A Home Selling Strategy That No Longer Works (And Why You Should Avoid It)
The process that people use to buy a home has changed, and that means your home selling strategy must change if you want to get top dollar when it comes time to sell.
This change is not exactly recent, it crept into the Tallahassee real estate market as homebuyers switched to the internet (from using real estate agents) to find a home. In the past, REALTORS were the "gatekeepers" of the information on homes for sale in Tallahassee. If you were a buyer, you needed to link up with a Realtor with MLS access in order to find all the homes that could meet your needs.
But times change.
Now, if you want to buy a home in Tallahassee, you do not need to speak with a real estate agent to simply find all the homes for sale in Tallahassee, you simply just use the internet to find the best, FREE, property search tool and use it to look at thousands of properties at any and all times of the day or night.
So if homebuyers are no longer restricted to Realtors and have instant and immediate access to all the listings on the market, don't you think there might be a smarter way to market a home for sale?
The Good 'Ol Days
Back in the "good 'ol days," when there were no internet, no computers, and no widespread sharing of information, real estate agents were needed if you wanted to shop for homes. Back then, a real estate agent was your best property search tool.
Because of this, the value of homes was something that required knowledge and expertise, and there was quite a bit of "wiggle room" because nobody had consolidated all the information in one location. While appraisers had data on what had recently sold, they did not have a great grasp about current market conditions (supply).
Real estate agents knew about the listings in their offices, and they tried to share information through local Boards of REALTORS with listings in MLS books. But it wasn't like anyone could memorize the thousands of listings and the tens of thousands of sales that had occurred.
When a homeowner wanted to sell a home, they were given an opinion of value by a real estate agent (which had a huge margin of error).
Conventional thinking was "price it high so as to not leave any money on the table." Since nobody really knew exactly what the home would sell for, this pricing strategy made good sense and everybody knew the asking price was negotiable.
Old Strategy Used By Homebuyers
Since there was no singular source for "all the homes on the market," buyers used location as their primary home search.
When I say location, I mean a specific neighborhood or part of town. They would drive around (with or without a real estate agent) hoping to see signs and open houses. Agents would specialize in specific neighborhoods and the smarter buyers would work with an agent who really knew that part of town.
If a buyer found a home they liked, they would make an offer. If they couldn't come to terms with a seller, often times a buyer would wait for the seller to get more realistic. In other words, buyers would come back and make another offer later. They were focused on a limited location and a limited pool of potential homes to buy, so they were limited in what they could do.
NOTE: Buyers do not come back any longer. This is a critical reason why sellers must change their strategy.
How Buyers Shop For A Home
94% of homebuyers are using the internet during their home search these days (according to numerous polls conducted by the National Association of REALTORs).
Instead of starting with a specific neighborhood when they start their search, they are starting with a city, a county, or a much wider section of a local market. Why? Because they can! Information has been consolidated and the best property search tools expose buyers to more of the market than they ever could have seen in the past with a real estate agent.
This isn't to say that location is not still a critical element of a home search, it's just not the starting point of a home search any more. Price is.
Buyers start their search with a price range. If you are priced $1 more than the top of the range they use, then your home will not be seen. Every dollar you pad your asking price with might very well reduce the size of the pool of buyers who see your home online. Furthermore, the higher you price your home, the nicer the homes with which you compete will appear.
NOTE: When you market a home today that is priced too high, you are marketing it to people who will not buy it. They are looking to spend that amount of money, but they want more home than you have. They will not buy your home when you lower your price (they won't come back), because they are planning on spending more money and want a nicer home. Thus, you lower your price to market your home to a new set of buyers, not to entice those who have already rejected it.
A Smarter Way To Market A Home
The key to understanding the best way to market a home online is to understand human emotion (which drives the purchase of homes) and to understand the current methods buyers use to find a home.
As a marketer, I understand that people want what they cannot have, thus scarcity (or the appearance of scarcity) is the friend of the seller.
Buyers today have been trolling the internet looking for the right home for nearly a year. They have been ready to make a purchase for the past thirty to sixty days, and they are just waiting for the right house to hit the market.
Your initial asking price is critical. If you price it too high, the people ready to buy a home like yours won't even see it (their refined property search tool will have a price range too low to see your home).
If you price it too low, you also will not be seen by the people most willing to pay you top dollar for your home. A low price however will get you immediate offers, as your home will be "a steal" to people who are looking at homes with less value.
So the smarter way to market a home is to put it at "the right price" that the ready-to-buy buyers will want to jump on.
The right price will bring more than one offer, and that is the smarter way to market a home. If we can generate more than one interested buyer, then we can negotiate your price up to its full market value, even if it ends up being higher than your asking price.
Learning From Others
If you have ever used e-Bay, then you know that you can get more money for something by getting more buyers to the negotiating table. I bet if you check out e-Bay today, you can find a gold watch for sale for less than $10. But I bet when the auction concludes, it will have sold for much higher!
I recommend we learn from e-Bay and work to attract multiple buyers to your home. A highly competitive price will do that. Remember, buyers are in the market (on average) for more than 9 months. We know that only the "ready buyers" are worth pursuing, as the newbies will still be learning the ropes and not yet ready to make a serious offer.
Ready buyers know a brand-new listing that is priced right will sell right away, and they know that there are other buyers competing for the best listings. They have already been through the phase where they foolishly want to make low-ball offers, so a properly priced listing will get a full-price (or higher) transaction from a ready buyer. If you price your home correctly at the onset, you will attract the ready buyers in the market.
Sell A Home In Tallahassee
I titled this article "A Home Selling Strategy That No Longer Works," and that is not entirely accurate. The strategy of pricing high and then lowering over time will eventually get a home sold (so technically it does work), it just does not get as much money for the seller as using a smarter approach.
Finding the "sweet spot" in home pricing is the difference between getting top dollar or getting far less at closing. Take the time to hire a real estate company that can show you not only WHAT your home is worth, but WHY their recommended price will net you more money at the closing table. I have seen homes sell for up to 12% lower simply because the home seller had the wrong initial asking price.
If you want to know what your home is worth and what we can do to help you get top dollar for your home, just drop me a note and we'll schedule a time to preview your home and give you the guidance that you need.