How to sell new construction in middle income area

16 Replies

Hey guys - I'm having trouble selling a spec house I recently built and was wondering the best way to market it. It's located in a middle-low income area with the average home price(used) being around 170-180k. We have ours listed for 269 so we're really at the top of the market which isn't ideal but it is comped accordingly. There's little to no new construction in the area so we're really appealing to a small audience that is willing to sacrifice location for a nicer house. Assuming the price is fair what is the best way to market this? Personally I feel newspaper advertising is a waste of money - I don't think too many people read the newspaper anymore and the ones that do are older and probably not who we are marketing to. Is internet marketing the only way to go? We have it listed on the MLS, have put up open house announcements on Zillow/Trulia/etc - I'm just wondering if we're missing something here.....We're also debating hiring a local relator but I'm not sure how much they could bring to the table...What do you guys think?

If it's in the MLS (without a local agent??) it's being exposed. The problem of course is that you're $100k above the immediate neighborhood. People who buy a $270k house want to be in a $270k neighborhood, not a $170k neighborhood.

@Joseph R. You can put it on BP Marketplace (though you need to be a paid member) or advertise on sites such as Postlets.

I will tell you though, if a house isn't selling after being on the market for a period of time, it's usually because there is low demand, and/or it's priced to high.

Most people buy their homes through a Realtor. If you property is on MLS, what is the amount you are offering for a commission? Make it clear that you cooperate with agents, etc.

More than likely you need to lower your price.

Karen Margrave

Originally posted by @Joseph R. :
It's located in a middle-low income area with the average home price(used) being around 170-180k. We have ours listed for 269 so we're really at the top of the market which isn't ideal but it is comped accordingly. There's little to no new construction in the area...

You say the following three things:

- Average home price is $170-180K

- Yours is "comped accordingly" at $269K

- There is little to no new construction in the area

I just don't see how these three statements reconcile with one another. If the $269K is based off comps, what comps are these? Certainly not average home price (which is a $100K lower) and certainly not new home prices (since there are none of those). So, what/where are the comps you are referring to.

As Wayne said, if it's on the MLS, it's getting exposure. And if you're not getting any offers, it's because it's overpriced for the location/design/condition.

My suggestion would be to keep lowering the price until you get a sale. The next few months are prime selling time, so I would do my best to get it sold sooner rather than later...

Hey guys - let me explain a little better...We bought this property 2 years ago - there was an existing two family that we renovated and then subdivided the rest of the land into 5 lots....the two family sold for 259k, and one of the spec houses we built(exactly same as the one in question) sold before it was finished for 269......there's also a 20 unit subdivision that was built in 2010 around the corner that sold for between 230-260 a unit......Pricewise I think we're fine but more importantly I want to make sure we're marketing this properly and effectively.

Originally posted by @Wayne Brooks :
If it's in the MLS (without a local agent??) it's being exposed. The problem of course is that you're $100k above the immediate neighborhood. People who buy a $270k house want to be in a $270k neighborhood, not a $170k neighborhood.

This is definitely the biggest issue with our property. My partner in the deal is a broker so its listed through him on the MLS but we're debating finding a local realtor that knows the area and can move this house quick.

Originally posted by @Joseph R. :

This is definitely the biggest issue with our property. My partner in the deal is a broker so its listed through him on the MLS but we're debating finding a local realtor that knows the area and can move this house quick.

If you're not getting any interest at the current but want to move it quickly, my suggestion is to both find a local agent and drop the price...

Originally posted by @J Scott:
Originally posted by @Joseph Rohinsky:
This is definitely the biggest issue with our property. My partner in the deal is a broker so its listed through him on the MLS but we're debating finding a local realtor that knows the area and can move this house quick.

If you're not getting any interest at the current but want to move it quickly, my suggestion is to both find a local agent and drop the price...

Do you think a local realtor would bring enough value to be worth the 3%? That's sort of what we're debating currently - personally I don't think a realtor is going to get much done and it would be a shame to have the realtor sell the property in the same time frame it would of taken us. I think we need to evaluate the holding costs/opportunity costs and make a decision from there.

Quick question for you guys - do you think newspaper advertising is dead? I think we're appealing to a lot of first time home buyers/young couples and I don't think anyone under the age of 40 regularly reads the newspaper. Personally I feel its a waste of money to advertise in the local paper(and it isn't cheap) but curious to hear what you guys think.

Originally posted by @Joseph R. :

Do you think a local realtor would bring enough value to be worth the 3%?

Unless the agent has personal connections to increase the likelihood of reaching your specific buyer demographic, probably not. The key is that the property is on the MLS and not through a discount/flat-fee broker (many buyer's agent don't like the hassle of working with a flat-fee broker).

Have you had a bunch of showings with no offers? Or few showings? This is a big question I don't think I saw answered above, and would give some additional insight into what's going on.

@Joseph R.

try offering a bonus to the selling agent on the MLS... Since your partner is a broker he is getting equity in the deal... If I have a problem property I will list it my self like you have done... and then offer in many cases a full 6% to the selling agent... And I market to the agents hard... they will drag anyone they remotely think would be interested for a chance to double end the deal.

Originally posted by @J Scott:
Originally posted by @Joseph Rohinsky:
Do you think a local realtor would bring enough value to be worth the 3%?

Unless the agent has personal connections to increase the likelihood of reaching your specific buyer demographic, probably not. The key is that the property is on the MLS and not through a discount/flat-fee broker (many buyer's agent don't like the hassle of working with a flat-fee broker).

Have you had a bunch of showings with no offers? Or few showings? This is a big question I don't think I saw answered above, and would give some additional insight into what's going on.

Haven't had many showings - I think the biggest issue in the neighborhood - once they step foot in the house they fall in love its just getting them to the front door. It also doesn't help we're doing a lot of construction next door finishing the underground utilities so the lot isn't in the greatest shape. Hopefully with the lot coming together combined with the peak buying season we can move this soon enough.

Originally posted by @Jay Hinrichs :
@Joseph Rohinsky

try offering a bonus to the selling agent on the MLS... Since your partner is a broker he is getting equity in the deal... If I have a problem property I will list it my self like you have done... and then offer in many cases a full 6% to the selling agent... And I market to the agents hard... they will drag anyone they remotely think would be interested for a chance to double end the deal.

thanks Jay - think I'll run that buy him later.

Originally posted by @Joseph R. :

Haven't had many showings - I think the biggest issue in the neighborhood - once they step foot in the house they fall in love its just getting them to the front door. It also doesn't help we're doing a lot of construction next door finishing the underground utilities so the lot isn't in the greatest shape. Hopefully with the lot coming together combined with the peak buying season we can move this soon enough.

If you're not getting a lot of showings, that generally means one of two things (pretty obvious stuff):

1. Buyers aren't seeing the listing

2. Buyers are seeing the listing but aren't interested in actually seeing the house

#1 happens when a house is overpriced, and buyers are filtering their searches on lower-priced houses.

#2 happens when the listing isn't attractive (bad pictures and/or copy).

Can you post a link to the listing? Maybe if we can look at the pictures and read the copy, we can either rule out (or rule in) #2?

Originally posted by @J Scott:
Originally posted by @Joseph Rohinsky:

Haven't had many showings - I think the biggest issue in the neighborhood - once they step foot in the house they fall in love its just getting them to the front door. It also doesn't help we're doing a lot of construction next door finishing the underground utilities so the lot isn't in the greatest shape. Hopefully with the lot coming together combined with the peak buying season we can move this soon enough.

If you're not getting a lot of showings, that generally means one of two things (pretty obvious stuff):

1. Buyers aren't seeing the listing

2. Buyers are seeing the listing but aren't interested in actually seeing the house

#1 happens when a house is overpriced, and buyers are filtering their searches on lower-priced houses.

#2 happens when the listing isn't attractive (bad pictures and/or copy).

Can you post a link to the listing? Maybe if we can look at the pictures and read the copy, we can either rule out (or rule in) #2?

 Hey JScott - I meant to get back to this thread a while ago but got sidetracked - anyways here's the listing

http://www.zillow.com/homedetails/1561-Quinnipiac-...

I definitely think the pictures/description need some updating but do you think this is a major detriment to our sale? I think in a competitive market this is a must but given we're new construction and there's no other inventory in the area, I don't see it holding us back.....at this point we really want to unload it so we can move on so we're contemplating either getting a realtor to take it on, lowering the price, or both.....I think the main draw of a realtor is to be a great salesman and sell someone on the property who's not fully committed, but at the same time I'm not sure how effective they're going to be......lowering the price is another option but if we drop it to 259 do you think that will change anything? I feel like this is a unique product for the area and if people are truly interested they are going to make an offer regardless if its 10,000 cheaper.....looking forward to hearing your feedback....BTW, I've been following your new construction project on twoplustwo and have really enjoyed it - keep up the good work :)

Is the listing on the MLS? If not, that's a big part of your problem...

A few other thoughts:

- If it is on the MLS (and even if it's not), you really need better/updated pictures. Hire someone for $200 to take professional pictures so that the outside isn't covered with snow (that tells people immediately that you have an old listing) and so the kitchen doesn't look like it has carpet... :)

-  You need more pictures.  If this is new construction, every room should look great, so get pictures of every room.

-  Is the house staged?  If not, get it staged, at least for pictures.

-  Sorry for being blunt about this, but those front steps leading up to the front door are horrible.  At the very, very, very least, stain them so that they don't stick out and make the house look like the steps were thrown on as an afterthought.  Better yet, redesign with a more contemporary look, build a portico or at least create some type of more aesthetically pleasing porch.

-  If possible, update the listing to say it was built in 2014 (not 2013).

-  You say that this is a unique product for the area -- that's not a good thing.  To me, that's more reason to hire a great agent who knows the new construction market and knows where to find buyers who may be interested in a house like this.

-  You may need to take the listing off the market for a couple weeks, spruce up the house and start over with a fresh listing.  Agents/buyers who see a listing that's many months old will assume there is something wrong with the property and steer away from it.

@Joseph R.  You have been trying on your own to sell the house for a few months now. People have seen it, and they aren't motivated to make an offer. Unfortuantely, you probably overbuilt for the neighborhood. How much do you owe on the house? How much is it costing you every month to keep it? Drop the price and get out of it, or rent it out. I'd also consider listing with an agent that works that area of the city. 

I will tell you, as a real estate agent you learn very quickly that very rarely do buyers buy the property that they call on; and Open Houses are good for picking up leads of buyers, but generally don't produce buyers. 

Karen Margrave

Thanks for the responses guys.....its been on the MLS since February and I definitely agree that the listing/property needs an overhaul.......I think at this point its best to hand this over to a professional and see if they can unload it.....Hopefully with a cleaned up listing and a local realtor we can move this and move on to the next one :)

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