A lively real estate blogging/networking site (AgentGenius.com) recently hosted an article about the Australian method of selling homes. The process down under is comprised of many of the same components as ours – buyers, sellers, agents, walk-throughs, bids – with one key exception. What are they missing? A listing price!
That’s right – Australians hold an open house and then they begin receive offers and/or set an auction date. It’s fairly straightforward. Everyone knows who’s willing to pay what, and everyone knows when the sale will close. Offers, whether they are made pre- or during the auction, are not legally binding.
Of course, this minimizes the work that would normally be done by a listing agent, which is perhaps why a couple of comments on the AgentGenius article referred to the process as “ridiculous”. But let’s be realistic – what’s ridiculous about breaking with the highly-artificial concept of pre-determined “price”?
When we set a price for anything – whether it’s a pack of bubble-gum or a car or a bathing suit – we’re not actually making a statement about objective value. We’re making a guess or setting up an expectation about how much cash some other person would be willing to part with in order to obtain said bubble-gum, car, or bathing suit. We all kind of know this, but every single day we take the concept of “price” for granted – because, hey, it’s convenient not to have to launch into a soul-searching debate every time you go to the grocery store.
But when it comes to a purchase that really DOES require some soul-searching, maybe taking “price” for granted isn’t the best idea? After all, the housing bubble – and any other kind of “bubble” – happens when people overestimate what other people are willing or able to pay.
Perhaps what we’ve all learned from the housing and economic crisis – and what we need to keep learning over and over – is that nothing is actually worth a penny more than what a living and breathing human being is actually willing to pay at a particular critical moment in time. What we need to remember at THIS particular critical moment in our economic history, is that no matter how frustrated or persecuted we may feel, we are all potential buyers – and buyers hold a lot of power.