Two Things Sellers Need To Understand About Buyers

There's an old saying in sales: "The best way to achieve your dreams is to help others achieve theirs". I wasn't able to run it down to the original attribution, but it is as true a saying as can be imagined. The first thing to understand about any transaction that doesn't flow from the point of a metaphorical gun is that all parties are made better off thereby. The way to get as much as possible for a property is to show prospective buyers that they are getting as much as possible for their money.

As a seller you have real property. As fantastic an investment as it is, it is also completely illiquid. You can't go up to the counter at the grocery store and pay with a couple square millimeters off your lot. You have to have cash and for whatever reason, you have decided you want cash. You can't spend real estate, just like you can't live in cash. Buyers have cash or the ability to get what is cash to you via the loan they take out to cover the difference, and they want a property. Therefore, you have the makings of a real exchange that leaves both parties better off provided that you can persuade them that your property is the one that they want.

What you want is for prospective buyers to be willing to pay you as much cash as possible. Since Make-believe loans are no longer with us, this means you have to show real value to them. At the present time, the only widely available loan that does not require a down payment is the VA loan, and selling to someone with a VA loan has its own set of issues. What this means is that the buyers need a down payment, and they are going to have to qualify for a real loan with an ongoing income stream. Neither one of these is easy. Buyers understand money they had to build up for the down payment dollar by dollar out of their paychecks is real money much more clearly and at a more visceral level than they have the same understanding about money they borrow. They understand the payments they are going to have to make at least as clearly, and neither one of these is subject to the same kind of handwaving "let's pretend you can do it" loan qualification as they were a few years ago. Therefore, buyers are aware of value today in a way they were not aware of it a very few years ago.

One thing that you must understand in your bones before your property hits the market is that buyers are shopping for the lowest possible price for the best property they can get. Nobody ever bought a property because it was that property's "turn" - quite the opposite in fact, as the longer it's on the market, the less valuable a property is perceived as being. They bought it because it was the best value for them that they could afford. If there's a better property out there cheaper than yours, that's the one buyers will want. They will not automatically come to your property when that one sells, either, unless you're the best remaining value on the market. If another property comes on the market that's a better value, that's the one people will want instead of yours. It's what you did when you bought. Understand that's what everyone else wants to do when they buy. You are competing for those buyers attention and you are competing for their desire.

Fortunately for sellers, every buyer values property in slightly different ways, and therein lies your potential for profit. Some buyers want the absolute cheapest property they can get, while most people will pay more for certain amenities. But what every single buyer has in common is that you have to offer them something that they perceive as being more valuable to them than the difference in price between yours and the cheaper property down the block or around the corner. Not more valuable to you, the owner. More valuable to them, the buyer. Otherwise, they're going to buy the cheaper property, or at least make an offer on that one instead of yours.

Each and every buyer has a mental list of amenities they are willing to pay extra for, and ones that they are not. If your property is priced higher because you expect them to be willing to pay more for something in particular and they are not, your property is stricken from their list. The more things you try this with, the narrower your marketing niche. This is why you need to understand how prospective buyers think - what marketing folks call "hitting a target market" You or your agent need to understand the target market for your property, and work to hit it. This is not to say that no property ever sold to someone who wasn't in the precise target market, but those people are not usually willing to offer as much money, which defeats your aim in properly marketing the property because you want the people who are willing to pay the most for your property. People are willing in general to pay more for beautiful kitchens, good floor plans, extra bathrooms and nicely landscaped yards they can actually enjoy, but not every person and every target market is so willing. Your area, your neighborhood, and your location also influence your target market, and most particularly, the target market's willingness to make an offer and their willingness to make a higher offer in negotiations. Practically everything else in the way of amenities means you are trying to hit a narrower target market in order to get the most money, and any time you narrow your appeal, you have to make even more effort to be more attractive to the prospective buyers who are left in your target market.

Another thing to understand is that if the prospective buyer cannot see the property with their own eyes, they are not likely to make an offer, and they are definitely not going to make a good offer. The phrase "pig in a poke" comes to mind. Fewer people who are able to see your property means a lower selling price. What this means in practical terms is make the bar to seeing the property as low as you possibly can. Yes, it's a pain when someone wants to see the property and you had a quiet day at home planned, but think of it this way: Your property is probably valued at least $600,000 (at least in San Diego that's a good ballpark mode, in the mathematical sense of the word). If it makes a difference of 1% to your sales price, you are effectively paying yourself $6000 for a month or less of making your property accessible - and 1% is a very low estimate of the difference this makes to sales price. Put the heirlooms away, put the dog in a run or a portable kennel, get a lockbox on the door so people can see it when you or your agent aren't there (both conditions make it much less likely you'll get an offer). If it's tenant occupied, anything you spend to negotiate with them to make the property completely accessible will likely more than pay for itself. When my clients ask me "can we see the property today?" and the answer is "No, because it's tenant occupied and we need to have 24 hours advance notice" what do you think happens? We go see other properties, and if they like one of those, they're no longer interested in yours. When that happens, you're left with something you don't want - an unsold property. If you still wanted it, it wouldn't be on the market, now would it?

Caveat Emptor

Original article here