How Did You Determine That Listing Price?
February 2nd, 2010 categories: Market Trends, Real Estate News
Successfully selling homes isn’t rocket science. Or, is it?
Does a home sell itself, or is smart marketing the key? Or, is it a little of both?
While most of us realize that targeted marketing is a sound sales strategy, it is tough to sell a lemon in any market. But most would agree, rarely is a buyer willing to pay more than an item is worth, unless of course, there’s more to the item than meets the eye. But, that is seldom, if ever the case. Wouldn’t you agree?
Attempting to accurately price homes requires consideration of various factors including:
1. Home Inventory
2. Current Market Conditions
3. Recent Comparable Property Sales
4. Condition of the Property
As many who provide valuations of property will tell you, any good Comparative Market Analysis (CMA) will provide a property owner with an accurate price window for his/her property. If we’re comparing like properties, it is hard to go wrong with a CMA. But, if you’re expecting an apple to be the same as an orange, you could be in trouble! So, where do those inflated listing prices come from? The owner? Yes, at times. But, unfortunately, often, the blame lies with the Realtor.
An article in a recent Business Week reviewed William Poundstone’s new book, Priceless: The Myth of Fair Value (and How to Take Advantage of It). In it, Poundstone examines both the psychology of buyers and sellers, and the logic used when placing a value on a product or service. The author argues that pricing is anything but an exact science. In his words, ”In the new psychology of price, values are slippery and contingent….” According to the article, many “clueless” consumers are vulnerable to the marketing or sales practice of anchoring. Anchoring, in its purest form, is the act of using of a high priced item that may never sell, in order to make a lesser priced similar item much more attractive. Often, the same manufacturer may sell two like products, one tagged with a designer name and price, the other, a “great deal” at almost half price. The “cheap” one sells like gangbusters!
Since it’s hard to ask twice as much for a similar home, overpricing occurs far too frequently. The good news is, that high price tag makes all the rest of the homes look lots better! The bad news is, the anchor model is probably going nowhere.
While pricing or valuing a home isn’t quite as easy as 1-2-3, accuracy is a result of using the proper comparable properties when determining the listing price of a home. But, if instead, you believe your property to be priceless, and list it accordingly, don’t be disappointed if you find the price you’re offered is only what the educated buyer thinks it is worth.
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Is a 31 Percent Failure Rate Acceptable?
December 28th, 2009 categories: Market Trends, Real Estate News
“Incompetents invariably make trouble for people other than themselves.”
Larry McMurtry
Did you see the news? Yesterday’s New York Times carried an article detailing the results of recent federal mandated licensing exams for loan officers around the country. The results thus far are anything but encouraging. According the Times article, ”31 percent of the roughly 10,000 people who took the national test from July 30 to Nov 30 failed it, and about 27 percent did not pass the state-specific component.”
While there are those (you can trust that the dissenters aren’t those depending on the expertise of their lender) who question the industry’s testing, many others appreciate the attempt at accountability. Is it odd to expect those who provide you a service, especially one you pay for, to know what they’re doing? One would hope not.
In the effort to clean up the mortgage industry and answer critics’ claims of of its ”poorly qualified” loans officers, the testing mandate includes both a federal and state national exam that covers federal laws, general mortgage knowledge, the loan-origination process and ethics. While I have to applaud the “after the fact” efforts to ”fix” a disfunctional mortgage loan process, why did it take a crisis to prompt such measures?
The question that leadership in any industry or profession needs to ask itself, is, what are the minimal acceptable standards required by those licensed to perform or practice? Would I want them (the practitioner) to provide that service for me? What if had to pay them for their service? Would I trust them to provide me, or a relative or friend, advice? As we’ve all heard, “many people will only do what’s required.” Let’s hope, when it comes to your trusted advisor, you’re getting at least what you’ve paid for. And, if not, who will pay for their neglect?
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Let It Snow
December 20th, 2009 categories: Real Estate News, Relocating
Yes, if you haven’t heard yet, we’re snowed under! As you can see, the front yard is blanketed in almost two feet of snow, and the Northern Virginia area is struggling with a bit more of the stuff than they were ready for. Outside my front door this morning, it looked like this.
And, as I’ve said previously in this blog, when there’s any show on the ground in Northern Virginia, driving on our roads is akin to bumper cars lite! While that might be a bit of an exaggeration, it’s not far off. From what the local weather channel says, yesterday’s snowfall surpassed the record level that occurred in 1932.
Of course, for many of us, being house bound isn’t something we’re used to. Most Realtors, after all, are out with clients on the weekends. So, the forced confinement is probably what I needed! Life’s like that sometimes, don ‘t you think? Forcing us to do things we otherwise wouldn’t. Perhaps there is something to an overall design to this life. Hmmm, I wonder if….on second thought, perhaps we’d better not start down that road.
So, are you going to be lucky enough to have a white Christmas too? We’ll, while the snow’s here, I might as well head outside and have some fun!
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Please Read the Real Estate Fine Print
December 13th, 2009 categories: Market Trends, Real Estate News
”IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS”
Unknown
This morning’s Boston Globe ran a story of a real estate investment venture gone bad. Sound familiar?
In this case, a young Virginia Beach couple, among others, were sold “a bill of goods”, left high and dry, broke, and are facing a lengthy legal battle to simply try and reclaim their good name. If there ever was a real estate swindle that exemplifies the worst aspects of the buying and selling of real estate, for profit or not, it’s this one. It has all the necessary elements:
1. The Promise of Easy Money
2. The Smooth Talker
3. Fraudulent Loans
4. Fabricated Appraisal Figures
5. A Gross Lack of Due Diligence
This is but one of the many tragedies left as a result of the housing market run amok. Kind of like teenage boy on steriods driving a school bus without a governor (you know, the device that restricts their speed). Before you invest your time, effort, and your money into any venture – especially one that sounds too good to be true – please take the time to do a risk analysis, and ensure that the road ahead isn’t full of quicksand!
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Fredericksburg’s First Snow
December 6th, 2009 categories: Real Estate News, Relocating
Well, we knew it was coming sooner or later. Yesterday was our area’s first Winter’s first snow. According to the Weather Channel, we’re due for a bit more over the next 24-48 hours. And, as most of us that live here know, the roads in Northern Virginia aren’t the friendliest in good weather. Can you imagine the craziness with snow and ice on the roadways? It isn’t pretty!
What about you? Any snow in your part of the country? If not, how are the temperatures? Years ago, while stationed in Tucson, we spent Thanksgiving evening on the community swimming pool. That was….different, and enjoyable.
There’s certainly the Christmas spirit in the air. And, the snow helps complete the holiday setting. In the days leading to this special time of year, enjoy the sights and sounds, and be careful on the roads!
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Are The 5 W’s Important in Real Estate?
December 4th, 2009 categories: Market Trends, Real Estate News
We’ve seen lots written about the latest “du jour” method of communication, advertising…..and marketing. It’s called Social Media. If you aren’t there yet, they say you should be, and ultimately, will be. I know, sometimes we just don’t have much choice.
Most of us have realized, usually through trial and error, that success depends a great deal upon building a firm foundation to begin with. And, in Social Media, it’s no different. It begins by understanding who you audience is and what they want. In Social Media “speak”, it starts with the 5 W’s.
1. WHO
Who is saying things about your products and service?
2. WHAT
What are they saying about you and the product you provide? Is it good? Bad?
3. WHEN
When are they talking about you? If your business is cyclical, are you only being mentioned during the busy season? If you specialize in one area of your profession, does the discussion occur only when your specialty is hot?
4. WHERE
Where are these conversations taking place? On blogs related to your business? On other popular discussion platforms?
5. WHY
Why is anyone commenting, discussing, or examining you and what you have to offer.
There are a number of variations of the 5 Ws. Many, recently, have focused on web sites and blogs. Earlier this week, Inman News’ featured an article “The 5 W’s and your Web site“, by Robert Hahn. Other informative articles on the 5 Ws include, “Knowing What’s What and What’s Not the 5 W’s (and 1 H) of Cyberspace“, and The Five W’s of Web Site Evaluation.
Social Media platforms are useful marketing tools, and today, they’re all the rage. A careful analysis of any marketing devices and means is is not only useful, but a necessary factor in identifying what works and what doesn’t. The 5 W’s is another, and value added, method way of determining what we need to pay attention to, by identifying who may be listening, and what they’re interested in. And, if that’s the case, do you think it might be helpful for Realtors to pay attention?
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