Friday 15 May 2015

"How long has it been listed?"

When looking at a house, you might be tempted to ask how long it’s been on the market. This is information I have access to through the MLS® system and which I will look up for buyers, but it’s almost as big a red herring as asking ‘what did the seller pay?’

The theory behind the question, of course, is that if a property is listed for a long time, the seller may be getting desperate. The truth is that this is not necessarily the case, and a long time on market may actually mean the exact opposite – the seller is not desperate at all.

Having said that, there can be value in knowing how long the property has been listed in some situations.

A power-of-sale property is one example, where the bank has taken the property from the owner for not making their mortgage payments. These listings are sometimes over-priced because of inaccurate opinions on value given to the bank. Because a bank can be liable to the owner for lost equity by under-selling the property, they need to give a listing time on the market to prove that the value is less than the opinion they received. So if a power-of-sale has been listed for a while they may be ready to take a lower price.

Another situation where it can be useful in negotiating a good deal is an estate sale, where someone has passed on and the family is now selling estate assets including the house. Closure and payout has some value to a family, so if it has been listed for a while you may be able to get away with a lower offer, especially if you can offer a relatively quick closing.

But beyond those situations, how long a property has been listed doesn’t necessarily tell you anything useful. Usually, if a seller is under real pressure to sell – whether because of financial pressure or family issues or whatever – price reductions will come sooner rather than later.

If a property has been listed longer than usual for the current market conditions with no significant price changes, the seller is probably under no pressure and being listed a long time doesn’t necessarily mean that they will bend for a low offer.

So, feel free to consider how long a property has been listed, but don’t over-estimate the value of this information. If a seller is under no pressure and feels their property is worth a certain amount, then they may never bend to a lower price.

Try your offer, but be prepared to either move on or pay their price if it doesn’t work out.

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