Accurately Valuing Real Estate: The Pet Rock
<p>Real estate is a tricky business. First let's consider what is expected of a seller; appropriately price a unique product, handle and negotiate a business transaction for a substantial sum, relocate your life and family. These three matters are not trivial when independent and we understand how stressful it can be to experience them all at once. In this blog we'll discuss the pet rock phenomenon when pricing and negotiating the sale of your home. Let me explain.</p>
<p>In brief the pet rock was a brilliant marketing ploy. Ad executive Gary Dahl sold people a rock in a box. For $4. In 1975. That's about $18.75 in 2018 dollars. If someone tried to sell you a rock, with or without a leash, would you pay $20 for it? </p>
<p>How does this relate to real estate and the sale of your $400,000 home? The main point here is that markets and tastes change. When Mr. Dahl was selling his rocks, people were adorning their homes with orange shag carpet and paisley or plaid (sometimes both) sofas. The 80's brought white kitchens with tile counter tops, which people in the 90's yanked out and replaced with granite and stainless. No one needs to be reminded what they wore in their family portrait in 1986 or what their glasses looked like in 1975.</p>
<p>So how does this knowledge affect our valuing recommendations in real estate? The memories we create in our homes and our personal touches and upgrades are individual and important, but are often not intrinsically valuable. As sellers we need to understand that the hours poured into a custom entertainment room may be a hindrance to someone who wants the space for a closet. Right now you wouldn't be surprised to see faux-wood tile and river stone in a shower, but in another 10 years we expect trends to have moved on as they normally do. As a seller keep in mind that the way you use your house may be completely different than the next owner.</p>
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Real estate is a tricky business. First let's consider what is expected of a seller; appropriately price a unique product, handle and negotiate a business transaction for a substantial sum, relocate your life and family. These three matters are not trivial when independent and we understand how stressful it can be to experience them all at once. In this blog we'll discuss the pet rock phenomenon when pricing and negotiating the sale of your home. Let me explain.
In brief the pet rock was a brilliant marketing ploy. Ad executive Gary Dahl sold people a rock in a box. For $4. In 1975. That's about $18.75 in 2018 dollars. If someone tried to sell you a rock, with or without a leash, would you pay $20 for it?
How does this relate to real estate and the sale of your $400,000 home? The main point here is that markets and tastes change. When Mr. Dahl was selling his rocks, people were adorning their homes with orange shag carpet and paisley or plaid (sometimes both) sofas. The 80's brought white kitchens with tile counter tops, which people in the 90's yanked out and replaced with granite and stainless. No one needs to be reminded what they wore in their family portrait in 1986 or what their glasses looked like in 1975.
So how does this knowledge affect our valuing recommendations in real estate? The memories we create in our homes and our personal touches and upgrades are individual and important, but are often not intrinsically valuable. As sellers we need to understand that the hours poured into a custom entertainment room may be a hindrance to someone who wants the space for a closet. Right now you wouldn't be surprised to see faux-wood tile and river stone in a shower, but in another 10 years we expect trends to have moved on as they normally do. As a seller keep in mind that the way you use your house may be completely different than the next owner.