The $10,000 Doorknob

By Jack Newcombe

April 11, 2012 4 min read

In 2004, the band Bowling for Soup reached No. 23 on the Billboard Hot 100 by detailing the failed dreams of a married woman, in the single "1985."

The song's heroine is depicted as a desperate housewife who relies on "one Prozac a day" to cope with her mundane life and whose husband has the unglamorous job of certified public accountant. Her dreams are crushed at the young age of 24, when she settles down and walks away from a youth filled with rock 'n' roll.

In the song, the band repeatedly laments changes in pop culture and yearns to be back in the year 1985. Specifically, the band asks, "When did 'reality' become TV?" The answer is now.

Reality TV is currently one of the most popular forms of entertainment. There are reality shows about cupcakes, hoarders, pawnshops, tattoo parlors, chefs, cops, ghost hunters, brothels and New Jersey.

However, one reality TV genre in particular seems to be gaining popularity: real estate.

"Extreme Makeover: Home Edition," "Property Virgins," "Trading Spaces" and "Flip This House" all are riding the current wave of real estate-focused reality TV.

Buying a house can be scary. It is an opaque industry in which consumers make large financial purchases based on the advice of "experts" whom they hardly know.

Reality TV is just the opposite. It costs little or no money and can be comforting. Unlike real estate, it is completely transparent and opens the metaphorical kimono. As a result, it makes sense that consumers would look to the trusted advice of reality TV to help them make a decision when purchasing a home.

For example, Bravo, best-known for its flagship show, "The Real Housewives of (insert city name here)," airs a series called "Million Dollar Listing New York," in which a camera crew follows three real estate agents while they try to sell real estate. The agents don't really like one another, and they certainly do not appear to respect one another. That said, they seem to be good at their job in that they sell a lot of real estate.

A big part of the show is closing the deal, which usually means persuading the seller of the property to take a lower price while persuading the buyer to pay a higher price. The price is almost always the sticking point, and the conversations regularly address the issue of valuing the location of the property versus the quality of the construction and furnishings.

Ryan Serhant, one of the featured agents on the show, discussed this very issue with a client. Though the client was worried about spending more money on nicer fixtures for his property, Serhant encouraged him to spend the money, saying that if his client "(spends) $10,000 on a doorknob, (he will) get it back in $100,000 in purchase price." That sounds good for the seller but does not seem fair to the buyer.

Now in the documentary "Freakonomics," Steven Levitt and Stephen J. Dubner ask whether real estate agents even have their clients' best interest in mind and come to the conclusion that they do not. Essentially, an increase in sale price will not impact an agent's commission enough for him or her to risk a deal falling through, and as a result, houses are not sold for as much money as they could be. That sounds good for the buyer but does not seem fair to the seller.

The reality is that if you are selling a house, stainless steel appliances and hardwood floors do add more value than they are worth. On the other hand, if you are buying a house, do not overvalue the Viking refrigerator or marble countertop, even if your real estate agent gives you the hard sell. And in either case, try to read a book instead of turning on "Keeping Up with the Kardashians."

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