A couple of months ago, my resident teen idol idolizer decided that the perfect sixteenth birthday present would be a trip to Irvine to see the Jonas Brothers concert. Being Mother of the Year and all, I signed her up for the Fan Club which came with the bonus prize of pre-sale ticket access. Now, I know these guys are big. I read the hype, and I hear the hype in my own family room on a daily basis. The concert was going to be a swift sell-out. This is when I became a real estate investor.
I only needed two tickets, but I got caught up in the media frenzy. I bought four. Knowing that my real estate was in short-supply, I figured I would sell the other two for a profit. Maybe I could cover the parking. This seemed like a good idea at the time, capitalism at its best, but then with any investment comes an element of risk.
My two extra tickets were listed for sale with an agent, Stubhub. When I made the initial purchase, I paid commissions (“convenience charges” they like to call them) and closing costs (shipping and handling). As a flipper, I now was faced with costs of sale at the other end, so in order to make a tidy profit, I had to list my tickets a little higher. I “needed” to get a certain amount, and this dictated my asking price. Granted, there were a lot of seats on the market when I made my debut, and many were better and even cheaper, but I had time.
How quickly a market can change. Suddenly, two new concert dates were announced, the two consecutive days following the date on my tickets, for a venue in a nearby neighborhood (Anaheim). Overnight, inventory tripled. But, I wasn’t worried. I had time, and I needed to get my price. Oh, faced with this news, I agreed to a price adjustment, but I just lowered the price enough to make it competitive with the hundreds of other offerings, the other offerings that weren’t selling. My new price wasn’t enough to distinguish my property from many of the other comparable properties, and my price was even slightly higher than others yet, but my property was “special.”
Yesterday it suddenly occurred to me that I didn’t have that much time after all. With my need to move (the tickets) in the next three weeks, I became a motivated seller. I was reminded that my property is not worth want I need or what I want, but it is worth what a buyer is willing to pay. I was smelling short sale if I didn’t act swiftly.
So I agreed to another price reduction. This time, I didn’t mess around. My new price didn’t scream “fire,” but it was compelling. I priced my offering not just below comparable properties, but slightly below slightly inferior real estate. Buyers in this market, I realized, want location but they also demand value. In difficult economic times, value will overcome a lot of objections. Value trumps every time.
I am happy to say that I’m in escrow. Within thirty minutes of doing what I should have done thirty days ago, had I heeded the market indicators and responded to the buyer feedback (crickets), I had a sale. I made a whopping $15, and I am a little short of my goal of covering the parking. On the one hand, I might see this as having lost $100, because at the peak of the market, $100 was roughly my imputed equity. However, it was never real. It’s only real when you actually sell. My timing was off, certainly, but a little too much greed and a big lack of objectivity and proper pricing day one ultimately resulted in a lower sale price.
This story sounds eerily familiar, if you know what I mean.