You may have heard of the “unattainable triangle” in discussions about everything from business to products to project management. The idea is that each point (or side) of the triangle represents one competitive aspect. Take a look at one product model where we swap out “Fast, Good and Cheap” for a Real Estate expectation triangle “Price, Value and Location.”
From a Real Estate perspective, a Stable Attainable model will look like this:
Price (at or below market)
Quality (well maintained with no updates needed)
Location (Desirable)
In Real Estate we even have three parties involved Buyer, Seller and Agent. That’s another triangle, making them all happy.
Let’s see how these triangles of expectations work. The theory is you can only emphasize two of those points or sides at any one time. The other one will always suffer. You can’t make a triangle with only two points. Coffee drinkers can understand this example… MacDonald’s coffee vs. Starbucks coffee.
- MacDonalds – Price Low (a good thing), Location Many (lots of availability), Quality (questionable when you include service, taste, presentation etc)
- Starbucks – Price High (a bad thing in most minds), Quality Great (Service, Presentation, Taste), Locations (everywhere it seems now days)
So want great Price from many locations? Choose MacDonalds but Quality (service, presentation, taste) may suffer. Want great Quality from many Locations? Choose Starbucks but get ready to pay the price!
In Real Estate there are two views of this triangle – Buyer and Seller. They are put together by two different people – Buyer’s agent and Seller’s agent under direction of the Buyer or Seller. When the expectations of the Buyer and Seller match all three sides a sale is possible. It’s easy to match two of these sides, difficult (unattainable) to match all three, that is until you are willing to adjust one. As a seller you can’t adjust Location. Adjusting Quality can be done but takes time or money or both. You can only easily adjust Price. As a seller you can adjust any of them if you are willing.
Take a look at a home, from a buyers perspective, that is priced at high market, in a desirable location but needs updates. You can see it’s not stable, no one will buy it. There are two things a seller could do, lower the price or do the upgrades or maybe a little of both. Shorten the price line and/or increase the quality line and it becomes stable once again.
When we start our search or sale we all tend to think of the perfect triangle. From OUR perspective it’s perfect. The values WE assign to the triangle are equal. It’s how you thought starting out in life on graduation day. “We’re going to change the world, make a billion bucks, everyone will love us” (not). In the end it’s the market that will measure the sides of the triangle, not you. The speed at which you find a match, that will result in a sale, is impacted by the values YOU placed on the triangle. Remember you can’t change the Location side. You can change the Quality side (invest your time, money or both). You can change the Price side.
So how can we make this work? First and most importantly prioritize each side. This is different for buyers and sellers. Buyers can change Locations, sellers can’t. Know what you are willing to compromise on and how much for each triangle side. Share with your agent. Talk it over with them. Agents who really know the market and the neighborhoods can match buyers and sellers with ease as long as they know what you are willing to compromise on and how much.
Now this is where it gets real interesting. Willingness to adjust one side is an absolute requirement, two really helps, three is a guaranteed quick match. On top of that the length of each of side is determined by their own triangles. For Price there are only so many homes in each range (Low, Medium or High priced). Desirable Location may be determined by Schools, Municipality or Neighborhood. Quality may be Sq ft, Rooms or Fixtures. Each of those triangle sides can be broken down into more triangles.
Stop the madness. Keep it simple. Let your agent help sort it out. Trust them. Most importantly, if you can’t trust them move on to another agent. But keep in mind the most important component of trust is when they can and do tell you when your expectations are unrealistic and what side of your triangle doesn’t match the current market for what you are looking for or selling. Don’t shoot the messenger. Read the message. take a realistic look at your triangle.
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