they are – trying to get more money than what the last home just sold for does not go far if your house is worse than that one.