Does Price Trump All?
March 5, 2008
I’m having an interesting discussion with some other real estate agents via Twitter today.
Question posed: Why do houses not sell?
Answers included: “price, condition, location, or obsolescence”, “prizzle for shizzle” (don’t ask), “1. price. 2. no one knows it’s for sale. 3. price 4. price 5. price” the tongue-in-cheek response “It’s the agent’s fault!” and a late response of “surly seller will not allow showing.”
The scenario is this: A house is on a hill, a sweet little home in perfect condition - next to a junk-laden property. The neighbors just cut down their trees, so their junk is highly visible from the home. The home is not selling.
So what do you do?
Me? I think there’s three major factors: Price, Condition, and Location. You tell me - which is easiest to fix?
Not much can be done about location. Condition - well, we can work on that. Perhaps in this scenario, a wall could be built to block out the view - that might help somewhat, although it would be expensive. The question is, will constructing a wall be more expensive than the price reduction required to sell the house in its current state?
Let’s go back to the “it’s the agent’s fault” response. There’s some truth in that. In my listing presentations, I talk about the three P’s - price, product, and promotion. I think you need the right price for the right product - aka, your home - and the right promotion, or marketing.
What is beautiful is that as a home seller, you are completely in control of the first two. You determine your home’s condition, and your agent can’t set or change a price without your agreement. Certainly, I have opinions on the subject, but in the end, both of those things are under your control. So if the promotion is bad, then yes indeedy, the house can fail to sell. But then again, if the price or the product is incorrect, then it can fail to sell as well.
So which is it: Price, Condition, Location, or Promotion? Could be one or many of those things. Is it anything other than those things? I’m going to go ahead and say NO.
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7 Responses to “Does Price Trump All?”
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Price, Condition, Location and Promotion pretty much cover the bases when figuring out why a home is not selling.
Price is the easiest to fix because it only takes the Seller to say, “Ok, lower the price to $xxx,xxx”. However, it seems that Buyers always assume that cost of any repair is going to cost three times the actual cost of doing the repair. So the “triple estimate of repair cost” is factored into the buyer’s offer for the home. So we always get an estimate for the repair to show the prospective buyer before they make the offer.
I would suggest you get an estimate for a wall and another estimate for landscaping. Landscaping could be cheaper if you buy younger, smaller plants but you will have to wait for a year or so for the plants to provide privacy. (I am in Florida, so if you plant it … it will grow. I don’t know about your area).
In addition, with the current surplus of homes on the market in our area we do recommend to our sellers to fix the condition if it can be done for a reasonable sum. Unfortunately, for your situation a wall sounds expensive.
Hi there PVBRE! Can you use your name next time?
Buyers do tend to overestimate the cost of repairs, that’s a good point. Fortunately, this wasn’t my seller, so it’s not my personal situation to deal with! It was just a discussion I was participating in.
I understand that Price is always the first thing that comes out of someone’s mouth regarding what makes a home sell but I do not fully agree. Price is what you pay value is what you get. Buyers want to know that the payment that they are going to make for the next 30 years (so the plan) is ok for the home they are buying. They assume the only way to get the payment down is to get a better price. Case in point was during the boom when mortgage brokers sold Neg-Ams to customers buyers consistently spent more than what they were pre-approved for. WHY? The payment was comfortable for the home that they would get. As rates increase the price has to come down. When rates were dropping the price people paid went up without thought. The sale of a home comes down to is this the home that I want to pay $x monthly for for the time I plan on being here. What is the value for me not the price. Right now the inventory is high and the urgency is gone and buyers have the time to shop for value.
Hi Matt! I like your focus on value, but let me ask you this: if the seller needs to sell, how does he add value then? In that scenario, what do you, the seller, change in order to make your home sell, given that buyers are looking for value?
Exactly you control location when you buy and by staying intune with community projects in your area.
As for selling this particualr house consider this. As for the junk yard neighbor talk to the city and see if they can enforce any rules to remove the junk eye sore, hazard to children, enviromental hazard. Consider a nice fence and plantings. When all else fails offer to buy the junk from the neighbor and have it romoved may cost $1000 but well worth it and that creative people.
I have seen home buyers with this delema before and actually offer to buy the house next door and then they fix it up and clean the property and sell both. Somethimes if you want to sell you have to take a risk and doing something out of the box. Most won’t do this but for sure the neighborhood will be glad you did.
I think it’s price. Location they either like it or not and condition can be changed. It’s the price they want to know and may not even enter the house if not in there affordable range.