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The 4 P’s of House Marketing

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P#1: Property – Is your house really a creme-puff ?

We start here.  The home is the tangible product that we are selling.  Like any tangible consumer product, it can be beautiful, useful, and irresistible, regardless of its’ price. On the other hand, sometimes the price of a product is so good that the price makes the product irresistible, despite the condition or design of the product.  Sometimes the product is great, but the price is so high, that only a select few can afford it. Or the product is so bad, that despite the low price, only a select few would even consider it.

The challenge for most home sellers is to make an honest determination as to how their house is positioned in the product mix.  Here’s an example:  At the time of this writing there are twenty-two homes listed in the Sugar House area that are very similar in size (1,800sq.ft – 2,000sq.ft).  The lowest priced home is listed at $220,000 and the highest priced home is listed at $479,000.  Which home will sell first?   

     
MLS#:  909313 912505
     
Status:  Active Active
     
List Price:  $220,000 $479,000
Price/Sq Ft Inc Lot:  $115.30 $248.44
Type:  Single Family Single Family
Style:  Bungalo/Cottage Bungalo/Cottage
House #:  1136 E 1555 S
Street:  1300 S 1400 E
Unit #:     
City:  Salt Lake City  Salt Lake City 
State,Zip:  UT, 84105 UT, 84105
     

The Answer: 

It depends.  Based on price alone, we would assume the house on the right must be in fantastic condition.  Is it?  It has an extra bedroom and bath.  It also has a two- car garage.  Is that alone worth the extra $250,000 to the buyer?  I could build a 2-car garage for $15,000 and could add a bedroom and bathroom for about $10,000.

Here’s another question: 

If the seller made $25,000 worth of improvements to the house on the left, could they sell it for $300,000?  A net gain of 25% or $55,000?  Maybe. 

For those of you familiar with the Sugar House area you will notice that some of the price disparity can be attributed to Place (location) alone, the next “P” in the marketing matrix.  The lower priced house is located on 1300 South, a busy street.  A physical characteristic that can’t be changed.  The higher priced home is located within walking distance of the coveted 15th & 15th neighborhood. 

So how does a home seller go about maximizing the selling price of a home?  What if the goal is to minimize the time on market?  Can certain REALTORS sell homes faster and for more money?

As you can see, the house IS the biggest differentiator.  The condition of the house will play a central role in determining its’ selling price and time on market.

A few weeks ago I toured three clients through 68 houses in 72-hours.  Of those 68 houses, maybe four (5%) were in great selling condition.  Defined:

  • Recently painted
  • Generally updated
  • Very clean
  • Without the smell of its’ owners
  • De-cluttered
  • Landscaped
  • Without notable need of repair

The REALTORS biggest challenge regarding this marketing category is in their ability to have a frank discussion with the home seller regarding the true condition of the home.  Most can’t handle it. 

The one that got away.

The One That Got Away

I know first-hand the affect that a frank discussion regarding price and condition can have on a home seller.  The news was delivered to me like this:  “Michael, we were very impressed with you.  You clearly know the real estate market. But, we’ve decided to go with an agent that demonstrated a greater passion for our mother’s home”.  The agent that was awarded the listing of this fixer-upper, based on passion, listed on 8/17/07 for $1,500,000 (on the price opinion of the seller’s brother…who knows Steve Wynn, and therefore knows real estate).  The home eventually sold on 7/24/2008 for $350,000.

No, I’m not bitter.  The experience taught me a very valuable lesson.  I’m in the business of selling real estate…not listing real estate.

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