Two Things Sellers Need To Understand About Buyers

| | Comments (0)

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


Delicious Bookmark this on Delicious StumbleUpon Toolbar Stumble It!
Please be civil. Avoid profanity - I will delete the vast majority of it, usually by deleting the entire comment. To avoid comment spam, a comments account is required. They are freely available, and you can post comments immediately. Alternatively, you may use your Type Key registration, or sign up for one (They work at most Movable Type sites) All comments made are licensed to the site, but the fact that a comment has been allowed to remain should not be taken as an endorsement from me or the site. There is no point in attempting to foster discussion if only my own viewpoint is to be permitted. If you believe you see something damaging to you or some third party, I will most likely delete it upon request.
Logical failures (straw man, ad hominem, red herring, etcetera) will be pointed out - and I hope you'll point out any such errors I make as well. If there's something you don't understand, ask.
Nonetheless, the idea of comments should be constructive. Aim them at the issue, not the individual. Consider it a challenge to make your criticism constructive. Try to be respectful. Those who make a habit of trollish behavior will be banned.

Leave a comment

Copyright 2005-2024 Dan Melson All Rights Reserved

Search my sites or the web!

The Book on Mortgages Everyone Should Have
What Consumers Need To Know About Mortgages
What Consumers Need To Know About Mortgages Cover

The Book on Buying Real Estate Everyone Should Have
What Consumers Need To Know About Buying Real Estate
What Consumers Need To Know About Buying Real Estate Cover

Buy My Science Fiction and Fantasy Novels!
Dan Melson Amazon Author Page
Dan Melson Author Page Books2Read

Links to free samples here

The Man From Empire
Man From Empire Cover
Man From Empire Books2Read link

A Guardian From Earth
Guardian From Earth Cover
Guardian From Earth Books2Read link

Empire and Earth
Empire and Earth Cover
Empire and Earth Books2Read link

Working The Trenches
Working The Trenches Cover
Working the Trenches Books2Read link

Rediscovery 4 novel set
Rediscovery set cover
Rediscovery 4 novel set Books2Read link

Preparing The Ground
Preparing the Ground Cover
Preparing the Ground Books2Read link

Building the People
Building the People Cover
Building the People Books2Read link
Setting The Board

Setting The Board Cover

Setting The Board Books2Read link

Moving The Pieces

Moving The Pieces Cover
Moving The Pieces Books2Read link

The Invention of Motherhood
Invention of Motherhood Cover
Invention of Motherhood Books2Read link

The Price of Power
Price of Power Cover
Price of Power Books2Read link

The End Of Childhood
End Of Childhood cover
The End of Childhood Books2Read link

Measure Of Adulthood
Measure Of Adulthood cover
Measure Of Adulthood Books2Read link

The Fountains of Aescalon
Fountains of Aescalon Cover
The Fountains of Aescalon Books2Read link

The Monad Trap
Monad Trap Cover
The Monad Trap Books2Read link

The Gates To Faerie
Gates To Faerie cover
The Gates To Faerie Books2Read link

Gifts Of The Mother
Gifts Of The Mother cover
Gifts Of The Mother Books2Read link

C'mon! I need to pay for this website! If you want to buy or sell Real Estate in San Diego County, or get a loan anywhere in California, contact me! I cover San Diego County in person and all of California via internet, phone, fax, and overnight mail. If you want a loan or need a real estate agent
Professional Contact Information

Questions regarding this website:
Contact me!
dm (at) searchlight crusade (dot) net

(Eliminate the spaces and change parentheticals to the symbols, of course)

Essay Requests

Yes, I do topic requests and questions!

If you don't see an answer to your question, please consider asking me via email. I'll bet money you're not the only one who wants to know!

Requests for reprint rights, same email: dm (at) searchlight crusade (dot) net!
Learn something that will save you money?
Want to motivate me to write more articles?
Just want to say "Thank You"?


Add this site to Technorati Favorites
Blogroll Me!
Subscribe with Bloglines

Powered by FeedBlitz

Most Recent Posts
Subscribe to Searchlight Crusade

About this Entry

This page contains a single entry by Dan Melson published on June 19, 2023 7:00 AM.

Which Makes More Difference To Your Future - Buyer's Agent or Listing Agent? was the previous entry in this blog.

First Time Buyer Programs and Multi-Family Housing is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.


My Links