The Five Points That Affect the Sale of Real Estate
When speaking with Sellers regarding the promotion and sale of their real estate, I always include a discussion of the Five Points That Affect the Sale of Real Estate. By understanding these Five Points, you increase your chances for sales success:
Let’s look at each point.
Price is the listing or asking price. The listing price is controlled by the Seller.
Location is fixed (in most instances) as land is immovable.
Available Terms are the current availability and cost of mortgage money.
Condition is the physical condition of the property. Condition is controlled by the Seller.
Exposure is the marketing effort. Exposure, for the most part, is controlled by the Broker.
When you look carefully at these points, you realize that as a Seller… you have a great deal of responsibility in the sale of your property. You control the price and the condition - which are the two most important points.
Location, while important, is not a factor within the control of the Seller or Broker. Location is what it is.
Available Terms can sometimes be enhanced by the Seller. For example, if the Seller is able and willing to hold a second mortgage for the Purchaser. For the most part, Available Terms are what the prevailing mortgage market conditions are.
Exposure is the only factor under the direct control of the Broker… and even then - it has restrictions that are controlled by the Seller. For example, the Seller controls whether a real estate sign or a lock box will be used on the property. The Seller controls whether the property can be shown without an appointment - or if an appointment is required… and if an appointment is required, how much advance notice is needed… and if the Listing Agent must be present during all showings.
While Exposure is important, no amount of exposure will overcome overpricing a property. Take a $300,000 home and put a $400,000 price tag on it - and it won’t matter if you run full-page ads in the newspaper or buy up billboards on the freeway… it still won’t sell. The intender of the $400,000 home wants the best $400,000 home they can find - not a $300,000 home. They are considering $400,000 homes with the features and amenities of homes in that price range… and the $300,000 home with the $400,000 price tag will just annoy the potential buyer.
We can all agree that if the Seller will lower the price - the house will sell. Meanwhile, this advice goes unheeded… and the house has not yet sold. Even with a 20% Buyer’s Broker commission.
Another set of rules that I like to explain is that of the Rules of Substitution. In a nutshell, these rules usually forecast which property will sell first:
When two similar-style homes of similar price and condition are for sale… the larger one will usually sell first.
When two similar-style homes of similar price and size are for sale… the one in better condition will usually sell first.
When two similar-style homes of similar condition and size are for sale… the one with the lower price will usually sell first.
It is wise to keep these Points and Rules in mind when selling your home, because they can help guide you to success in your home-selling endeavor.