The Pros and Cons of Buying a Stale ListingNovember 15, 2019
When is a stale listing a diamond in the rough, and when is it a trap to be avoided? When does a stale listing mean you, the buyer, have an advantage in negotiations over the seller, who’s likely motivated to take any offer that comes their way?
This blog will give you a crash course in the pros and cons, risks and opportunities, in buying a stale listing.
First, what is a stale listing?
Outside of the price per square foot, one of the most important factors to take into consideration is the home’s DOM, days on market — aka the amount of time the home has been listed for sale on the multiple listing service.
After 45 days on the market, a listing is usually deemed “stale,” and price reductions are likely. Drops in price can attract more attention and make the home more desirable, but they can also communicate weakness on the part of the seller, and perhaps point to problems with the home. Some consider a home sitting on the market for three to five weeks as being stale, but of course it depends on the relative strength of the housing market.
In other words, in a market where homes are being bought up hours or days after being listed, a DOM of 21 days is legitimately stale. In a market where around a month on market is normal, not so much.
To buy or not to buy?
Here’s the first important takeaway: Sometimes there’s nothing wrong with a stale listing. There is such a thing as a good deal. Don’t let one pass you by because of the “stale’ stigma. But you still need to do your due diligence.
Great homes can be overpriced, and if you wait until they fall into the appropriate price range, you can score a home that would have flown off the market if it had started at the current price. Sometimes it’s not the seller’s fault at all, one common example being if the seller accepted a contract but the buyer could not qualify for financing and the deal fell through. This is quite a different matter than a home located on a busy street or one located in a flood plain, which speak to the home’s value.
Before you pass on a stale listing, your job is to find out why it’s stale. Is it stubborn sellers? A defect? Is it the location? Are major repairs needed. When you know the answers to these questions, you can adequately judge the value of a stale listing.
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