I’m typing this while surrounded by boxes, some full, some waiting to be filled. I’ve told you many times I’m not the most organized guy. I fear that most of the contents of my home office are just going to get dumped into whatever open containers are left, to be sorted (if at all) at some later date.
Yes, my house sold. It took seventeen months from listing to closing.
It took seventeen months, a dozen gallons of paint, a new stove, two dozen borrowed items for staging, fifteen open houses, four prices changes (the last one upward), and three written descriptions of the house before the sale happened.
I want to talk about those last two.
For the first year, we started with the house listed at $249,900, hoping to get $230,000 plus. We listed in late July 2016 so we missed the window for the families who wanted to move over the summer and be in the new place before school started. Although we had some traffic early on, most people complained about the old, dated kitchen.
To their credit, the kitchen was old. And dated. And included four different types of wood (light maple pergo floors, dark cherry cabinets, dark oak trim around a tile counter, and medium oak trim around the light fixtures, oh and wood paneling—yuck!) But it was also functional and efficient and filled with good, usable storage.
We lowered the price to $245,000 and then to $239,900 hoping to refresh the listing (by the way, the comparable values put it in the $250,000 range.) The rest of the first year was all the same. Plenty of traffic. Everyone had the same comments. Loved the location. Loved the spacious rooms. But the kitchen was dated. A few commented that the price was too high because of the kitchen.
At the end of the first year I took it off the market for a month. I painted the remaining rooms that had yet to be painted, re-staged it, and put it back on the market at $259,900.
I also rewrote the listing to include the following paragraph …
The kitchen is dated—but completely functional—and will serve you well until you decide to build the kitchen of your dreams and turn this house into the home you’ve always wanted.
The higher price meant fewer lookers, but one thing changed dramatically. Not one person mentioned the kitchen as being an issue. Surprisingly, no one mentioned the price either.
Those two changes led us to the buyer we needed—someone who would see the house for the incredible value that it is, and not be scared away that the kitchen has to be redone.
Through our new price and new description we eliminated all the traffic that was pointless, and only brought the traffic that would be interested in a house like ours.
As I have been teaching for years, price is a perception game. In housing, that game has changed dramatically thanks to the Internet. Almost every house hunter goes online first. One of the first filters you use is price. You put a minimum and maximum price into the filters and your search appears. With a price of $249,900, we were at the top end of the $250,000 filter. People who put $250,000 as their top filter are not looking to buy a $249,900 house that needs a $20,000 kitchen. We needed to get out of that search mode.
Going to $259,900 put us into searches for people who put $300,000 as their upper limit. Now our $259,900 price looked like a value. Even with $30K worth of work, the buyer will have a $300,000 house for less than $300,000.
Yes, the perception of this new mode of search is that every house that pulls up in a search of houses between $200,000 and $250,000 has a maximum value of $250,000 because they put “$250,000 maximum value” in their search. Every house that pulls up between $250,000 and $300,000 is likewise a $300,000 home.
By changing our price, we changed the perceived worth of our house. Instead of being an expensive house that needed a lot of work, it went to being a value-priced house that needed a little bit of work.
My agent was good with my new description—even the part about the kitchen being dated. I heard from other people in real estate that you should never say anything negative about a house in the description. I respectfully disagree. By admitting the downside, I earned the trust that the other statements would have a better degree of accuracy.
Most of us know that keywords like “cozy” means “cramped” and “charming” means “hasn’t-been-updated-in-years.” Yet, by admitting the kitchen was dated, not only did it make the other statements feel more truthful, it eliminated any house hunters who didn’t want to remodel a kitchen.
Our traffic was down, but we got a buyer and closed the sale.
The lessons are two-fold.
First, price has a huge impact on the perception of an item. Sometimes a higher price is actually better than a lower price. You have to look at your prices through the eyes of a customer and see what she sees and reads into your prices. Do that and you can find the sweet spot that gets you the most bang for your buck.
Second—and this is something Roy H. Williams has been drilling into my head this entire century—you have to choose who to lose. Through our description and pricing we eliminated a lot of potential buyers, mainly because we knew they weren’t going to be the right buyers. Just having traffic to your website doesn’t make it good traffic. Just having traffic through your door doesn’t make it good traffic. You want to specifically attract your kind of buyers. You do that with your message. Our new message brought us the buyer we needed and got the house sold.
Time to go fill up those boxes.
PS Before you ask, we got $230,000. We got where we wanted, but only after attracting the right people. The housing market hasn’t changed much in our area. We didn’t get any offers with the old description and old price during the peak selling season of April to July. We got our first offer during the off-season and only after the new price and new description. (Speaking of off-season, I am currently staring at a snowstorm out my front window that has closed one of the major highways through town. This is Michigan. When they close the highway here, it’s a real storm. Fun for my son because school was closed, but not so fun for packing and moving.)
PPS I apologize for the sporadic posts the last few weeks. It will probably continue into next week as well while we make the move. Stay tuned, though. I have some fun thoughts for how we can make 2018 amazing. You might want to tell your other retailer friends to sign up for the blog here.