Why is my Seattle home not selling?

Selling a home over the last few years has been seemingly simple. Take some photos, put it online, and receive ten to twenty offers. As we’ve seen in 2023, it’s becoming a much more complex process that involves various factors. Sometimes, despite best efforts, a home may linger on the market without finding a buyer. In such situations, considering renting the home instead of continuing to lower the price week after week can be an attractive alternative. Let's take a look at some common reasons why a home might not sell and explore whether it makes sense to think about renting it out instead.

Seattle Real Estate Market Conditions

Economic conditions, interest rates, and local real estate trends can significantly impact the housing market. If the market is slow, it may take longer to find a buyer willing to meet the asking price. Price reductions are becoming common in the Seattle market. Even if nearby homes have sold for much more, it’s important to recognize how much damage was done to home affordability with the recent jump from 3% to now 7-8% interest rates.

Overpricing

Setting an unrealistic asking price can deter potential buyers. And while it may be enticing to list a property high and reduce the price later, oftentimes the longer a property sits on the market the more stigmatized the home becomes. Imagine yourself in the buyer’s shoes. You find a home that looks incredible, the price now looks good, but it’s been sitting for 43 days… what’s wrong with it? You can see how quickly a buyer may decide against your home. Conducting a comparative market analysis can help determine a fair and competitive price, just be sure to consider the cost of ownership at the time of each comparable sale vs the cost of ownership today.

Property Condition

Seattle homes that require significant repairs or updates may struggle to attract buyers. Investing in minor improvements or renovations can enhance a property's appeal and increase its market value. Even as simple as repainting the exterior trim or installing a smart thermostat can boost the appeal of a property.

Limited Marketing Exposure

Effective marketing is crucial for selling a home. Inadequate online presence, lack of high-quality photographs, or insufficient neighborhood awareness can result in missed opportunity. Utilizing various marketing channels, neighborhood canvassing, and leveraging online channels can broaden the reach to potential buyers.

Inflexible Terms

Unfavorable contract terms, such as a rigid closing timeline or strict negotiation stance, can discourage potential buyers, driving them away. Being flexible with terms and willing to negotiate can make the transaction more appealing.

Tried everything and still no luck?

Instead of waiting for a buyer or selling at a massive discount, renting the home can be an attractive option for many homeowners. Let’s explore the positives and negatives of renting your property.

Positives

Steady Income

Renting provides a consistent stream of income, which can be especially advantageous. This allows you to take less losses than you might by selling at a price lower than you purchased. Additionally, the rental income may be higher than your monthly payments, helping to contribute to covering your new mortgage payments and property expenses. Even if renting for less than your monthly mortgage amount, renting can still be a better option. A loss of $200/mo for 8 years in a row is more financially advantageous than selling at a $20,000 discount.

Market Conditions Affect Rental Demand Less

Unlike selling, renting is less affected by market fluctuations. People always need housing, and renting can be a stable option even in uncertain economic times. When the market is climbing many people cannot afford to own and choose to rent instead. When the market is falling many homeowners can no longer afford to own and opt to rent. And through it all there are people who prefer to rent instead. For this reason, owning rental property is one of the most stable investments long-term.

Property Appreciation

Renting your home allows you to retain the property and potentially sell it when market conditions improve, preserving the long-term value of the investment. Holding real estate may be a great path towards future retirement as well. Property in coastal cities like Seattle tend to appreciate dramatically more than properties in other metros. The Seattle home you’re trying to sell may be one of the strongest investments in your portfolio down the road, especially if you’ve secured a low interest rate.

Negatives

Owning rental property can be a lucrative investment, but it comes with its share of challenges and drawbacks. Some of the negatives associated with owning rental property include:

Maintenance and Repairs

Property owners are responsible for maintaining and repairing the rental units. Regular wear and tear, as well as unexpected damages, can result in significant expenses.

Tenant Issues

Dealing with tenants can be demanding. Issues such as late payments, property damage, and conflicts between tenants can create stress and require time-consuming resolution.

Regulatory Compliance

Rental properties are subject to various laws and regulations. Staying compliant with local housing codes, zoning laws, and landlord-tenant regulations can be complex and time-consuming.

Despite these challenges, many investors find success in rental property ownership by hiring a professional property management company to handle the day-to-day on their behalf.

Conclusion

While there are various reasons why a home might not sell, renting as an alternative strategy can provide financial stability and produce a lower risk cash-flowing asset. Homeowners should carefully assess their specific situation, weigh the pros and cons, and consult with real estate professionals to make informed decisions about whether to sell or rent their home.

FELLOW Real Estate Services is an expert in the Seattle real estate and property management sphere.

To schedule a consultation with our team, click here.