Second Life real estate is and has been changing drastically.

Gone are the days, for example, when only a handful of people had their own sims. Gone are the days when, if you were an estate owner, you would have people banging your pixel door down for a parcel. Now it seems that almost everyone knows someone in Second Life™ real estate.

I myself managed Cove Islands for 18 months, a private estate company comprising of 30 sims, some residential zoned and others commercial. And even in that period of 18 months the transition was incredible. First of all, Linden Lab made the questionable decision to cut purchase prices from $1675 to $1000, thus reducing existing estate owner’s estate holdings values by 40%. Bravo. (/end sarcasm). This decision was ultimately what led to the state of the market as is today – a sim is more affordable and thus there are simply too many companies out there. The private estate market is saturated beyond belief. And what with open spaces then being used for ‘full sim purposes’ and homestead changes being made…. essentially a lot of completely rash decisions that seemed to have been poorly thought out by Linden Lab and even more poorly executed, private estate has had a rough ride.

But it seems to be levelling. However, in a market as saturated as that, every company has to really be top notch to work. At Cove Islands, the time we spent on marketing, promoting, training staff and ensuring that our residents had the best value and the best customer service possible was unbelievable – but worth it ultimately, as while we watched companies around us sink, we maintained upwards of 80% occupancy.

One massive change that occurred over the 18 months I was in charge was essentially the disappearance of up front purchase fees for private estate parcels. When I started at Cove Islands, parcels were ‘selling’ at 17000L for a 2048sqm and 25000L for a 4096sqm. And then there was tier on top. Yet despite what may seem like a hefty fee, we would sell out as soon as a sim was open. By the time I left Cove Islands in June 2009, we were selling parcels at 99L. The fact is when you have so much competition people will not pay hefty fees for what is essentially permission to rent a parcel. When you ‘buy’ land on private estate, you could have it snatched back at any time. YOU OWN NOTHING. Yes, you could resell it etc (depending on the company you are with), but an estate owner can, at any time, come in and reclaim your parcel. As the market got more and more saturated, up front purchase fees therefore pretty much disappeared. And so they should. The only purchase fee, in my opinion, that should be payable is enough of a fee to deter newbies or trouble causers who have no intention of paying tier, from purchasing the parcels. We found L$ 99 to do just this and it seems a lot of companies are selling parcels at that price now. Some choose to sell at the value of a week or a month of tier and then credit that tier accordingly – thus there is actually no purchase fee for the land itself. And I truly believe that this is how it should be. Paying that token up front fee of L$ 99 or whatever gives you “ownership” of the parcel and enables you to do as you wish with it. But you are still, essentially, renting.

So why then, with this in mind, are some companies still charging such excessive fees up front for land? It isn’t like these parcels are even developed or even come with anything. Many of the parcels I have seen in world at a price tag of L$ 20000 or so (ludicrous) are just plain, flat, square parcels with no content. Yet these companies still want you to pay the equivalent of almost $100 (US) just for the privilege of then paying them tier as well for a parcel of Second Life land. What the Hell is that all about? The ‘renters’ or ‘residents’ are doing the estate owner the favour in choosing them in a market that is so saturated. Check out some of the bigger estates on the map… the amount of yellow (parcels for sale) is scarily high. So those in Second Life real estate, particularly private estate, in my opinion, should be seriously thinking about value for the consumer. Ok, so a first time buyer might come in, pay that fee for the parcel not realising that they could probably get a parcel with the same prim bonus and the same appearance elsewhere for a negligible fee. But when they realise, they are likely to be pissed off… and that money they have paid will be lost. Even if the estate owner justified ludicrous fees with ‘well you can resell,’ what use is that? The big estate owners are having enough trouble selling parcels – the individuals have no chance. And, of course, until they do sell it (or abandon and lose everything they spent) they are still responsible for the tier. Win-win for the estate owner. Lose-lose for the resident.

The other excuse I am tired of hearing from Second Life real estate ‘professionals’ for charging up front fees at that level is, “Well I pay for the sim out of my own pocket and I want to get that back.” If you bought a business in real life, let’s say a clothing store, would you expect your first ten customers to each give you more money just so you can get your investment back immediately? Would you charge them fifteen times the price for a jacket? Would you bollocks. It’s a load of rubbish. Anyone going into Second Life real estate as an estate owner really should expect to be out of pocket at first. And unless you start thinking more about the renters and less about getting your money back and lining your pockets, you’ll stay out of pocket too.

Categories: Random Thoughts and Musings

This entry was posted on Monday, August 24th, 2009 at 9:55 pm and is filed under Random Thoughts and Musings. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.