2018 on Kauai was still very much a seller’s market, and property was getting snapped up left and right as low inventory levels drove prices up with offers on newly-listed homes continuing to flow in. The planned luxury development of Kukui’ula on Kauai’s south shore also had a record year, with 37 lots and 16 homes sold for a total sales volume of $97 million - this is a hot market and this house (below) is a sparkling jewel in Kukui’ula’s remarkable collection.
This $16,000,000 home listing by Hawaii Life has 5 bedrooms, 5.5 baths, lava rock entrance pillars, honed granite countertops, a steam shower, guesthouse, pool, and over 7,800 square feet of combined outdoor/indoor living space. It offers dramatic ocean and golf course views on a lot size of 1.46 acres and the listing photos showcase many of these jaw-dropping features.
This house is so beautiful and so picturesque, that when the Wall Street Journal ran a competition for 2018’s house of the year just this January it won first place after being voted on by 272,804 people and while beating out 51 other houses for top honours. As far as realtors are concerned, the positive press generated by having your listing splashed across the Wall Street Journal and viewed by hundreds of thousands of viewers is the Holy Grail of real estate marketing.
So why didn’t it sell?
You could argue the obvious and say, “How many people actually have $16 million to drop on home?” This is fair, but on this island there are more expensive places that are still selling, and at the time of writing this home has now been on the market for over 500 days (average on Kauai is currently 100 days). What marketing strategy could you possibly employ, now that the Holy Grail of real estate marketing has so far failed to find the right buyer?
You give your listing a haircut. In this case, they gave it a $3 million haircut.
Two things happen now. First, the MLS in Hawaii (multiple listing service that the agents use to manage listings) is updated and this notifies all agents across the board that there has been a price decrease. This usually generates further interest in a property, especially one that a buyer has had their eye on since an agent can use this as an opportunity let them know that something has happened.
In fact, this is a common strategy employed by selling agents with their clients, and they will write into a listing agreement that every x weeks that a property is on the market, they will decrease the price by y% or $z to ensure the MLS is constantly pushing updates to the other agents. It is not unheard of (but not recommended) for sellers to lower the asking price by $1 every day until an offer is received!
The second thing that happens is less tangible. As you know, the buyers, not the sellers, ultimately determine what real estate is worth (by how much they will pay for it) and the best thing that a seller can do to ensure their home is sold is to list as close to fair market value as possible (unless they are desperate to offload the property quickly, than they may list under fair market value) By dropping the price, the seller is sending a signal to the world that they are willing to entertain a lower offer which will pique the interest of some buyers who may have otherwise been on the fence about submitting an offer to purchase.
This particular case is interesting simply because of the size of the transaction - someone was willing to forgo $3 million after winning a home of the year award, and so here we are, at a listing price of $13,000,000.
By using price as your primary marketing tool you are telling all buyers that you know your home’s fair market value and are willing to engage in an equitable trade of real property for money. Start here, and you may not even have to boast a home of the year award to sell your real estate.