Achieving a Premium Price

In achieving a premium price, the big question is what method of sale will you use. And what ‘asking price’ will you list your property as to maximise the sales price and to get it sold? Really isn’t that what selecting the right agent, pricing your property and choosing a method of sale is all about?

It is all about getting your property sold for a great price...indeed a ‘Premium Price’.  Let’s get clear first on what exactly is a ‘Premium Price’ and how to achieve it for your property. But, first here are the three Methods of Sale and their attributes.  

 

A ‘Premium Price’ is a ‘High Price’ that’s the result of a highly motivated buyer, who is ‘ready-willing-and-able’ to buy, falling in love with your property and deciding they absolutely MUST own your property. That’s when a buyer will become “Emotionally-Motivated’. They stop thinking with their ‘head’ and start following their ‘heart’. And this is what drives prices up. Studies have shown that ‘Emotionally-Motivated’ people will pay more for something if they fall in love with it and want it badly enough. Supporting those studies is research carried out by the Real Estate Institute (QLD). They have found that 30% of buyers paid more than they expected to pay for their property.

Ok, you should be thinking, “I want a premium price’. I want one of the ‘30%’ who go over their budget to become emotionally-motivated for my property.” (If you’re not thinking that, it probably means you just want a ‘quick sale’ and are happy to take the first price, not necessarily the best price and that’s ok if that’s where you’re at.)

So let’s look at how to create a ‘Premium Price’ for your property. Before you decide on what method of sale is best for you, consider this question...

“What are the 2 things you think about a property that’s been on the market for a long, long, long time? Well, if you ask a genuine buyer that question, they invariably answer with...

a) — it’s either ‘Over-Priced’, or
b) — there’s something ‘Wrong With The Property’.

That’s what pretty much all buyers think about properties that have been on the market too long. This is the REAL problem all property sellers face. The fact is, the longer your property stays on the market unsold a ‘STIGMA’ grows around it, and the stigma grows and grows and grows until it becomes a self-fulfilling-prophesy causing your property to be bypassed by ready-to-buy motivated property buyers. You don’t want that! Here’s the other thing...this ‘STIGMA’ occurs quicker than you think...

...It starts to grow around week 5 of a property being ‘on the market’. (‘on-the-market’ refers to a property that has been correctly ‘exposed’ to the maximum number of buyers via the various forms of marketing and promotion. To me, a poorly marketed property isn’t really ‘on-the-market’.) 

Fact is, most of the ‘ready-to-buy’ motivated property buyers will look at your property in week 1 to week 3 of it going on the market. If you haven’t sold it by week 5 or 6 of going ‘on the market’, you may be looking at an uphill battle to get your asking price.

Here’s why...

There are 2 KIND OF BUYERS:

1) Your best buyers are called A-BUYERS – they’re buyers who have done their research. They’re ready, willing and able to buy now. That means they’re ready to make a ‘BUYING DECISION’. When a buyer becomes an ‘A-BUYER’ they’ll often make a decision within 30 days give or take.

2) All other genuine-buyers fall into the ‘B-BUYERS’ category – they’re in ‘RESEARCH-MODE’ and because they’re still trying to understand values and maybe even still trying to work out what they what they can and can’t afford;
they’re not ready to make a ‘BUYING DECISION’.

Before you can make an informed decision about which method is best, you need to consider ‘BUYER BEHAVIOR’:

– The majority of ‘A-BUYERS’ take a rational approach to their buying decision to begin with. Or at least that’s what they try to do.

– The trick then is to not give them any ‘rational reasons’ why NOT to look at your property.

– If they think you’re wanting too much for your property or if they feel it’s out of their price, they’ll overlook your property.

Losing there ‘A-BUYERS’ is where the rot really sets in.

Here’s why...

– If you don’t attract ‘A-BUYERS’ you’ll be left with only ‘B-BUYERS’ who aren’t ready to buy because they’re just in ‘RESEARCH MODE’. Some people call them ‘tyre-kickers’.

– And let’s say you finally realise you’re expecting too much for your property by week 5 or 6, well unfortunately, it’ll be too late, all of your ‘A-BUYERS’ plus your ‘B-BUYERS’ will have move on by then.

If’s funny, over the years I’ve heard sellers who are struggling to sell say this... ‘Won’t they just make an offer despite what we’re expecting?’ Mostly they won’t.

– They either don’t perceive the value in your property. or...

– They are disheartened by how much you’re expecting for it, or...

– The property simply isn’t what they want.

This leads me to my final point what influence price and how to create a ‘PREMIUM PRICE’.

FACT IS - ‘PRICE IS A DETERRENT’ to achieving a ‘PREMIUM PRICE’

What this means is as you put a price on your property you draw attention to it. The listed ‘asking-price’ is one of the main indicators buyers use to determine if it’s a match or not.  If the listed ‘asking-price’ is in their budget, they’ll look at it.  If it isn’t, and especially for well researched buyers, they’ll ignore it.

Price then is often a ‘DETERRENT’ for a buyer making an offer or even just to view a property. The price you place on your property could be stopping the right buyer from looking at it. As I said earlier, your best buyers will inspect your property when it’s new to the market provided the price doesn’t scare them away and provided you’ve done everything possible to ‘maximise buyer enquiry’.

...And in which case, if you haven’t sold it by week 5 or 6, many buyers viewing your property will automatically assume it’s either overpriced or there’s something wrong with it.  

The Solution? It’s simple really, all you have to do is remove any possible ‘PRICE-DETERRENT’.

This is how to do it...

1) THE GOAL: Attract as many ‘A-BUYERS’ as possible whose ‘BUYING-CRITERIA’ matches your property and get them to inspect your property within the first 3 weeks of your property being on the market.

2) THE PROMOTION: Your marketing must depict all the best elements of your property. Show your property in its best light. The better your marketing, the easier it is for the right buyers to recognise your property as a great match for them. And that makes it easy for buyers to decide to inspect your property.

3) REMOVING THE ‘PRICE-DETERRENT’: Here’s how...you can either go to the market with ‘no-price’ (Auction), or ensure your ‘asking-price’ ( ‘list-price’ ) is not a deterrent and elicits offers and gets buyers to the negotiation table fast. The ‘wrong-pricing’ will only confuse, mislead or drive them away. Going in with a high price will deter buyers. Going in with no price or a low price will attract more motivated buyers to view your property.

4) GETTING IT SOLD: You need to place pressure on your buyers to act. That’ll happen if motivated buyers fear losing the property by not acting fast enough. The ‘fear of loss’ is a powerful motivator. Without it, buyers will be slow to make a decision. And you don’t want that. A buyer who perceives the value in your property will automatically assume that there will be other buyers out there who’ll also perceive similar value. They’ll feel the pressure of competing. They’ll fear they’ll lose the property. And this will result in a serious buyer making an offer
sooner rather than later.

It all comes down your ‘PRICING-STRATEGY’.  Generally speaking you have 2 PRICING STRATEGIES to choose from...

1) ‘TOP-DOWN-PRICING’ Strategy – this is where there’s an actual asking price, like say, $750,000. This version of ‘List-Price-Marketing’ produces a sales result usually below the asking price. However it should be noted price doesn’t always go down. For example in a ‘trending-up’ market where there’s lots of buyer competition it’s possible for the property to sell for above the list price. This tends to be the exception rather than the rule.

2) ‘BOTTOM-UP-PRICING’ Strategy – This is where the property’s advertised asking price is expressed for example as either –

a) “Offers from $x”

b) “Offers over $x”

c) “$x plus”

d) “No-Price (as in an Auction or Expression of Interest)

Here’s the beauty of a ‘Bottom-Up-Pricing’ strategy (e.g. “Offers over” or Auction)...

When someone is ‘EMOTIONAL’ about a property, when they fall in love with it, they want that property so badly that they become a little irrational about it. This ‘heightened state of desire’ often results in buyers throwing their budget out the window which leads them paying much more than they had planned, in some cases it causes them to rob their piggy bank (i.e. borrow to the max).

This is how a ‘PREMIUM-PRICE’ is created for a property. It’s created when a ‘rational’ yet motivated ‘A-BUYER’ falls in love with a property. This what happens when you remove or lessen the ‘PRICE-DETERRENT’. You attract rational buyers who fall in love with your property and the price goes up (and with the right marketing it’ll go up and up even more).

The goal of ‘BOTTOM-UP-PRICING’ is to get a lot of buyers to your open. To create a real buzz. With the expectation that amongst the many buyers inspecting your property, one or more buyers will fall in love with your property and become and ‘EMOTIVE-BUYER’. The kind that goes over their budget. By removing the ‘PRICE-DETERRENT’ you’ll be attracting not just ‘A-BUYERS’ but rational buyers as well. The more the merrier.

I’ll say it again, remember 30% of ‘A-BUYERS’ go over their budget. There is no ceiling to how high the price can go. Price goes up and the more ‘EMOTIONALLY-ATTACHED’ the buyer is, the price goes up even more. This results in a ‘PREMIUM-PRICE’.