The theory of under-pricing
Displaying blog entries 1-9 of 9
A condo can offer a good location at a less expensive price.
Photo by Brian Weiss
It’s no secret that color is crucial when marketing a product. In fact, consumers come to a subconscious conclusion about a product within 90 seconds of viewing, and much of that judgment (62-90 percent) is based solely on color, according to the Institute for Color Research. Retailers apply these findings every day (think red sale signs) to encourage consumers to purchase their products. Can the same be said in real estate?
Consider this: If color influences product marketing strategies, the color of a home can be a decisive factor when selling.
“Your home’s exterior color is literally the first thing a buyer will see and comment on,” says Suzanne Otto, home stager and owner of Six Twenty Designs in Montgomery County, Pa. When preparing a home for the market, Otto recommends shades within the white, tan or gray color families. These colors resonate beyond pure aesthetics – according to e-commerce giant eBay, white indicates safety. For a homebuyer, a home with a white exterior can translate to concepts like “shelter” or “safe haven.”
Similarly, understated browns (including the aforementioned tan) signal security. Homes painted in sandy or mushroom hues read comfort and warmth. Colors like taupe, which falls somewhere between brown and gray, call to mind traditional values, homeownership included. Earthy tones like laurel green or artichoke can not only highlight a verdant landscape, but also evoke a sense of tranquility.
Per eBay’s assessment, blue is ideal to move product because it transcends culture. Homes outfitted with a dusty blue or blue-gray exterior may not bridge the gap between your everyday seller and an international homebuyer, but a universally regarded color can help widen the net for buyers on the home front.
If red signs boost retail sales, it seems likely a red home would be ideal for a speedy sale. Not necessarily – red in small doses, such as sale stickers or tags, encourages action. Red on a grander scale can cause adverse reactions. An alizarin crimson door, for instance, might be well-received by buyers, but a house in the same shade could potentially limit offers.
Homes in other colors can sell successfully – our retinas tend to register yellow before any other color, so a buttery yellow exterior could be an attractive option for buyers – but non-traditional colors, like oranges and purples, appeal to very specific personalities and can significantly shrink the pool of interested buyers.
It’s important for sellers to consider the home in relation to the neighborhood before swapping out the exterior color or refreshing an existing paint job. Do nearby homes share a distinct color scheme? Is each home uniquely colored? Evaluating the home’s surroundings can help sellers determine what’s most popular in their market.
I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!
Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!
While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.
Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.