January Newsletter
Price Positioning…..
Why “Positioning the Home on the Market” is a better approach than “Pricing the Home on the Market”.
But first the Story…
A Seller Calls you up and says …”hey can you come over and tell me what my house is worth?”
When you give someone a CMA or a Comparative Market Analysis or Competitive Market Analysis do you show them “Comparables”? After that you tell them a “Price Range”? So after you have had a conversation about price and a number is in their head what do you think happens? You become solely responsible for that information. You are looked at as the specialist. It is money to them. The words Price and Value and Worth have a definite meaning in the minds of the seller. Would you agree? They are hanging on your every word hoping beyond hope that the number will be in the ‘range” that they were hoping for…You say the number. There is no turning back now. “Well Mr.and Mrs. Smith, your house is worth in the price range of approximately $290,000 to $295,000″…. for example. Then you pause….hands shaking…holding your breath…you think to yourself….”are they going to like that price?” Mr. and Mrs. Smith look over at each other and then look back at you. Mr. smith clears his throat….ahem. “Well that is in the area that we were expecting but we were hoping for the $309,000 price”. Now what happens? Well you can fill in the story from there….But the next day there is a sign on the lawn. You make sure everything is all set up for the listing. Good pictures….A Video tour perhaps….feature sheets….REALTOR marketing begins…pages out through the office on the new listing…book the home into the next office meeting and tour date and it all begins. You have done an excellent job with the pictures. You may have used snapseed to get get your pictures just right…imovie or splice to create your video tour or you may actually pay someone to take care of that for you…..You are now invested….At least 4 to 5 hours of time is spent organizing everything and if you are systemized the rest of your marketing efforts are taken care of in the next day or so and it is out there. If someone is looking for this type of home they will find it and the phone is going to start to ring…
But wait…!
What happened with the price conversation? Let’s say that you battled it out for 30 minutes and traded blows going over the comparables and finally convinced them that they have to list under $300,000. You are a winner! You won the battle…..or did you? First they are of the opinion that they are now losing $10,000…When the offer comes in at $289,000 they are absolutely offended and appalled!!! They can’t LOSE $30,000!! Have you ever ran into this type of scenario? Can you relate? Me too. But once I learned about Price Positioning and I adjusted the way I had a conversation with people it changed the ‘expectations’ that were created in the other scenario.
First of all….Take out the words, Comparable – Price – Value – Listing, and replace with similar and use the words market positioning in place of the rest. You are placing the home into the marketplace of Buyers. Here’s a question that you need to consider….
What do you do for people? What are you ….truly?
Let me ask you a few questions to help get you there: Can you with absolute certainty and honesty…… 1) Tell your client who will be buying their home? 2) Can you tell them when it will sell…on which date the offer will be coming in? 3)Can you tell them the exact amount that the offer will be? I hope you answered NO. You cannot. You will never convince me otherwise unless you took the listing with a buyer already set up and the listing is a mere formality.
So then why are you trying to predict the future with your clients? Why do we do this? Once we do that we become totally and utterly responsible for that information. It is now your fault if it does not sell. When it doesn’t sell there is something wrong with you. You have failed them. It is harder to approach them for a “Price Reduction” now because of what you said….because Why? They are now losing money….money they never were going to realize, but – the minute that you used the words, price, value etc….you sealed your fate.
To answer the Question…”What do we do?” I would contest that the answer is that we are Market Specialists and our job is to position the home into the market so that it sells. We sometimes refer to ourselves as listing agents. In the old days a listing agent was a person who had a list in his top hat of properties that people wanted to sell. He made his money off of the difference that the seller said that they wanted to receive for their property and what the buyer paid. We are not allowed to do that any more…that is archaic. So is the listing agent. I know that we “list” properties onto the MLS system so we can apply the term that way but do you want to simply, List Properties on the MLS? or do you want to SELL properties? Who buys the properties? Buyers.
When is the actual Market Value of that home truly established?
Once a Buyer has bought a property would you agree that, at that moment, the Market price of that property is now established? That is the only time. We have to position properties into the marketplace of buyers in order to give it a good opportunity to sell. We should be REAL ESTATE MARKET SPECIALISTS and learn how to position the home on the market in order to sell.
Here is the best part. The Seller picks and chooses based on the information that you give them…where to position the home. So then when it does not sell…who’s fault is it? Yours and Theirs and they know why. It is because they decided where to position the home.
If it doesn’t sell within the first 21 days then you need to “re-position” the home. There are some neat ways to do this and some handouts to help people understand Market Absorption as well. I would be happy to go over those items with you if you like. Just give me a call and I will be happy to spend an hour with you on this and help you learn to be a REAL ESTATE MARKET SPECIALIST.
Understand this crucial point: It doesn’t matter how great of a listing agent you are……how much of a nice guy or gal you are….how nice your feature sheets look…..how cool your video tour is….whether or not you “fake stage it” with pictures on the MLS or use a “fish eye” lense or pay thousands of dollars in the newspaper to advertise the home…..NONE OF THAT MATTERS….unless that home is positioned on the market appropriately to sell.
The other benefit of positioning he home appropriately is that you will attract Buyers to you as well. Every listing should pay you 4 times. Your goal should be to attract 2 buyers, you should sell the listing and then sell them a home. 4 deals. The average commission is $4500/ end in this marketplace….Positioning the home is a $18,000 decision every time you do it….Is it worth it to learn this skill?
This could be you!!
Have a great day….unless you choose otherwise.
Kelly Johnston
Sutton Group Showplace Realty Ltd.
604-793-9900
http://www.suttonlysuccessful.com
http://www.suttononline.ca
@happyhomesbc – Twitter
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