Making resale competitive with new homes can be a challenge. One REALTOR® learned how to highlight the features of his seller’s property against the blank canvas of new construction in the neighborhood.
Location: Indianapolis Square footage: 5,217 Bedrooms: 4 Bathrooms: 4.5 Lot size: 13,939 square feet Year built: 2010 Extras: Hardwood floors, custom master walk-in closet, finished basement
In most circumstances, the home that Josh McNair, broker-owner of Geist Realty in Indianapolis, listed last October would be an easy sell. The four-bedroom, four-and-a-half-bathroom house with custom upgrades was in a hot neighborhood with attractive features such as walking trails, playgrounds, and basketball courts. Even more appealing, McNair thought, was that the house was in excellent condition, being only about 7 years old. But the problem was that the area was a hotbed for new construction.
With new homes going up on every corner of the 100-home subdivision, McNair’s resale listing was a marketing challenge. With a third of the neighborhood still under construction, he found that most buyers were holding out for a brand-new home they could customize themselves. Some buyers wanted a bigger, more private backyard; some wanted a different layout. One buyer wanted vaulted ceilings in the great room. These requests could be more easily accommodated by a builder.
As more new homes were built, the local market was constantly evolving, which meant McNair’s marketing tactics had to change as well. He pulled comps every two weeks rather than every 30 days, made sure he was upfront with the sellers—a couple with two children—about price changes and home values, and highlighted the strengths of his listing’s individual characteristics over the blank canvas of new homes. Even so, it took until May of this year—seven months—to find a buyer and close on the sale. Over that time period, 10 new homes were sold in the neighborhood.
What marketing techniques did you use to make your listing competitive with new homes in the neighborhood?
McNair: I did a video walkthrough, showing how open and spacious the floor plan was. Even though the home was seven years old, it still showed like a newer home, and the video conveyed that. I also talked with other agents who recently sold homes in the area and picked their brains about what helped to sell their listings. They told me to make sure all upgrades stood out in the listing. I also took out a half-page ad in a local monthly magazine with a circulation of 12,000. I used social media, reverse prospecting, e-newsletters, broker-to-broker marketing, and open houses. Builders tend to use television ads, billboards, and a lot of directional signage. I used mostly online tools and utilized the local broker as well.
Approximately how much did you spend on marketing?
McNair: I spent about a third of my commission on this particular listing, putting about $3,700 into the marketing. This amount might seem high, but it was good for exposure.
What features made your listing attractive to buyers who might have otherwise wanted new construction?
McNair: The home had real hardwood flooring, which I made sure to mention in the listing description. Laminate and carpet flooring were standard in the new-construction homes, while hardwood and tile were considered upgrades. My listing had a lot of custom elements that the seller added, including a finished basement, granite countertops, and an oversized master closet, which helped the property stand out. The new-construction homes were standard build, and a buyer would have to pay more for these extras.
Was there a difference in sale price between your listing and competing new homes?
McNair: Yes, the new-construction homes were selling for about $10 to $15 more per square foot than the home I sold, which fetched a sale price of $408,000.
Running comps every two weeks–why was this important? What did it reveal to you and the seller about the market?
McNair: Typically, I pull market analysis every 30 days, but for this listing, I pulled it every 10 to 14 days. It kept myself and the sellers on the same page in terms of what the list price should be, as well as when and if we should adjust it. We were competing with other resale homes and new construction, and we listed in the fall, which is typically the slow season. The market was changing rapidly because of the newly built homes, so we had to make sure we stayed super competitive.
How often did you adjust the price?
McNair: We originally listed the home at $450,000. At the time of sale, we had lowered the price to $419,900 and accepted an offer more than $10,000 below that. We adjusted the price probably five times during that period. Because of my diligent work keeping the sellers updated on changes in market conditions, they were very trusting and understanding when I suggested a price reduction. We were always on the same page, so they didn’t have any objections to my advice.
What lessons did you learn from this transaction?
McNair: I had to make sure I was up-front and honest with the seller from the very beginning. I knew it was probably going to take some time to sell. We were up against new construction, but we were also dealing with other resale homes on the market—one just four doors down. It really helped to be honest from the start and not overpromise. I had to make sure I really made the upgrades of the home stand out against the new-construction homes. This really helped sell the house, but it took time. Patience and constant updates on the market were really important.