Think of Your House as a Commodity - not a Product!

By
Real Estate Agent with Howard County, MD - RE/MAX 100 - Columbia MD

starsWhen trying to understand the real estate market and why prices are what they are, it may help to think of your house as a commodity - not a product

 Peanut Butter

  • A product is an item that a seller places a value on and prices it accordingly ... think: a sofa, a jar of peanut butter or a shovel.  There will be differences in quality, differences in features, differences in attractiveness.  There will be sales available and some vendors may charge more or less than others ... but the price is the price as set by the seller.

 

  • A commodity is an item whose price is determined by the buyer who has a perception of it's current value.  Think: stocks, gold, and silver.  The buyer places a value on it and pays accordingly - prices of commodities go up and down.  Commodities' prices are influenced by supply and demand.  The more supply there is, the less the price will be.  The more scarce the commodity, the higher the price will be.

Who cares?  What's the difference?  Why does the distinction matter?

A seller should care, understand the difference, and make the distinction ... then price her home accordingly.  In today's real estate environment (in most areas of the country) where there is a plethora of available homes on the market, the prices are lower than when the inventory is sparse.  The law of "supply and demand" is in control.  In real estate, when the inventory is high, it pushes housing prices downward.stars 

A savvy seller will hire a Realtor who is educated, experienced, and knowledgeable in their area and who will help them price their house accordingly.  Sellers who position their houses correctly (as the commodity that it is!) sell for more money and in less time than those who treat their house as a product whose perceived value by the potential buyers may be different than theirs! 

THINK OF YOUR HOUSE AS A COMMODITY ... YOU'LL PRICE IT RIGHT AND IT WILL SELL!

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. KARIN SMITH 11/29/2009 02:22 AM
Topic:
Home Selling
Location:
Maryland
Groups:
Active Rain Newbies
Realtors®
RE/MAX Active Rain Bloggers
Learn to be a Top Producing Listing Agent
Tags:
define commodities
commodity product

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Rainmaker
575,044
Pat Champion
Coldwell Banker Camelot Realty - Mount Dora, FL
Call the "CHAMPION" for all your real estate needs

You have done an excellent job on describing your house and the pricing-this is the most important factor for a seller in today's market,

Nov 29, 2009 02:16 AM #1
Rainmaker
749,569
Jackie Connelly-Fornuff
Douglas Elliman Real Estate in Babylon NY - Babylon, NY
"Moving at The Speed of YOU!"

Sue - You did a perfect job on that! Love the peanut butter analogy but it's true! :)

Nov 29, 2009 02:18 AM #2
Rainmaker
359,850
Ginger Foust
Certified Staging Professional - Oakhurst, CA
Home Stager Oakhurst CA, Dream Interior Redesign & Staging

A very good point and distinction.  Thanks Sue. 

Nov 29, 2009 02:31 AM #3
Rainer
58,686
Laurie Calhoun
Gloria Home Staging, Inc. - Winter Springs, FL
Seminole County FL Home Stager

You're right -- a home is worth what the buyer is willing to pay for it, not the price the seller wants to get for it. A dose of reality is in order for sellers, and they'd better make the home's perceived value as high as it can be.

Nov 29, 2009 03:32 AM #4
Rainer
69,094
Sue Wettstein Brazzel & Dipper Wettstein
Howard County, MD - RE/MAX 100 - Columbia MD - Columbia, MD
"Fast, Efficient, Hassle-Free Service!"

I agree with you, Pat!

Jackie & Ginger - Thanks for reading!

Laurie - And the "perceived value" can be greatly enhanced by a little bit of staging!!

Nov 29, 2009 04:55 AM #5
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Rainer
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Sue Wettstein Brazzel & Dipper Wettstein

"Fast, Efficient, Hassle-Free Service!"
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