The Magic of Numbers

by Allen Butler

Realtor, Audio Engineer

Author website

A combination of magic and the truth seems to be where it’s it. In regards to the selling of homes, in this current market, agents are willing to try anything; witchcraft, voodoo, incantations, an appeal to Jesus Christ, and aside from these, more orthodox approaches, including bribery, trickery, flattery, and simple marketing. Having tried some of these methods (of which my conscience would dictate), I have discovered that Russell and Greg are right. In this market, price matters most.

I had begun to view myself as one of those scantily clad women at boxing matches parading with a placard. Instead of “ROUND 2,” my placard read, “A STEAL AT ONLY $739,000!!” Generally speaking, these women are afforded a certain measure of respect, even if only for their outward attributes. I, on the other hand, was being pelted with rotten eggs and tomatoes. This was evident because my “steal” was in fact, not a steal, and at the worst of times, my glorious placard was entirely ignored.

So began the quest for Truth. Having searched diligently, I discovered what others before me had discovered: price will sell anything. An old Floyd Wickman adage goes something like this:

“I can’t sell this house. Nobody will look at it!”

“The price is too high.”

“No, it can’t be that. I comp’d the property every which way. It is priced right.”

“Are people going to see it?”

“Uh. . .no.”

“Then it is priced too high.”

“Nonsense. Maybe I need some new photos. Maybe some more advertising, or an open house.”

“Do you think you could sell it for $100,000?”

“Well, of course! That’d be like giving it away!”

“Then the price is too high.”

I determined to really get to know my market. I needed answers. I began to study and research the hard numbers. How many homes are selling? What is peculiar about these homes. Are they the nicest? Are they the cheapest? Are there agent bonuses? Are there buyer concessions? What I began to learn is that the ones that were selling were, in most cases, both the nicest and the cheapest. If I wanted to sell my homes, I needed to have the nicest homes, for the best prices. Only then could I sell them.

So, I approached my sellers. I showed them the hard facts. Many were chagrined, but many were understanding. I’m certain that ALL had a sinking feeling in their collective guts. The price was simply too high. A simple illustration was in order.

“I have here a fabulous pencil. It is red, is inscribed with gold lettering, and contains top-grade #2 lead. I am offering this pencil for the ridiculously low price of only $2.00. Are you interested?”

“Uh. . .no.”

“What if it was only $1.00?”

“It’s not worth $1.00. In fact, it’s not even worth 50 cents.”

“Okay. So what would you be willing to pay for this pencil?”

“Well, if I even wanted a pencil, I suppose I would pay like, 10 cents.”

“Great. I’ll take it.”

Thus, the magic number. A house is not worth anything unless someone (the buyer) attaches a price to it that they are willing to pay. Unfortunately (or fortunately depending upon perspective), the seller is no longer in the driver’s seat. The buyer alone determines what a home is worth. (In fact, they always have. But that’s a different post.) My job is to simply find that number. So, our hunt began. What IS the magic number?

     The price was dropped to $699,000. No lookers after two weeks. Again, the price was lowered. This time, to $675,000. Got two showings over the next week. Then, no more for the next two weeks. Okay, still a little too high. We lowered to $657,000. The very next day, the showings began in earnest. Over the next week, we had a total of six showings. The house was sold the following Monday for a negotiated price of $652,102.

Question: Did the sellers “lose” $86,898? Absolutely NOT, as they never “had it” to lose. The value of their home was “undeclared.” Now we know exactly what it is worth: $652,102.

Allen