Really? A $1 Price Reduction?

Price changes are often a part of marketing a property. However, there is supposed to be a solid reason for showing a price change which helps agents and potential buyers to consider a property they might not have to that point.

Reasons for a price reduction for a home are often, and are supposed to be, well thought out, even if they are only for a few thousand dollars.

For example, let's take a house initially priced at $207,000. Part of the strategy for this price could be that someone searching in the $200,000 to $225,000 range from "low to high" would see this property ahead of similar homes priced closer to $225,000.

If this price point is not successful after several weeks, the listing agent is likely to reduce it by $8,000 to $10,000 in order to show it listed for under $199,999. The reasoning is that by doing so, this house would now appear in searches of under $200,000 instead of over. This reduction of less than 5% is designed to open up the marketing potential to a "new" group of potential buyers.

However, the amount of a price reduction also plays a factor. Think of those times you are in the grocery store and see a "Sale" sticker on an item you regularly purchase. Then you see that the item you usually purchase for $1.79 is on "Sale" for $1.69. Saving ten or twenty cents on one or two of the items doesn't thrill you to the point of calling your friends to let them know of this sale.

Over the course of Thanksgiving day, this unit in downtown Chicago, which has been on the market since August (3 months earlier) showed up on the "Price Reduction" list the next morning. The fact that the next morning happened to be Black Friday, the biggest sale day of the year, seemed like a solid marketing approach, since properties are for sale, too.

Imagine the shock upon discovering that this home was reduced by a grand total of (Are you ready for this?) $1.00. Yes, all the way down from $180,000 to $179,999. 

Oddly enough, despite the Black Friday approach, only one other downtown Chicago property showed a price reduction on Thanksgiving. However, the other listing, which is located a few blocks from the $1 reduction, posted a $40,000 price reduction.

In other words, the agent representing the $1 price reduction took a good idea (a Black Friday reduction) and wasted the time of other agents and potential buyers. The savvy agents are likely to remember this agent and might not bother to look at his future price reductions. At the same time, it's hard to believe that the seller is jumping for joy about the prospect of chipping in $1 toward getting their property sold.

Their $1 didn't even buy any favorable publicity.

(Here is the link to the listing)

https://www.realtor.com/realestateandhomes-detail/535-N-Michigan-Ave-Apt-411_Chicago_IL_60611_M73774-19873

Tulsa Marketing Strategy Not OK

The city of Tulsa just joined a list of cities offering incentives to gain new residents, with their approach of offering $10,000 to 'employees' who move there.

In theory, this would attract attention. However, as we know in real estate, attracting attention isn't always a positive, while this is an industry that needs a lot more positives from day to day.

CNBC's story about this provided details about the requirements, which were clearly not well thought out.

Their concept is that its "Tulsa Remote" Grant program will pay an employee $10,000 over the course of one year for moving to the city or County of Tulsa, and work remotely for an out of area employer.

From a financial standpoint, the structure doesn't make sense. The first part is a $2,500 "relocation fee".  By the time someone from a long distance away deals with moving expenses, that amount could be gone and then some.

That amount does not take into account a security deposit or 'last month' rent on an apartment, and certainly is zero help when it comes to a possible down payment on a home.

Remaining funds would be paid off at $500 per month with a "final" $1,500 check at the end of the one year period. It is difficult to determine whether this would be enough of an incentive to keep someone living there for one year if they wind up not liking the city.

However, this program was put together without considering the marketing and real estate impact this publicity stunt gives. From here (well outside of Tulsa), this is NOT a well thought out approach. And how the $10,000 is paid out has no bearing either way.

First of all, those who are skeptical will take the approach of "They couldn't pay me enough to live there!" and see this as desperation to attract more residents.

Employees that work remotely often do so because of family or other personal considerations and are not able to relocate. Employers may not wish to have remote employees work beyond a certain distance or out of area regardless of performance

More importantly, the real estate aspect of this is all wrong.

If Tulsa wants to increase the population and the economy, this offer should be coming on behalf of employers in the area. A "Get Hired by Tulsa Business and Get $10,000" Campaign would spur activity for this Grant.

It might also lead to more employers wanting to participate, and perhaps building or expanding their office, store, or factory to or within Tulsa County. Which, of course, means more commercial development and helps the local economy.

This was not well thought out. Or, it could be that they don't want to pay out any money, thinking that this will be a favorable publicity stunt. They seem to have overlooked the "favorable" part.

Here is the story:

https://www.cnbc.com/2018/11/13/tulsa-oklahoma-will-pay-you-10000-to-move-there-and-work-from-home.html

When High End Living Doesn't Fit In

The situation with the Bayside project in Milwaukee is worth paying attention to, especially for investors and real estate professionals in large cities with a variation in the residential market.

On one side is the developer seeking to dominate a community with a mixed use community which would include 280 high end apartments. The developer has shown how its property tax money and eventual retail revenue would have a positive financial impact on the entire community.

The other side has the area residents of middle income residents with comparatively "simple" one and two bedroom single family homes, who are looking to retain the community they are living in without this large development.

To its credit, the city has delayed its decision either way while seeking more input and analysis. Frankly, not all municipalities would delay a project of this magnitude and actually listen to area residents. Instead, many would have pushed the development proposal through and started planning on how the millions of "new" dollars will eventually be spent.

However, one important factor is that a large number of area residents have attended the meetings and made their views felt. Often times it appears that hardly anyone cares until the change goes through and people complain when it is well after they had their chance.

It will be worth tracking this story for how this plays out, as well as for how both sides present their case.

Here is the story:

https://www.jsonline.com/story/money/real-estate/commercial/2018/10/09/bayside-officials-seek-changes-controversial-high-rise-proposal/1575974002/

Only One In A Million?

It was good to see that Leslie Rouda Smith, a presidential candidate for the National Association of Realtors for 2020, was in the Chicago area and appearing at two days' worth of meetings and presentations. Her 30 years of experience appear to make her well qualified for the role.

However, there is cause for concern, and it is not a reflection on Smith or her qualifications. The real estate market is changing again. Renting instead of owning is "in" these days. Home owners in many areas have little to no incentive to sell only because of profit potential. Technology and security concerns continue.

With all that needs to be done to address the current residential real estate situation locally and around the country, the fact remains that Smith is running unopposed for NAR President for 2020.

Unopposed!!!!!

Out of approximately 1,000,000 Realtors around the country, no others are interested in a prominent industry leadership role. Does everyone agree with everything she says and does?

Consumers are swamped by advertisements and marketing campaigns by real estate companies and individual agents all the time, as if they should constantly be "thinking about" selling or buying a new home. Some agents are more prominent and more aggressive than others.

Many agents take pride in finding solutions, negotiating, and going the extra mile for their current and potential clients.

But only ONE of them wants to lead the pack?

Smith could be the ideal candidate, but that is not the point. She should need to be CHOSEN as the right candidate, and not default into it.

Make the hundreds of thousands of voters have to choose her if they all think she is such a good candidate. Her running unopposed brings an element of "I give up. I can't compete with that." to the mix.

If not even one out of roughly one million Realtors is not stepping up to oppose Smith and lead an effort toward improvement, what kind of message does this send to millions of homeowners?

Most of these Realtors spend countless dollars to give the public reasons why you should choose "me" over all of the other agents.

At this moment, NONE of them, except Smith, have pursued the most prestigious role in the entire industry.

Smith, however, can boast to potential clients that she is, literally, one in a million. Shouldn't she be "one of the choices" instead?

https://www.illinoisrealtors.org/blog/nar-2020-presidential-candidate-visits-with-illinois-realtors-at-business-meetings/

Make Inventory A Positive

I know I keep harping on this, but it is so important to not have negatives when marketing real estate. Here is another example in the (below link) story about home sales in York County.

It's not about whether you live in that area. This is the situation in many other areas of the country. The most recent local home sales report shows that homes are selling faster and that prices are rising.

What this shows is that the area is desirable, and that means that prices are likely to continue to rise, however slightly. What this tells a potential buyer is that he/she/they have a better profit potential a few years down the road. Thus, buying for the situation (schools, job nearby, transportation, family involvement, etc.) is ideal for now, but a profitable investment is possible down the road with reasonable maintenance and upkeep.

The ability to demonstrate that homes in these areas are selling "more quickly" is also a plus. However, this is a plus for a potential buyer, and NOT for a potential seller.

Yet, with this article and many others I see, the real estate community continues to complain about "lack of inventory". 

If numerous homes are for sale within the same community, this, quite frankly, is often seen as a sign of neighborhood distress by potential buyers. "Why are so many people looking to move out?" is a question I have been asked, and I am not a licensed agent. 

On the other hand, if only a couple of homes are for sale, it shows as being a steady area with the occasional "opening" that someone needs to pounce on.

This talk of "lack of inventory" makes people think that something is wrong if people aren't looking to move out. 

All they needed to do was to release the information about homes selling faster and for higher prices. Make the area look good. Keep the negative out.


http://www.cpbj.com/article/20180813/CPBJ01/180819974/pace-speeds-up-volume-drops-for-york-county-home-sales

They Ames To Please

Exemptions from a rental cap in Ames IA normally wouldn't be a big concern for real estate professionals and investors around the country. But this is not your typical debate.

This past Friday (8/3) the city council voted one way and then changed its mind following another vote within the same session. As this story details, now that exemptions are in place, some local politicians and area attorneys are still reportedly seeking further clarification.

If the lawmakers aren't clear, how are landlords supposed to be?

What makes this more noteworthy for those of us around the country is that much of the controversy about this comes from rentals surrounding the college campus.

It is easy to see where all sides are coming from and why everyone has a valid point toward what they want.

How this plays out could be significant for other college towns....



http://www.amestrib.com/news/20180731/ames-city-council-momentarily-kills-then-passes-rental-cap-exemption


Thoughts?

Will Other Communities Follow Oak Park?

Oak Park (a west suburb of Chicago) is now allowing coach houses, per the article link below. This community already has some unique features which enable Oak Park to stand out beyond neighboring suburbs as well as the Chicago communities nearby.

It will be interesting to keep watch over this for the next few months. The question is whether this will be another "Oak Park thing", or if coach houses will take hold and be allowed in surrounding areas in order to attract residents to those communities.

My hunch is that it won't go beyond Oak Park in the near future.......

https://blog.chicagocityscape.com/oak-park-allows-coach-houses-ed8d1440a2c4

A Nice Lesson From The York County School Districts

If you take out the first paragraph of this local (for York County) article about the real estate market, you have something that other cities should be doing INSTEAD of the typical "no inventory" story which is often discouraging to readers.

Showing which school districts have the best home sales is an excellent way to draw attention to a neighborhood. Even if a potential buyer does not have school age children (at the time of potential purchase), it shows them those neighborhoods which are drawing buyers.

The idea is, or should be, to make a potential buyer feel like they are getting a good investment which will bring them solid returns years down the road. This is one way of doing that.



https://www.yorkdispatch.com/story/news/2018/03/26/york-county-housing-market-ripe-spring-sellers/430027002/

Similar Home Sales Stories Show A Different Message

News stories within the past 24 hours show how much interpretation of information makes a difference when it comes to the real estate market.

On one hand, a story about how some experts consider some Dallas area homes to be "overvalued" by at or above 10%, based on statistics they judge by.

On the other hand, a story out of Roanoke VA about how strong the real estate market is and how the median price is at record levels in some parts of the state.

What we have is opposite reactions to a similar situation. 

If only more people within the real estate community would think about the message they send to consumers BEFORE these statistics and "reports" are made public.

From here, the Virginia story sends a positive message to consumers. It tells potential buyers that they stand to gain value when they buy a home in these areas, thus making for a solid investment in addition to the desired living conditions.

The Dallas story just served to make buying a home in those areas less appealing, making a consumer feel that they would or could overpay for what they get. This sentiment hurts both those trying to sell as well as to buy.

And for what? 

This many homes in different zip codes can't ALL be "overpriced". 

If only the writers of the Dallas story had used the theories of the Virginia story writers. They might have done local sellers and buyers a nice service, instead of hurting their chances.

See for yourself:

https://www.dallasnews.com/business/real-estate/2018/03/19/ratings-firm-raises-red-flag-d-fw-home-prices

http://www.roanoke.com/business/news/roanoke/poll-optimism-about-real-estate-market-strong-as-inventories-remain/article_8b3ea866-6230-592b-a2c0-ee39c470365f.html

Hawaii Mansion Sales Look Good As You Go Higher

Here is still another example of why real estate firms and associations need to look at only publishing those statistics on home sales and prices which are favorable.

The intent is to show one area of "promise" for the largest of mansions in Hawaii to potential buyers around the country. 

However, this article, based on research from the local Coldwell Banker officials, focuses way too much on the "down" areas.

In this case, the research shows positive trends for homes priced at over $3 million. However, while doing so, it points out the reduction in sales and/or prices in the $1 million to $3 million range, which is more discouraging than helpful.

Just point out the improvement in the $3 million and up range. As I figure it, if a potential buyer that actually buys based on statistical trends wants to know who "their" price range is doing, let them contact their local real estate office to find out.

See for yourself:

https://www.bizjournals.com/pacific/news/2018/02/26/luxury-home-sales-on-oahu-look-promising-for-2018.html

Knowing Which Home Prices Are Rising Makes A Difference

What makes this summary so interesting is that it details how rising home prices in this area are not the luxury listings and/or the higher priced listings.

The fact that this data comes from Flagstaff AZ is not as important as the trend it shows. Flagstaff is far from being the only community, whether large or small, that has this type of single family home structure.

This is where market research comes in to play for the savvy agent. Instead of wasting time pulling realty association statistics about dropping home sales, there is opportunity for a positive comparative analysis in many markets. 

If you are a potential buyer or investor, you might be able to use this research data in your favor in places where market conditions are or can be similar. If you are a real estate professional, this is the type of research which can bring you buying or selling points within appropriate communities:


http://azdailysun.com/news/local/flagstaff-home-values-on-the-rise----but/article_ec70bd48-be7d-510f-bb3c-00ee7e7032c6.html