|
|
The
key to achieving the best net price for our vendors is to have
buyers competing with each other to buy their property.
|
Priced
property potentially attracts the widest level of enquiry. But
the price level advertised is vital if this market approach is
used in order to gain the best price.
|
|
How
do you determine that vital price? |
| We use a range
of techniques keeping in mind the factors listed below.. |
 |
Buyer
Enquiry |
|
| Buyer
enquiry will be at its highest when your property is first introduced
onto the market. If your price is seen as above the
current level for similar properties buyers could take it off
their list without visiting. |
| You
may think this will not matter as perhaps one or two buyers who
can afford the price will visit and you anticipate being able to
negotiate with them. However if their first impression is that
other properties they have seen are better value you will have
set your property up as a “pinball listing” one which
bounces the buyers back to other properties perceived as better
value. You will have helped sell your neighbours’ property rather
than get a better price for your own. |
| Salespeople
keen to get you to list with them may “buy the listing” by
recommending a list price above the current market saying you can “always
come down”. Why would they do that? Overpriced listings help
them sell other properties on their books and after some
time on the market (but not in the market) their more desperate
vendors will be easier to negotiate down for their persistent buyers.
Rather than buyers competing with buyers and the sales team working
for you, the vendor, you may well find yourself faced with isolated
or no offer situations and eventually accepting a lower
price than a well managed marketing plan would have achieved. |
| Bait
marketing where buyers are enticed through using wide
price bands or unrealistic starting numbers associated with phrases
like, Bidding from …. , Buyer enquiry over…., sets
out to attract the wrong buyers for the property.
These are buyers who cannot afford it. This might benefit the
agents who may be able to direct enquiry to other properties
but can inconvenience buyers. Worse there could be a continuous
source of negative market feedback from visitors (who can’t
afford your property) which would be used as a conditioning lever
to encourage you to accept a low price. |
| Time
on the market is a critical consideration. The longer
your property remains on the market the more negotiating power
shifts to the buyers. However you need some time on the market
to get the property introduced to the buyers it will appeal to. |
|
Re-active
Marketing? |
|
| Reactive
marketing is slow and expensive. Some agencies rely
on advertising to spark enquiry together with phone calls after
checking past diaries and recent memory for possible purchasers.
This process can take weeks and if you receive early offers you
will have a risky choice to make, whether to accept or reject
them, without knowing all possible buyers have been reached. |
| Agencies
dependant on the reactive approach often rely on Auction or Tender
marketing with significant vendor paid advertising to attract buyers
and create a deadline for them. These strategies are risky if not
managed well and require more time and promotional cost than modern
methods. If the best buyers are not reached this way or don’t
respond to the advertising campaign all the pressure goes back
on their vendors. |
You
however are in luck. If you are reading this you have
discovered an agency that has proactive database systems
in place to provide quick contact with all their potential
buyers who would be interested in your property. They will
have back up systems to get in touch with others active in
the market place who could know of buyers.
|
| Their
systems will also enable them to link interested buyers to
your property and use email or phone calls to advise them when
an offer is about to be presented, ensuring all your potential
buyers have a chance to compete with each other. |
They
will give you the option of “a preview by invitation” and
an opportunity to assess the level of demand before finalising
your price or marketing plan.
|
|
How
do you assess a proposed marketing plan? |
|
We
assume by now you will have rejected a General or Open
Listing – you will have rejected commissioning
salespeople to work against each other and for their buyer against
you.
|
And
you will have rejected Private Sale – you
will have rejected avoiding most buyers who want the convenience
of dealing through an agency and attracting the most independent,
experienced and determined negotiators from the remaining minority.
|
This
leaves exclusive agency with or without a price.
|
|
No
Price Marketing |
|
No
price marketing (usually Auction or Tender) is often
promoted as a way to have buyers emotionally involved with
your property without price as a barrier. This does not always
lead to the best results for vendors. All agencies can point
to past successes with Auction and Tender marketing plans and
some advocate one style more strongly than another. The continuing
debate among the experts about which method is best should
encourage you to have reservations that any particular system
will automatically be right for your property.
|
|
Auction |
|
For
an Auction plan to work well on the auction day,
there needs to be 2 or more buyers willing and able to pay cash
for your property at a level higher than your reserve. For your
protection that reserve needs to be close to the price a current
market guide indicated your property would be worth when you
first put your property up for sale. This is obviously not easy
to achieve for all properties but works exceptionally well for
some. Competing buyers aware of what others are willing to pay
for your property can confidently offer a premium price they
would not otherwise have tendered.
|
|
Tenders |
|
Tenders
attract considered offers where buyers are influenced
by their advisors, valuers and lenders without the stimulus
of direct competition with others willing to buy the property.
The range of prices in a tender may be very large indicating
the gaps between viewing the property as an investment or as
a desirable home attracting a premium price. However many buyers
who “just miss” in a tender later report they would
have gone higher if only they had known how close they were.
|
|
Why
publish a price? |
|
We
know many buyers are not keen on either of these processes wanting
to avoid the uncertainty, expense, stress and possible lack of
personal attention and support from their salespeople that Tender
and Auction sales methods can impose. They respond strongly to
properties they see as fairly priced in comparison with alternatives
and which provide them with the opportunity to organise all aspects
of the purchase by negotiation in consultation with their salesperson.
This process, coupled with modern databasing techniques, can
develop elements of both the Auction and Tender methods in a
multiple offer situation.
|
| Choose
as your agency the one that has the best strategy to achieve
the best net price. It is clear that the marketing strategy
that will achieve the best net price for you will depend on a
wide range of factors including: |
>
|
The
state of the market |
>
|
The uniqueness
and presentation of your property |
>
|
The
time you have available to achieve a satisfactory sale |
>
|
The level
of promotional support you want to apply |
>
|
The
negotiating skills of your marketing team |
>
|
The acceptance
of different methods by buyers in your area |
>
|
The
financial capability of buyers attracted to your location |
|
| All
of these can be reflected in market demand and will be assessed
by our marketing team after the initial “preview by invitation” we
will arrange for your property. |
Armed
with the feedback from this pro-active approach we can determine
with you which marketing plan will give you the best opportunity
to find the most interested and able buyer and discover the highest
price they will be willing to pay for your property.
|
for
more details, please contact me:
|
David Morley
Tandem Realty Ltd MREINZ
Licensed Agent, REAA 2008
|
|
