1. Price UNLOCKING HOME SALES. Is the property priced lower than homes a buyer would consider comparable?

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1 In weakened real estate markets, controlling relocation costs calls for exceptional skill at home marketing. Experience shows that success comes only when all of the right selling strategies Price, Condition, Differentiation, and Readiness to Act come together. Fail to implement one, and the home may take a long time to attract a serious buyer. As logical as these four elements seem, they often are not applied consistently if at all. A closer look shows why implementing them together is key to unlocking sales.

2 1. Price Is the property priced lower than homes a buyer would consider comparable? Despite the lessons of recent markets, sellers often think of property as having an inherent value, putting more emphasis on how much they paid for the home, or on how much it could or should ultimately appreciate. Few sellers consider the buyer s point of view adequately, specifically the principle of substitution, which states that a buyer will always choose a lowerpriced equivalent, whether it be a house or a hose. This principle looks at real estate more primarily as a commodity, and comes into play far more dramatically in weak, or buyer s markets, when homes must be priced to offer the best value relative to comparable homes. Reducing the list price of an overpriced home in stages, as the market declines, only guarantees that it will remain overpriced compared to its competition as the buyer chases the market down. Even in a stable market, a relocation home loses value once it has been listed. This is true because, unlike a seller who can withdraw the home from the market at will, the transferee must sell, and the pool of potential buyers does not change rapidly enough to create opportunity. In short, a successful pricing strategy has to aim at an outright win, not a tie, versus comparable homes for sale. Best Practice: When pricing a home for sale, sellers should consider the status of the local market, the absorption rate, and the number of homes for sale in the same price range. The price should be slightly less the competition s price and never more than the market value. Page 2

3 2. Differentiation Does the property offer clear advantages to a buyer compared to similarly priced homes? All homes are not created equal but sometimes potential buyers need some help to see it! Advantages can come in many forms. Some may be immediately apparent, such as new granite countertops in the kitchen. Others may be less obvious but no less valuable. Access to public transportation, an efficient floor plan, and low heating bills are pluses with value, but only if they are pointed out. Still others are not attributes of the house at all, but attract buyers nevertheless. For example, preferential financing and a home warranty are competitive advantages that can be manufactured and, in the former case, can augment the pool of potential buyers by increasing affordability. A word of caution, however. Differentiating features are advantages only if they meet a buyer s needs, and not all buyers agree on value. A pool may be a requirement for one buyer and a liability for another. Bottom line: the property must set itself apart from competing listings in a limited number of meaningful respects. Best Practice: Seller should offer incentives to potential buyers to compensate for deficiencies in the home that cannot be readily cured. This will in effect make the home more desirable than the competition. Consider incentives such as decorating allowances, which can be used to target individual buyers tastes and needs. Page 3

4 3. Condition Is the property free of negative features that could deter a buyer and does it show to its best advantage? Buyers are attracted to homes that are in move-in condition. They are troubled by properties with problems that must be corrected and even by those that merely suggest that problems could exist. Selling a home in top condition is especially important in the current market, where buyers have less appetite and less need to accept either fix-up work or risk. A possible roof leak is often enough to disqualify a property, even if the seller offers a buyer s allowance. Given this knowledge, and accepting that some factors, such as size and location, are unchangeable, the first impression made on a potential buyer must be positive. A negative impression can even be created by a feature that is technically in good condition, like new purple carpeting. It s best to evaluate the property as objectively and quickly as possible and eliminate negatives at the outset. In the final analysis, money invested in removing unnecessary negatives makes it possible for buyers to consider the home without significant reservations. This strategy may even help create competition among potential buyers. Best Practice: Sellers should make whichever improvements they can to improve the condition of the home before putting it on the market. This is critical in a situation in which prospective buyers have a choice of of homes, making first impressions most important. Page 4

5 4. Readiness to Act Are all parties aligned to take quick, decisive action in achieving a sale? Decisiveness pays dividends in selling homes. The ability for all to act in concert allows strategies to be implemented promptly and effectively. One obvious party is the broker. Whether responsibility for the home selling strategy is ultimately the client s (e.g., an inventory sale) or the relocating employee s (e.g., home marketing assistance), the broker needs to clearly understand the plan. But there also needs to be a plan, agreed to by the client or employee. And that plan should take into account the best thinking of the broker and Cartus. It should be forward looking and anticipate different future scenarios with agreed contingencies. Delaying decisions about how to respond to an offer often loses sales. Similarly, taking a passive approach to marketing the home, for example by holding the price for a little while longer, often dramatically reduces the chances for a sale. Best Practice: All parties should agree to the written marketing plan before the home is put on the market, Also, they should agree in advance on what would constitute an acceptable offer from a prospective buyer so the seller doesn t lose a sale while making a decision. Examining company procedures and determining whose permission is required for decisions at certain price points and in certain scenarios is critical to eliminating potential delays. Page 5

6 The Key to Success Whether real estate and economic conditions are deteriorating or recovering, effective home sale requires some forethought. And in a buyer s market like the one we are experiencing, success requires faultless execution of a complete strategy. It is an unforgiving climate that puts a premium on foresight and rewards clear thinking and concerted action. The common element among these four selling pre-requisites is making the best use of time. However, a clinical analysis of the process of marketing a home that an employee is unable to sell or that accumulates an excessive inventory time often shows that one of these four factors has not been in alignment with the others, with predictable and costly consequences. Applied together, these four strategies give the home the best chance for a ready sale. For more information, contact your Cartus representative or deliveringmore@cartus.com. For information on real estate solutions, see Mobility Management Outsourcing Consulting Intercultural & Language Training 2009 Cartus Corporation All rights reserved Cartus and the Cartus logo are pending or registered trademarks of Cartus Corporation.