Is Your For Sale Residence Instagram Influencer and Hashtag Ready

I just finished an article in The New York Times titled Hashtag Open House concerning brokers hiring influencers to promote their listings. While the trend seems to at present be relegated to Los Angeles and New York City is this a marketing program a seller of a residence or their broker consider?

With a marketing and public relations background; honestly I rolled my eyes while reading the article. While I understand the concept and the desire to secure eyeballs onto a listing; will such a program and the costs associated truly sell one’s residence?

Thus I decided for fun to distill my thoughts and I welcome comments:

  • Influencers: My first question is the influencer presenting and/or penetrating the audience for the listing? Honestly when I see a multi-million dollar listing being splashed across Instagram and other channels, promoted by an Influencer I question the Return on Investment (ROI). Granted if someone can present me with an influencer that is truly targeting the prospective buyers of one of my listings I would entertain the idea. However when marketing a larger, top 2% of the market price point I have to question if the influencer is capturing the demographic I wish to target including high-net-worth, liquidity, professional educational attainment and employment and so on. My personal view is if I am not attracting qualified prospective buyers all I am attracting is voyeurs.

 

  • Voyeurs: Hey I have nothing against voyeurs. Actually I like them as A) I hope I have captured their interest, B) at some time in the future they may be a client either on the buy or sell side and C) more eyeballs mean potential sharing and potentially attracting a buyer. Now for my concern: more eyeballs may also invite nefarious activity. Granted this is nothing new; as brokers we post pictures distributed among various channels i.e. Multilist, the Internet, Social Media and  open houses have been used by those up to no-good to preview a potential opportunity for future theft, squatting, vandalism and so forth.

 

  • Is One Selling a Residence or Selling their Broker: Yes I may be old-school (it happens with 25+ years in the business) yet do such activities sell a residence or sell the broker? In general from discussions with experienced peers it seems very few open houses actually sell the home to a visitor to the open house. Please do not misunderstand; I believe open houses can be a valuable tool for both sellers and brokers including assessment of comments/responses concerning presentation, pricing, interest and so forth. Of course for brokers hosting an open house an opportunity to meet prospective clients, both sellers and buyers.

The whole concept of being Instagram ready is not new. I always suggest a prospective seller consider professionally photographed images as a picture is truly worth 1000 words. In addition for certain listings, staging and related activity may enhance the marketing program. Personally I view staging, as a 3-D advertisement coupled with presenting a fantasy that can becomes one’s reality.

And while the article mentions events and immersive marketing this is nothing new in California! A Builder Hires Model Family to Sell Homes. However even California builders were late to the party as live mannequins have been used in retail (Selfridges c. 1920’s) as well as entertainment i.e. Area in NYC in the 1990’s.

BTW if you wish to see truly challenged listings: http://terriblerealestateagentphotos.com

I will be curious how the Instagram and Influencer marketed listings work out. I comprehend the opportunity concerning new developments, a multi-unit building, rentals, a market with competition within the price-point and so forth. However for exclusive listings, the one’s that are truly unique, bespoke, rarified well……sometimes discretion can be most attractive.

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Why I believe the Housing Market is Overheated An Example with Statistics

This morning a listing alert came on my MLS advising 549 Lafayette St is on the market asking $800K. This is the exact type of home my wife and I have been looking for. Well actually a renovated version; let me explain.

In the 400 block there are three similar homes 434, 440 and 446 Lafayette all Victorian design on smaller lots i.e. 37.5’ frontage. All have been renovated with similar design criteria including enlarging the rear on the ground and upper levels including master suites with en sure bathroom and an additional 2nd bathroom. 440 Lafayette Street sold in 2015 for $825,000 and was truly turnkey condition. 446 Lafayette Street was last asking $1,150,000 (adjusted downward from $1,200,000) and is now under contract, also truly turnkey.

Thus I was intrigued with the 549 Lafayette Street listing. In my professional broker opinion; not as strong a block as the 400 Block of Lafayette Street as it is denser and is impacted by 6th Avenue traffic noise. Also the house has been a rental thus has not been updated or expanded recently. From the pictures a total renovation is needed and assuming an expansion would run $250,000 to $300,000 to replicate the design of the homes in the 400 block mentioned above.

Now let me compare sizes and condition:

549 Lafayette: 1,587 SF Above Grade / 846 SF Basement – Condition – Good (Asking $504.10 PSF Above Grade)

440 Lafayette: 2,084 SF Above Grade/ 329 SF Basement – Condition – Excellent (Sold for $395.87 PSF Above Grade)

446 Lafayette: 2,306 SF Above Grade/ 380 SF Basement – Condition Excellent (Asking $498.70 PSF Above Grade)

Thus as per my usual research I decided to look at the sales history of 549 Lafayette Street as follows:

In January 2011 the home seems to have been inherited, as the conveyance was a Personal Representative Deed, usually associated with an estate.

In February 2015 the home sells I believe through an arms length transaction for $225,000

Two months later in April 2015 the home sells again to an LLC for $456,000. Almost double in two months, which usually suggests either, not an arms length transaction OR someone just hit the market just at the right time.

Now 3 years later almost to the date, the home is asking $800,000 or a gain of $344,000 or basically a $10,000/month increase in valuation since the last sale.

Now back to 440 and 446 Lafayette St. Both of these homes are on a stronger block, have been gut renovated, expanded, offer 25% – 40% additional above grade square footage when compared to 549 Lafayette and are in excellent condition.

The following is their sales history:

440 Lafayette, which I believe mirrors market conditions:

  • 11/98:           Sold for $425,000
  • 5/04:              Sold for $665,000 (close to the pinnacle of the market cycle)
  • 12/11:            Sold for $675,000 (just coming out of the Great Recession)
  • 9/15:              Sold for $825,000 (Just as the market started to its ascent)
  • -Of note, between 2004 and 2011 the house gained just $10,000 in value or based on inflation the house actually lost $130,000 in value.

446 Lafayette:

  • 9/98:              Sold for $287,500
  • 10/05:            Sold for $530,000 (a few months shy of the pinnacle of the cycle)
  • 7/13:              Sold for $875,000 (market starting to begin to overheat)
  • 2/18:              Asking $1,150,000 under contract

Now granted someone may purchase 549 Lafayette for the asking at $800K. And in this market such a price may look attractive (yet on the 400 Block of Lafayette St a superior home and renovation asking $5 PSF less) .

However while I am not suggestion history repeats itself I would be remiss if they were my client not to mention one block south, larger homes in excellent renovated/upgraded condition sold for similar pricing just a few years back yet offering more above grade square feet and overall condition. Even in the present when comparing 446 Lafayette Street and 549 Lafayette Street within $5 PSF above grade, serious differences.

Personally I would take a pass. At $600K I am a cautious buyer, maybe even $625K knowing I am in it for another $200K and 6 months of construction to convert from its existing condition to my primary home. However at $800K I will pass and I hope the purchaser at that price does not see this blog posting.

Happy House Hunting.