You Can't Sell Houses in the Same Way that You Sell Gasoline!

15 years ago

Ever since gas prices started their rather precipitous climb, I have been much more observant about where to find better prices. As they've dropped, this "shopper's gene" has stuck with me (i.e. I still notice). I think the cheapest gas prices I have seen here in Austin lately are in the $1.77 range.

One thing that constantly surprises me is the fact that some gas stations and convenience stores seem oblivious to the competition, continuing to charge 20-30 cents/gallon more than the guys up the street. Sometimes, I have seen stations ACROSS the street charging 10 cents more than their competitors. Their pumps are pretty barren, with perhaps a lone car or two filling up.

Whenever I see someone actually buying gas at one of these places, I want to shout at them:

"Hey, look over there! The gas is cheaper! Why are you paying this higher price? Pay attention."

I guess they are just in a hurry, but why not glance around you a bit before deciding?

Unfortunately, many agents and homeowners seem to be just as oblivious as the convenience stores that are (sadly) attempting to gouge consumers.

QUIZ FOR ERRANT LISTING AGENTS & THEIR CLIENTS:

If two homes are sitting across the street or very near each other, and they are the same size/floorplan, with similar upgrades, lot sizes, etc., which one is worth more?

a) whichever one is offering a bonus to me
b) the one with red brick instead of stone
c) the home that faces northeast

If you answered a, b, or c, please slap yourself - HARD!

It is a trick question. They should be priced similarly, barring any unusual circumstances, such as a short sale or other distress scenario.

Unfortunately for many FSBO's, they attempt to do their research by using the "expertise" of national sites and their guesswork from pulling a few fliers from the neighborhood listings. In this case, they often become the laughingstock of the area, pricing their home well above the market.

Whenever I have a client who is interested in pricing their home too high (which is less frequent these days), I usually do my best to explain to them that if they do that, we must then wait however long it will take for the other homes in the neighborhood to sell first, since that will certainly be the outcome. If they are not interested in pricing it correctly, I decline the listing. This has been the case since 1997, when I started in this business.

QUICK LESSON/IDEA

I don't know if you have ever tried this or not, but one technique that has worked wonders when you need to illustrate this point is to put your potential clients in the car with you and SHOW THEM what they are competing with. This is a strong wake-up call, and it something that other agents are very unlikely to offer.

So, although you will always find people willing to pay a few cents more for gas, the average home buyer today is skittish and unsure about the future of our economy, and they want to be sure that the price they pay for their first (or next) home is reasonable. Banks and appraisers are scared, too, which means that they are very careful when establishing value.

The bottom line is that pricing is more important than ever.

On another note, maybe I need to consider buying a convenience store as a side business...