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For Local and National
Newspapers and Magazines |
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Feature Article Sample |
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This is a SAMPLE article for submission to real estate editors of newspapers and
magazines, condensed from the latest book by Kerry D. Bodily, Published by
Gabriel Publications
Untold Secrets – How the Real Estate Market Really Works – Price/Value
Competitive pricing – the solution to a volatile subject!
Imagine living in a home on a busy street with a major train line just beyond
the back yard fence. People really do live in these locations, and even worse
ones, by choice, but why? We’ve all heard the real estate adage, “location,
location, location,” but there are two things much more important than location,
and they are price and value.
You see, in real estate especially, buyers can only buy what they can afford.
But regardless of the location, style, or attributes, buyers should still
receive maximum value for the price they pay, and we’ve all heard that value is
in the eye of the beholder. Sellers, on the other hand, are focused on price,
i.e., their bottom line. Each, however, typically determines price and value
from a totally different and almost opposite perspective. In a market as
important as real estate, people expect to implement a standardized method,
which could be used by anyone, to determine the price and value of a parcel of
property, regardless of their perspective. Nothing is further from reality. This
problem needs to be exposed and fixed.
For example, let us say that you’re wearing your buyer’s hat. You’ve hopped in
your car, driven all over town, and you’ve personally walked through every
viable property in today’s market that meets your particular needs and
requirements. After choosing the single piece of property that best meets your
needs, you would want to determine its true value. Then you would know whether
the asking price was too high (forget it), too low (a steal), or just right
(perfect), before deciding to enter the negotiating stage. So how do you, the
buyer, determine its value? If the value is in the eye of the beholder, you, the
buyer, would determine its intrinsic value to you. After all, it is your
decision alone and you are the person who would be living there. Maybe you could
consult with an appraiser, a real estate agent, a relative, or even your best
friend, but any answer would come from their perspective, not yours.
If you have just viewed a dozen properties, and you have evaluated each, then
those are today’s competition. It’s not what sold yesterday, or what recently
sold up the street, or what just sold three blocks over, but it’s what’s on the
market today. “Today’s competition determines today’s value.”
Now, let’s put on a seller’s hat and take a walk through the immediate
neighborhood. Though buyers most often drive, the seller can walk. Why? If
you’ve ever sold a home, or talked to a real estate agent or appraiser about how
to value a parcel to sell, the typical explanation takes a wild and crazy turn
away from the buyer’s perspective. The common answer, passed down through the
decades, would sound like this: Find three properties that have sold recently,
in your neighborhood, preferably mirror images of yours, and even on the same
street, if possible.
Now those comparables, when presented by a real estate agent to a seller, along
with a myriad of statistics, market trends, charts, graphs, and other
non-conclusive data, will ultimately suggest a price range for the seller to
choose from. The typical seller will usually choose the higher values from the
range. But does that sound similar to how buyers value properties? No. In fact,
it’s exactly the opposite! Sellers are looking at properties from a market that
no longer exists, and buyers are looking in today’s market at the only choices
they have.
Why should there be any difference in how value is determined, regardless of who
is asking the question or for what reason? All logic says there is no
difference, but each half of the market (buyers and sellers) determines price
and value from opposite sides of the fence. Is there a problem here, and, if so,
is there a solution?
Signs that advertise Price Reduced often create unintended difficulties for the
seller. The implication is that the seller has finally realized the property is
overpriced, i.e., not priced competitively, and they now want to adjust the
price. These reductions in price are often too little and too late. When a new
property is added to the market, most of the activity takes place in the first
few weeks. In real estate circles, this is often referred to as the window of
opportunity. Buyers and agents who are actively looking in that area and price
range will often try to be first in the door. If their first impression is “nice
house, but overpriced,” then they move on and rarely look back. However, agents
will often appease sellers and say, “Buyers can always make an offer,” but most
buyers don’t want to negotiate with a seller who has visions of grandeur. The
property would not have been overpriced to begin with if the seller had
determined the value the same way a typical buyer would, i.e., from a
competitive approach.
The real solution for the seller is almost as simple as driving around town or
looking on the Internet and identifying your viable competition. Adjusting for
differences and determining your competitive market value requires some simple
tools, which are slightly beyond the scope of this article, but the first
challenge here is overcoming the natural human trait of resistance to change. As
a seller, put on the buyer’s hat and try looking at the market through the
buyer’s eyes, even though this approach would be foreign to most real estate
agents or appraisers. Competitive pricing is the answer.
Kerry D. Bodily, author of “Untold Secrets - How the Real Estate Market Really
Works - From a Twenty-Five-Year Veteran,” real estate instructor with several
professional designations, award-winning software designer, real estate board
officer, Multiple Listing Service advisor. ww.PricingRealEstateCompetitively.com
To reach the author directly, you can email him at kerry@kerrybodily.com |
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