Home Buying in 75039>Question Details

Knownmystic, Home Buyer in Irving, TX

Buying a house that has been on the market too long - potential pitfalls?

Asked by Knownmystic, Irving, TX Tue Aug 23, 2011

Hi all,

We are thinking of putting an offer on a house that has been on the market for close to 400 days. We were wondering if that could result in potential problems while we try to sell the house in the future. We know that buyers can request information about past sales of the house from a realtor and we were wondering if it would negatively impact the history of the house. The house is not in bad shape -- it just doesn't show well and we plan to fix it up real nice. Of course, we won't know of any other problems till we do the inspection. We plan to walk out if there any big problems. We were wondering if it's a good idea to consider buying it, if everything came up fine in the inspection. Please advise.

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Scott Mason’s answer
It is quite simple really. It always comes down to price. Other realtors always throw out a thousand other reasons why it hasn't sold but it is always price.The price is too high for its condition, terms, location, age or something. At a certain price everything will sell. Don't worry about how long it has been on the market for when you go to re-sale, at that time it will be your turn to set the price, and it will sell as quickly as you are willing to . I tell sellers that if you price it right it will be sold tomorrow; are you willing to price it at that level? No? then how long are you willing to wait for it to sell? These owners were willing to wait 400 days, but that doesn't mean you will have to.
1 vote Thank Flag Link Wed Aug 24, 2011
Did the listing agent have property disclosures on this one? If so make sure you read them because in most cases if a problem is disclosed its considered to be part of the AS IS provision. Secondly, just factor the time on market into your offer and make sure your agent does a good job showing you comps to justify what a fair price would be. Believe me when the agents talk this will be a huge factor. Thirdly, talk to a few contractors and try to get an idea how much your repairs will cost you. Sometimes a good house does fall through the cracks and sometimes the perfect home for you is just listed a little too high. The seller may or may be willing to meet you with a fair price, so just do your homework and make sure your agent does the same. Good Luck
3 votes Thank Flag Link Wed Aug 24, 2011
A house could be on the market for a long time for several reasons.

- Priced high at first and have now lowered the price
-Seller decided to make repairs to improve property showings
- The house had a contract on it that fell through after many months
- Or the seller decided to temporarily take it off the market ( vacation or death in the family) and re listed. Some sites count those days in between as “on the market”

400 days seems long in any market but the first question you should ask as a buyer is “what is considered a long time?” Every market varies from zip code to zip code. The first step is to find out the average DOM ( days on market) for your area of interest. Long and Foster provides monthly reports called Market Minute Reports.

You can get those reports and other useful home buying articles at our blog below
3 votes Thank Flag Link Wed Aug 24, 2011

A thorough inspection should reveal the problems you may need to contend with. Be sure you have a healthy "repair limit" amount in your offer and a clearly stated escape clause should the repairs be excessive. One that states that your entire escrow deposit would be returned in the event of excessive problems.

There is a big difference between "cosmetic" repairs and big ticket items. Cleaning, painting, minor repairs, carpeting, planting etc. are acceptable. On the other hand, you should be careful of "big ticket" items, such as roof replacement, structural defects, HVAC, kitchen & bath upgrades etc. because they can be very costly.

Good luck,

3 votes Thank Flag Link Wed Aug 24, 2011
Long market times are usually due to overpricing issues, location issues or poor marketing efforts by the agent or owner.
Overpricing is the main reason good homes sit. Owners believe their home is the exception to the best advice of a good agent. They price it based on what they want or need to get rather than what the current market indicates its worth. Only over time will they start to reduce the price to where it may attract an offer, but often too late to maximize their value.
Location issues like next to a busy road, train tracks or an isolated area is difficult too and it takes time for the right buyer to come along.
If it's a good house, but no one can see that, the marketing may be all wrong. This could be the agent, photographer or the home owner not being willing to prepare the home or even show the home. I had a client once ask me to only allow seriously interested buyers schedule showings. I told her, they are seriously interested if the want to schedule a showing, let them all in. She had been refusing showings and that house never sold.
You are wise to consider what impact this may have on you when you decide to sell the home. Of the issues I raised, only the location is one that you can't make better decisions on. Figure out why it has taken so long and if it's an issue you can avoid, don't worry about it until you decide to sell. In the mean time, if it’s a good home make an aggressive offer. Old inventory is often very anxious to get any offer and you may be in a good position to negotiate well.
3 votes Thank Flag Link Tue Aug 23, 2011
I would not worry about this at all. The days on the market likely presents an opportunity to you to negotiate a good deal. When you go to sell, the listing archive related to the current listing period will provide a historical perspective but I do not think it will negatively impact your future marketing.

Good luck to you!
Jeanne Feenick
Unwavering Commitment to Service - in New Jersey ;-)
2 votes Thank Flag Link Wed Aug 24, 2011
Not really. This home suffers from poor pricing. It is always about the sale price. Every thing is fixable for a price. Well priced homes sell quickly. Over priced homes don't. Hire a RE agent to help you analysis the potential of this home.
Good luck.
2 votes Thank Flag Link Tue Aug 23, 2011
There has to be a good reason for the home to be on the market that long. That is pretty excessive for Irving. If you get a good deal and can change things that are negative about it, then go for it. If it's a location, there's nothing you can do and you will experience the same issues the current owners are when it's time for you to sell.

Make sure your Realtor does a market analysis on it so you don't overpay.

2 votes Thank Flag Link Tue Aug 23, 2011
Hello Knownmystic,
Nowadays, most buyers are looking for houses in tip top shape, very often completely updated and upgraded. On the other hand investors (there are still some out there) are looking for a rock bottom price. This is why a lot of houses are still out there after 400 days. The asking price might be too high. Also the market status in you town has to be considered. You need an agent to represent you (from your question I don't know if you are working with an agent or contacted the listing agent). By having an agent of your own you'll able to get all the necessary information about the market in that area, the past sales of similar house, how long they were on the market, how much below the listing price they sold for, were they in the same condition, etc. It will be easier to make a decision after knowing all the facts. Your agent will help you with the terms of your offer.
You got nothing to lose. Make the offer you are comfortable with and go from there. The seller might accept it!
And don't forget HAVE A HOME INSPECTION. I hope I helped a little.
2 votes Thank Flag Link Tue Aug 23, 2011
Not a worry. Totally irrelevant when looking ahead to selling it.

What you should be looking at is WHY it's been on the market for 400 days. Likely, it's overpriced. Perhaps there's some significant problem (mold, foundation issue) that's scared some people off. (The inspection should reveal that, and the listing agent should disclose any known problems.) Or, as you suggest, maybe it just doesn't show well. Figure out what the problems have been thus far, and whether--and to what extent--they're a concern of yours. Make sure that you're getting a good value, and that you have a good handle on what expenses you're likely to face.

Then go ahead--if it makes sense--and buy.

As for when you sell the home in the future: Past days on market don't matter. Really, they don't. Buyers will come in and they'll determine whether you're offering the home at a good price. Most will be concerned about the condition and the appearance. You say you're planning on fixing it up real nice. So buyers will walk in and they'll see a house competitively priced, in good condition, with good curb appeal and a nice, updated interior. That's what they'll care about. Not about whether a previous owner had the property on sale for 400+ days.

Hope that helps.
1 vote Thank Flag Link Wed Aug 24, 2011
Don Tepper, Real Estate Pro in Burke, VA
You sound like you are going to be in this house for a while.

Several years from now, no one will care how long it was on the market in 2011.
1 vote Thank Flag Link Wed Aug 24, 2011
Hello Knownmystic,
I like that you are looking ahead as you consider this purchase. You should size up a house for resale before buying.

If the current owner has an ugly duckling that you can make a swan, then you might be looking at a good deal. But there are more factors. Was the home overpriced to begin with and is only now a fair price? Is there something about the location that is unappealing? Does the home backup to a freeway?

Four hundred days is an eternity on the market if we're not talking about a custom home. And by the way, there are plenty of custom homes that have poor curb appeal and don't show well, but 400 days?

All of that said, your are smart to be very suspicious. In addition to the required inspection, I would pay a visit to the local planning department to see if there is any information on this neighborhood that needs to be known.

Best regards,

of Longmont, CO
1 vote Thank Flag Link Wed Aug 24, 2011
Thank you all for your replies. All the information that you have given is very helpful. As first time home buyers buying a house can be daunting. We truly appreciate your insight and guidance. Thanks once again!
0 votes Thank Flag Link Wed Aug 24, 2011
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