This is an excerpt from a blog written by Matthew Ferrara, Real Estate Trainer and Consultant. There is no sugar coating here, so enjoy!
For the record I couldn’t agree more.
Now, back to the real estate story: Chrylser’s decision reminds us that, at some point, the absurdity of putting un-sellable commodities with no value to the consumer into the marketplace penetrates even the biggest egos and “marketing brands” of an industry. That’s an important lesson the real estate industry needs to learn – no matter how much of it’s own marketing hype it believes. Even the biggest, bestest, coolest-since-croutons-replaced-sliced-bread REALTORS out there need to realize that they are destroying the marketplace (and their own profits) by continuing to put overpriced listings on the market. No more excuses that foreclosures and distressed property are flooding the marketplace. There are PLENTY of JUST-LISTED-BY-A-REALTOR properties added to the market every week – and they continue to add un-wanted commodities to the inventory – because they are brought to market with no value.
Like Chrysler, self-deceiving REALTORS must ultimately learn a hard economic lesson. The laws of supply-and-demand – and consumer choice- apply to them as well, no matter how many “awards and designations” they have pinned on their Admiral’s uniform. No amount of postcard, calendar and magnet marketing will convince a buyer that an overpriced property will offer a good resell value in the future. Even representatives of stalwart “brands” will find their value proposition rusting like an old Chrysler bumper when buyers tour the lots (called open houses) and see row after row of un-prepared, overpriced homes.
Along the way, many brokers will find themselves just like Chrysler dealers: stuck with mounting expenses from trying to market un-wanted inventory hoping un-skilled salesmen will break out of the “union rules” of working when they feel like it. Like Chrysler’s mis-management, so too must many brokers take the blame of their own mistakes, as they ultimately signed-off on the mis-priced (mis-manufactured) inventory that came off of production lines operated by workers who resisted technology, innovation, training and accountability rules. Real estate companies will try everything – from fire sales to rebates to government loans and tax credits – yet they will find that it’s really not a matter of price that is keeping consumers on the sidelines.
For proof, we can find today plenty of sales in both auto and real estate industries. Toyota sold less, but plenty, of cars this year; so did many REALTORS sell fewer but sufficient homes. The message is that the market continues to work; and buyers continue to have the money and willingness to trade it when they see products of value. Virtually no buyer of automobiles today required a government subsidy to make his decision to purchase a properly priced, high-future-value product from BMW (who actually raised its prices this year). While billions of government dollars, fake interest rates and bank insurance programs still can’t get buyers back into the housing market.
If the real estate industry wants to correct its problems, it needs to look at the production side – not the consumption side. The consumer has already told REALTORS what they need to do: Put better homes at better prices onto the market. Most agents and brokers of the industry continue to ignore this message, listings anything from anyone who calls at any price because it might lead to any check. In reality, it’s leading to no checks, for most agents. All things being equal, the real estate industry should be selling vastly more homes as prices drop than when they soared due to inflation. Something else is seriously wrong – in the form of unwanted inventory – when the products sit on the lot like so many un-wanted Chryslers whose brokers insist it’s still a great time to buy a car.
Consumers know it’s a great time to buy a car – and a home. Perhaps they just wish they could buy a home from Honda?