Buying and Selling at the Right Price - Principle of Diminishing Returns

Reblogger Gabe Sanders
Real Estate Agent with Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales 3090099

Valerie Zinger from Ottawa, Ont. writes this excellent post for both buyers and sellers as to the value of a home.  Especially what sellers can do to improve their chances for a higher price as well as what they shouldn't do.

It's important to note what is happening in your local market as what works in one neighborhood may be inappropriate in another.

Original content by Valerie Zinger

 What is the right price for a house? 

The right price for a home is one that an informed Buyer is willing to offer and a Seller is willing to accept.  How do Buyers and Sellers get to that price?  There are several principles of value that consciously or sub-consciously play in arriving at the price. I have talked about the Principle of Supply and Demand, the Principle of Change, the Principle of Subsitiution and the Prinicples of Progression and Regression.  Now let's talk about how the price of a home will be influenced by having too much of a good thing.       

The Principle of Diminishing Returns says that adding more of something valuable reaches a point where the cost of the thing will exceed the return on it.    

What does this mean?  In a three bedroom home, adding a bedroom in the basement may add value to the home that is at or exceeds the cost of the construction of the extra room.  However, adding a fifth or sixth bedroom is unlikely to see the same level of return.  If there is a spa tub in the home, it could increase the value of the house but if there are three spa tubs, there may not be a corresponding difference in value.  For you, the prudent buyer, remember:

More is not necessarily better.   

Photo credit:  tubs @ http://www.flickr.com/photos/celinet/269850055/

Valerie Zinger  email: vzinger@royallepage.com  (613-723-5300)

Royal LePage Gale Real Estate,  Ottawa, Ontario, Canada  

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Rainmaker
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Cathy Glass
Realty Executives Associates - Knoxville, TN
Realtor - Knoxville, Tennessee

Helpful series of blogs. Thank you, Gabe.

Nov 01, 2010 01:03 AM #2
Rainmaker
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Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks for the great post Valerie.

Nov 01, 2010 01:48 AM #3
Rainmaker
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Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thank you for stopping by and taking the time to read my re-blog.

Jul 04, 2015 07:37 AM #4
Rainmaker
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Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Valerie, thanks for taking the time to comment it is always appreciated.

Mar 25, 2018 05:49 AM #5
Rainmaker
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Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Cathy, thanks for taking the time to comment it is always appreciated.

Mar 25, 2018 05:49 AM #6
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Rainmaker
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Gabe Sanders

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