I found the following short snip in an article on the web and was sort of fascinated by it. Although it makes sense from a strictly economic perspective, I wonder if this rule holds true in a market like real-estate where the “goods” (houses) are so unique. Here’s what the folks at HuliQ.com had to say:
“What is your home really worth right now? It’s worth as much as the lowest-price lender-owned comparable plus the cost of returning that home to turn-key condition plus a small convenience premium. In other words, if the lender-owned house sells for $120,000, and if it will take $10,000 to make it as nice as your home, then your home is worth $135,000 — $140,000 at most.
And if you’re not willing to sell you home for that price? Get it off the market right now. It will not sell for more, but the surplus of over-priced inventory is a false signal to buyers that the market has not found its bottom.”
I see the logic, but as I said above, houses are not fungible goods. They may have similar specifications or appear similar on paper, but every house is different from it’s neighborhood, to it’s view, to the barking dog next-door. I wonder if these factors would weigh heavily enough on buyers — meaning that buyer’s are more emotional than data-driver — and this would over-ride some of this logic.
It’s an interesting question. What do you think?
Duane Slade, Mesa Arizona
