A few years ago, a friend of mine walked into a high-end boutique and spotted two identical handbags. One was priced at $250, the other at $2,500. Intrigued, she asked the sales associate about the difference. The reply? “The $2,500 bag is part of our exclusive collection; limited edition, handcrafted, and only available in select stores. It’s for the woman who wants to make a statement to the women who know.”
Guess which one she bought?
This anecdote illustrates the Veblen effect. This is a phenomenon where higher prices make things more desirable because of the way a product is presented to buyers, signaling status, exclusivity, prestige, and an opportunity to buy what others don’t have access to.
The Veblen effect is when a higher price increases demand instead of decreasing demand.
Named after economist Thorstein Veblen, this is the opposite of traditional economic theory where higher prices result in lower demand. I have observed first-hand the power of the Veblen effect in the sale of luxury homes, particularly in Paradise Valley. When properties are presented to buyers in a more exclusive way, their desirability can actually increase with a higher price.
Enter ParadiseValley.com, a domain I’ve owned for years. I’ve received offers to sell it for close to $1,000,000. You might think the highest offers for that URL came from the real estate industry. They did not… I’d never have imagined… and I’ll leave it at that.
I turned down those offers because I wanted to do something special, super-special for my community. Being in real estate, and having traveled a lot, I know firsthand how special PV is.
What’s my plan for ParadiseValley.com?
AI tools now exist, and continue improving, to identify buyers worldwide for any type of home, in any community, in any price range, and if the message is right, attract those buyers to one single website. In fact, if one website showcases homes in one community, this is a dream scenario for AI buyer-attraction optimization.
That’s what I intend to do for the residents of Paradise Valley. No PV resident will ever have to list in MLS or on any home search portal. Why is that important? Because doing so commoditizes a home and eliminates the opportunity to leverage the Veblen effect. Commoditization and mass marketing typically result in lower prices, especially for luxury homes. Tragically, sellers don’t realize how much money they’ve lost because their homes were mixed in with every other property online, like a loaf of bread getting stale on a shelf.
Prior to founding 72SOLD, I was the top selling agent in PV for 10+ years. I learned that the key to achieving higher sale prices was to avoid commoditized, one-shot marketing. Instead, I made each buyer feel like a VIP, like they were given an advance opportunity to see the home before it was publicly marketed. Of course, I had been aggressively marketing it off MLS/Zillow, they just didn’t know it.
Could the existing MLS/Zillow home selling protocol actually result in lower sale prices, particularly for high-end homes? I’ve sold PV homes the MLS way and the Veblen way, and I am 100% sure that the exclusivity approach generates higher prices. My off-MLS/Zillow 22-step luxury home marketing system was so effective at achieving higher prices it was featured in Forbes.
So, what’s my mission?
I intend to elevate the nationwide perception of desirability and value of Paradise Valley and every home in it. How? ParadiseValley.com will showcase our community, comparing it favorably to other upscale areas around the country. The website will also leverage AI to enable any PV resident thinking about selling to see and assess the buyer demand for their home before making a decision to move forward.
Then, if they do decide to sell, they can upload their home (or have their agent do it), so that potential buyers are immediately notified.
Would you still use an agent? I would. However, your agent’s job would be showing and negotiating the sale of your home, protecting you, but not having to find a buyer.
Okay, that’s it. Currently, ParadiseValley.com simply showcases the Bob Dylan style song I wrote to celebrate the attractiveness of our awesome community. But soon, in a few months, I’ll make that website a showcase for our community and a value enhancer for your home.
What do I want? Nothing. No cost. No strings. Use whatever agent you want. I’m simply going to make it easy to sell your PV home, and perhaps more importantly, increase the value of your home and every home in PV. Just wait and see.
(If you haven’t heard the song I wrote about our community, check it out at ParadiseValley.com.)
