Proper pricing when listing homes is the name of the game from this point forward at our Orlando Watson Realty office. With a record number of homes on the market and a limited amount of buyers it is extremely important to advise sellers on the real market value of their home, both at the listing appointment and during the listing contract period.
To drive home the importance of listing a home at its real value I brought to our sales meeting a twenty-dollar bill. At the beginning of the meeting I announced that a friend has asked me to sell the bill for him at today's meeting. I placed it on the dry erase board and wrote the offering price my imaginary friend asked me to sell his $20.00 for. I received a few chuckles when I wrote down the $50.00 list price. I further explained that any agent at the meeting that wishes to purchase the bill must have the cash with them at the meeting. The point being that there would be a few in my meeting not qualified to buy much like buyers we meet in our day to day business. Then I asked if there were any interested agents wishing to purchase my $20 for $50 and of course I had no takers.
Continuing on with the meeting for the next 15 minutes, we discussed several other important real estate topics.
After 15 minutes, I turned my attention back to the $20. With still no offers, I suggested that maybe I am not advertising it properly and enough. So I took out a colored dry erase marker and wrote a big “for sale” over the $20 with an arrow pointing to the bill. This advertisement guaranteed that every potential buyer in the room saw the $20 for sale at $50 and yet...still no offers.
30 minutes into our meeting, I reduced the price by $5.00. No offers
5 minutes later I offered a $5.00 selling bonus to the agent who would give me $40.00 for my $20.00. Even with this agent bonus, no offers.
I lowered the price yet again to $30.00 and told my agents that my friend had someone else look at this $20.00 and it was definitely worth every bit of his asking price. This tactic did not sway anyone to make an offer.
I then informed my group of agents that if I sell this $20.00 for my imaginary friend, he promised that I could sell other $20's for him in the future. Still, no offers.
Before further reducing the price of my $20, I made sure that the agents knew that my friend needed to realize a certain amount of money so he could buy the 100 dollar bill he had his eyes on. This admission netted the same result, no offers.
Finally I made sure that they understood that at $30.00, this was the lowest priced 20-dollar bill being offered for sale at this meeting. That too, produced no offers
With just a few minutes left in the meeting a quick thinking agent made an offer of 15 dollars cash, then seconds later another agent offered 17 dollars and I sold my 20-dollar bill.
What were the lessons learned?
Value is determined by a set of facts as they exist at the time a seller is trying to sell. You cannot get more than a property is worth by increasing the advertisement, you cannot get more than a property is worth by offering special incentives, and a property’s value is not determined by a seller’s need or opinion of value. You could fly an airplane directly above an over priced listing 24 hours a day with a big banner flying behind advertising the home and if the home is over priced, even with this type of advertisement, it will not sell. Property is worth what the market determines it to be worth. In this case, the $20 sold for less than real value.
Possibly because it was over priced to begin with?
With a limited number of qualified buyers searching the market for the best use of their hard earned dollars and an ever increasing listing inventory, our agents are advising sellers to carefully consider our market opinions and list their homes within our suggested price point range.
The twenty-dollar bill experiment gives them more confidence in their ability to advise their seller’s correctly about value and pricing.
Related Florida real estate views:
Will it sell for a dollar?
Florida Realtors who test the market may receive a failing grade.
Home not selling? What does your agent say?
- Greg Staker Watson Realty Corp. 407-304-0255
2 comments:
Your post is right on- but leaves one very important thing out- the transparency of the real estate market due to the Internet.
Gone are the people "falling off the turnip truck." They or their agents can line up listings side by side and compare from their computer-they can and do.
That is true Terry however, even with the ability to compare pricing for themselves, many still elect to overprice their listing or home. I am not sure who said it but the quote.."You can prove everything with facts, except the truth." applies to some agents and sellers in today's real estate market.
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