Thursday, June 21, 2007

Delayed Response

Pricing right at the beginning will usually MAKE you money in the end. I am telling you this because I have seen sellers lose money, yes, by not listening to me. Here is the "why" and "how". Let's just say, for example purposes (I am protecting identities, but this is close to a recent scenario), that we have a house that by all reason and statistics, should be priced at $579,000. I have done a market analysis for the seller. I have taken into account the competing properties, what has gone "under deposit", and what has recently closed. I have to, of course, look at the market trend. Is it a down, stable or increasing market, in terms of value? We are looking at today's market, which is down, that is, prices are less than they would have been a year or six months ago. Thus, the information I give the seller has enough basis to be predictable, barring a greater rate of decline. The sellers, however, want to list the property at $599,900-- $20,000 higher than my recommendation. We proceed with the listing and do get a number of showings. Many showings. No offers, however. Why? When many buyers look at a property, and don't make an offer, then they are "picking" other properties. Ones that are more desirable in the price range. So, our subject house is really helping to sell the other properties. (Pretend you are the buyer. You walk into this house that really is not as good a value as others in the 599,900 price range. The next house you go into is far nicer, and it is the same price. You are sold! The incorrectly priced house helped you buy the other one.)

After a couple of months, the seller agrees to lower the price. By $10,000. That's really not going to make a dent in the perception of this property by the market place, but that is what the seller wants to do. At this point, other properties have sold, and the market has dropped a bit more. The seller really should have reduced to $579,900, if not the $569,900 at this stage. But he is stubborn. Again, many buyers look at the home. There are no offers. Other houses sell first. The seller squeaks down another $10,000. Now he is at the $579,900-- but this is four months later! Ineffective. He lost his window, and his price should really now be $559,000 to sell. This story continues with the incremental reductions until the home finally sells for $540,000. Guess what? If the seller had originally priced at $579,900-- he would have been sold, probably between $560,000 and $570,000. So, in the end he lost over $30,000. By not being responsive. This market is very competitive. You have to price "ahead" of the curve to sell first. If you don't-- the market will tell you. If you do, you'll make money.

Friday, June 8, 2007

Salesmanship

I am often reminded of what good salesmanship is when I experience poor salesmanship. This happened to me the other day at a car dealership. I was there to get my car repaired, so stopped into the showroom to take a peek. There was a new car I had been dreaming about, and had already done some research for "the future". A salesman, whom I'll call "Joe", walked up to me and commented how nice the car was. I told him I was "just looking", as I had my car in the shop. I agreed it was a beautiful car, and asked what model it was. He told me it was the "M". Being my sarcastic and sometimes blunt self, I said, "Oh, the version with the bad gas mileage". Joe then strolled up to the windshield sticker and read it to me, with a straight face "12 around town 17 highway, so you should really get 22 highway". I said that was nonsensical, the other version was better with gas. I peered into the car and saw an odd cupholder that protruded towards the passenger seat, just waiting to get busted by my husband's knee. I commented about it. Joe initially tried to defend it and said it was a cool design, but finally offered it could be removed. He then proceeded to tell me about the the costs of the different models and walked away.

What's wrong with this story? First, the salesman should have asked me questions! He should have had a clue I may have been a more serious buyer, because it was evident I had done some research. He may have found out more about me and what attracted me to the car. He should have established some rapport. He may have asked what my delay was in getting this car I really wanted. He should have answered that important objection-- the real objection to overcome. Instead, he countered every single objection, like about the cupholder. One of the basic principles of salesmanship is that small objections often indicate interest. A good salesperson does not have to counter every one of them. Especially if it is evident there is genuine interest. A good salesperson should look for the real objection. He never even got there with me. Instead, he told me about the different prices and models, and I had not even asked. I already knew which car I wanted. He lost a potential sale. Interestingly, the very next day I got a phone call from the dealer from whom I originally purchased my current vehicle. He simply said, we noticed your note is almost up, call us if we can do anything for you. You can bet on whom I'll call when I am ready to "go for it".