While where a property is located is undeniably important, there are two other variables that have equal impact. In addition to location, all properties also have a price and a set of features or attributes.
Each variable is tied to the other two and changing one impacts the others.
Every buyer of a home approaches their purchase with their own specific mix of what is important to them and it is rarely the case that all three variables are given equal weight. Let’s look at how to optimize the result for you as a buyer or seller by making one of the variables your primary focus.
Location Comes First
As it says in its name, real estate is about physical, actual property, and that property has to be located somewhere. Location is undoubtedly crucial in real estate, for both objective and subjective reasons.
For buyers, location is most often important due to subjective reasons – proximity to work, being within a certain school catchment area for the kids, or simply being close to friends and family. If you’re focused on buying in a particular location for any of these types of reasons, you need to be as flexible as possible when it comes to the features of the home and the price you’re willing to pay. Remember to take the very real benefits to you of the home’s location into account when you’re comparing against other properties that might be lower priced or have more desirable features.
For sellers, location discussions are typically focused on objective reasons – a short walk to a nice retail stretch with shops and restaurants, easy access to highways or transit, or being situated in a mature neighbourhood with trees. If you’re selling a home that is blessed with a number of objective reasons as to why it is well located, you (and your agent) need to make the location a central part to your listing story. They aren’t simply buying your home, they’re buying into living where the home is located. If you’re missing features that might be appealing to buyers, you can still command a good price based simply on location.
Features Make It A Home
During the COVID pandemic, we saw location decrease in importance for many people. Whether it was for subjective reasons such as no longer needing to keep a short commute to work due to a shift to working from home, or objective reasons like a lessened ability to enjoy the nearby retail stretch with restaurants and shops, many people chose to focus on features rather than location.
For buyers, focusing on the set of features or attributes of a home over location often offers a significant break on the price. We often see very similar homes sell for very different prices depending on the location. If you’re focused on a particular type of home with certain attributes, then be very open to where you will live. Structure your search around these desired attributes and you will quickly see that you can get more home (whether that means bigger, better or simply better suited to you) for the same budget.
For sellers, a home that is primarily being sold based on its features and attributes needs to present very well inside. If you need to ask buyers to forgive some lacking elements related to location, you better be making up for it by providing the features they will love in the home. While over-improving a home in a less desirable location is a genuine problem, you can and should work to make your home show as one of the best in the area.
Price Matters Most
Many people assume that price is the most important variable in a real estate equation. While this is understandable, it is wrong given real estate is not comprised of standard products with limited differentiation. As we’ve discussed, location and features are both fundamental variables and within each property there are a multitude of differences from another, some large and some small. Some buyers do, however, focus heavily on price and there ways for such buyers – and sellers who will be dealing with them – to optimize the result.
For buyers, the cost of the home can and should be an important part of your purchase decision. If price is absolutely crucial for you, then you need to gain a good understanding of where you can get the most house (best mix of features and attributes), in the best possible neighbourhood (location) for a certain price. By focusing your search on areas that are lower-priced than other areas, you then only need to seek out the best option in that area with your budget. It doesn’t make it easy, but it is far more achievable than looking for a lower priced property in an area that commands higher prices than your budget.
For sellers, when we talk about a situation where price matters most to buyers, you need to think carefully about any upgrades or expenditures you make on the home that you are hoping to recoup from the buyer in the form of a higher sale price when you sell. If your does not do well on either the location or the features side of the equation, you must make up for it on the price side. We always recommend sellers in such situations focus on any negative aspects of the home and work to bring them up to at least a neutral. A dated kitchen is not a negative and should not be renovated in such cases. A damaged countertop or broken tiles, however, are negatives that may have a large impact on the impression and therefore the sale price of the home.
It is simple to say that real estate is just about location, price and features, but these three variables influence each other in very complex ways.
Price is often wrongly considered to be only on the result side of the property equation, such as location plus features, equals price. This is short-sighted and fails to recognize that price is a variable, not just a result.
As we’ve just reviewed, sometimes location is the focus, where buyers say what price can I pay, what features do I want, in the location that I need. Other times, features matter most, with buyers looking for a particular size, type or finish in a home, and willing to pay within a certain range for it, in any number of locations.
As all transactions require both a buyer and seller, it is always worth it for both sides of the transaction to put themselves in the shoes of the other side. By understanding what someone focusing on location values, or what’s important to someone who cares most about the price, or what it means for someone thinking about the home’s features, you can adjust your approach and get a better result. If that sounds appealing and you want to work with agents who understand, get in touch.