Everyone loves those rotisserie chickens that they sell at Costco. At $5 for a fully cooked, 3 pound bird they just fly off the shelves - supposedly 157,000 per day. They are one of the best bargains at Costco - no doubt a loss leader - since they are a few dollars cheaper than what other stores sell them for and easily 50% larger. In fact, I've often wondered what sort of nuclear accident produced these mutant chickens but they make such great sandwiches that I try not to think too much about that.
I went to buy one Friday evening and when I got to the counter there were about 6 people waiting for a fresh batch to come out of the rotisserie but there was one perched on the heated shelves. I took a close look at it but couldn't find anything wrong with it and, with their sales volume, those chickens don't sit on the shelves more than an hour or two. Yet, six people were waiting for a fresh batch.
Now, there is apparently some kind of science to picking out the best chicken on the shelf which escapes me because every time I go there I see people painstakingly sorting through them. I usually ask them why they rejected certain ones and they usually have some kind of cock and bull story about the legs or the skin. Heck, they all look the same to me except I do like the ones that at least look like they have more white meat on them.
So when I got to the shelves I looked around, perplexed, and shouted out to everyone "Is this one defective?" Everyone looked pretty dumb struck but one person did explain that that one was from the previous batch - as if that was a sufficient reason. I was tempted to buy it just to mess with people's heads but at the last minute I chickened out and decided to wait for a fresh one.
As I was walking out - with 2 other items, just as Costco planned - it dawned on me that this curious exhibition of buying behavior of a $5 item is really no different than what we see with home buyers. If a house has been on the market for "too long" realtors have a habit of referring to it as stale. I don't like that term because I think there is an additional layer of insight available. I think the consumer looks at that house much the same way that those Costco people, and even me to some extent, looked at that last chicken: nobody bought it so there must be something wrong with it so I'm certainly not going to buy something that nobody else wanted. I've actually heard buyers say variations of this.
Of course, when you are selling a home you can always lower the price, which basically resets the clock to some extent. You can easily claim that the only reason it didn't already sell is because it was obviously overpriced before but now it's priced correctly.
Unfortunately, where people get into trouble is that they wait too long to lower the price, which prolongs their agony and makes the story more difficult to tell. And "too long" is relative. In a fast moving market "too long" is shorter than in a slow moving market and it's shorter for a lower priced home than it is for a higher priced home. So there is a lot of judgment involved and making a serious mistake in this area will eventually come home to roost.
#HomeSelling #HomeBuying #RealEstate
Gary Lucido is the President of Lucid Realty, the Chicago area's full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider's view of the seamy underbelly of the real estate industry, or you just think he's the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.