Major Price Reduction!!! Owner says sell!!! Price Slashed!!! Motivated Seller!!! Bring offers!!! E-mails with these types of headlines overpopulate our inboxes every day. It gets to be a little repetitive, don't you think?
Are these e-mails working? Do such exclamations excite you to actually open the e-mails and consider whether the properties are good deals and if the sellers are really motivated?
We, at Broker_Confidential, are a cynical bunch. When we see these messages, we tend to think: "Here's an old overpriced listing which is slightly less overpriced than before", or "Here's an agent who is making a last ditch effort before losing the listing".
Broker_Confidential was not created to spew negative comments about New York City's residential real estate brokers. There are already plenty of blogs and websites doing that! Broker_Confidential takes a constructive approach to the issues. Our mission is to point out practices which may be outdated, or even detrimental, to the brokerage community. Most importantly, we want to "Build Better Brokers" by suggesting new and smart ways of doing business - we hope to the benefit of both the real estate agent and the consumer.
With that in mind, let's return to the topic at hand: To suggest a re-thinking of the lingo to something suitable for an industry dealing in expensive investments which are often the culmination of our customers' and clients' life-long dreams or, sometimes, heartbreaking losses.
What is a broker to do if she/he wants to grab the attention of fellow agents or potential buyers?
First: We are so technologically advanced now that we have automatic searches set up to alert us if a change has been made to a listing. A mass e-mail announcing the change is redundant.
Second: A price adjustment is only relevant to those who have seen or inquired about the listing in the past. It is meaningless, at best, to everyone else. Again, a mass e-mail is unnecessary, but a targeted e-mail or phone call to interested parties seems like a good idea.
Third: An appropriately priced listing will create a fast and intense buzz simply by being appropriately priced. Again, a mass e-mail is unnecessary.
Fourth: A price reduction is just as likely to be a turn-OFF as a turn-on to the buying public. Here is how the thinking goes: "This seller was unrealistic before. Why should I think the seller is realistic now?" "The seller just reduced the price, so the seller is probably not negotiable. I have nothing to lose if I wait and see what happens".
In summary, the simple act of updating the listing in the database will grab the attention of those looking for the listing.
If you use e-mail as a way to promote your listings, consider focusing the Subject Line on the most important feature(s) of the property. What is it that sets it apart from the competition? It is very rarely a price reduction or a motivated seller.
Identifying the unique feature(s) may require you to study the competition, but that will probably be very helpful anyway to 1) your overall marketing of the property, and 2) your fingertip knowledge about the market segment.
Why will buyers choose your listing over others? Again, it is probably not price or a seller's level of motivation. Imagine yourself the buyer of the property. Imagine being asked a year from now, why you chose that property. There are usually several reasons. Some are more important than others. Your challenge, as the exclusive agent, is to distill those reasons into an attractive Subject Headline.
Broker_Confidential looks forward to receiving all your irresistible headlines!!!
Tell us what YOU think. Your comments, questions, suggestions are welcome!
Monday, March 22, 2010
The Square Foot Solution
We all know what a mess it is trying to figure out the true square footage of an apartment in Manhattan. A lot has been said on the subject and Broker_Confidential will not belabor the point here. This blog entry focuses on trying to come up with the simplest solution to the problem.
The city's brokers have struggled for years to come up with viable solutions. The Real Estate Board of New York's current guideline is not to quote square feet at all and only disclose the number of rooms. Disclaimers on advertising and showsheets cover the broker's legal behind, but they only add to the problem.
Let's face it: As long as space can be divided, and as long as humans are willing to pay for space, the need and desire to calculate square feet is NOT going away. Being unable to accurately quote square footage, and price per square foot, is a major obstacle in our daily business. Our inconsistency undermines our credibility in a BIG way and will continue to do so until we, as an industry, agree on a universal method.
Before we outline our proposed method, it is important to acknowledge two prerequisites for any possible change:
1) Agents must diligently question the stated room measurements on floor plans and be willing to take her/his own measurements;
2) Brokerage firms and listing system providers must be willing to check, and clean out, old apartment square footages in their databases as well as maintain the dignity of the information.
Broker_Confidential proposes that square footage always be stated as gross square footage (GSF) and the GSF shall be estimated in the following way:
* Break up the layout of the apartment into squares and rectangles to easily calculate the GSF of each area, then:
1) Multiply the total length from the inside of the wall or window of the FRONT of the area to the inside of the wall or window of the BACK of the space.
2) Multiply the total length from the inside of the wall or window of the RIGHT side of the area to the inside of the wall or window of the LEFT side of the space.
3) Add the two measurements together.
Example:
Front to back: 50 feet
Right to left: 28 feet
50 X 28 = 1,400 GSF
* If a wall interferes in such a way that a straight measurement from the front to the back and/or from the right to the left cannot be conducted, then 1/2 foot shall be added to the total length for each interfering wall.
Example:
Front to back: 50 feet + 1/2 foot (interfering living room/kitchen wall)
Right to left: 28 feet + 1/2 foot (interfering hallway/bedroom wall)
50.5 X 28.5 = 1,439 GSF
* Any space embedded in the apartment's floor plan that is not for the sole use of the occupant (i.e. public stairwell, airshaft, elevator shaft, etc.) shall be measured and subtracted from the GSF.
* Common Areas, including those where the apartment carries a "common interest" percentage (condominiums), shall be excluded from the GSF of the apartment.
* Exterior square footage (balconies, terraces, roofs, etc.) shall be quoted separately.
Brokers must continuously educate buyers and sellers about square footage because sellers sometimes assume their homes are larger than they really are and buyers sometimes think they need more square footage than they do. Which brings us to what is really the crux of the matter: As straightforward and mathematically immutable as the measurement of space should be, there is a significant psychological reality with which brokers have to deal. This, however, presents a terrific opportunity for the brokerage community to exert itself and gain some of the credibility it so urgently needs.
Tell us what YOU think. Your comments, questions, suggestion are welcome!
The city's brokers have struggled for years to come up with viable solutions. The Real Estate Board of New York's current guideline is not to quote square feet at all and only disclose the number of rooms. Disclaimers on advertising and showsheets cover the broker's legal behind, but they only add to the problem.
Let's face it: As long as space can be divided, and as long as humans are willing to pay for space, the need and desire to calculate square feet is NOT going away. Being unable to accurately quote square footage, and price per square foot, is a major obstacle in our daily business. Our inconsistency undermines our credibility in a BIG way and will continue to do so until we, as an industry, agree on a universal method.
Before we outline our proposed method, it is important to acknowledge two prerequisites for any possible change:
1) Agents must diligently question the stated room measurements on floor plans and be willing to take her/his own measurements;
2) Brokerage firms and listing system providers must be willing to check, and clean out, old apartment square footages in their databases as well as maintain the dignity of the information.
Broker_Confidential proposes that square footage always be stated as gross square footage (GSF) and the GSF shall be estimated in the following way:
* Break up the layout of the apartment into squares and rectangles to easily calculate the GSF of each area, then:
1) Multiply the total length from the inside of the wall or window of the FRONT of the area to the inside of the wall or window of the BACK of the space.
2) Multiply the total length from the inside of the wall or window of the RIGHT side of the area to the inside of the wall or window of the LEFT side of the space.
3) Add the two measurements together.
Example:
Front to back: 50 feet
Right to left: 28 feet
50 X 28 = 1,400 GSF
* If a wall interferes in such a way that a straight measurement from the front to the back and/or from the right to the left cannot be conducted, then 1/2 foot shall be added to the total length for each interfering wall.
Example:
Front to back: 50 feet + 1/2 foot (interfering living room/kitchen wall)
Right to left: 28 feet + 1/2 foot (interfering hallway/bedroom wall)
50.5 X 28.5 = 1,439 GSF
* Any space embedded in the apartment's floor plan that is not for the sole use of the occupant (i.e. public stairwell, airshaft, elevator shaft, etc.) shall be measured and subtracted from the GSF.
* Common Areas, including those where the apartment carries a "common interest" percentage (condominiums), shall be excluded from the GSF of the apartment.
* Exterior square footage (balconies, terraces, roofs, etc.) shall be quoted separately.
Brokers must continuously educate buyers and sellers about square footage because sellers sometimes assume their homes are larger than they really are and buyers sometimes think they need more square footage than they do. Which brings us to what is really the crux of the matter: As straightforward and mathematically immutable as the measurement of space should be, there is a significant psychological reality with which brokers have to deal. This, however, presents a terrific opportunity for the brokerage community to exert itself and gain some of the credibility it so urgently needs.
Tell us what YOU think. Your comments, questions, suggestion are welcome!
Sunday, March 21, 2010
Is Psychological Pricing For Psychos?
Have you ever wondered why brokers advise sellers to price their properties with a number ending in 95 or 99 – e.g. $695,000? Has it ever struck you as a little silly especially as asking prices climb into the millions of dollars – e.g. $2,999,999?
Psychological pricing is a technique designed to make customers believe they are paying less than they are. It was developed from a more than 100 year old sales trick.
The practice is rampant in real estate today. 1/3 of all properties for sale in Manhattan are listed in accordance with the 95/99 pricing strategy. Unfortunately, this marketing ploy only serves to support the generally poor image the public has of the broker as a self-serving salesperson.
Your credibility as an agent aside, there are other reasons why 95/99 pricing may not work to your advantage:
* Most psychologically engineered prices signal a final price, but in real estate it is perceived as the asking price, so it loses an important aspect of its intended effect.
* It ignites the idea in the buyer’s subconscious mind that not only is a price negotiable, but MORE negotiable.
* It keeps the property listing out of any search which starts with 00 (e.g. the search is $700K to $800K, but the listing is $699,000).
* The only area in which a real estate price tends to be perceived as final is in New Construction where the developer’s odd pricing (e.g. $1,374,540) is based on other considerations. It is noteworthy in this context that developers tend NOT to use 95/99 pricing.
* Real estate buyers generally decide what they can spend before shopping unlike, for example, with a car purchase where added features and flexible financing are part of the negotiation and decision.
* It offends the potential seller to hear your advice to ask $1,995,000 when $2,000,000 might have kept the good atmosphere and sealed the exclusive.
Broker_Confidential is not suggesting you discard psychological pricing in all situations. We ARE suggesting you think before you act instead of just following the herd. If you’re going to use it then learn something about it. There are many studies on the subject.
At the end of the day, honesty and transparency is the best policy. Real estate buyers are generally savvy people. You are brokering one of their most important purchases, not selling them a Walmart T-shirt. They are more likely to appreciate you respecting their intelligence by quoting the asking price as $1,000,000 than they are buying the apartment on impulse because it is ONLY $999,999.
Tell us what YOU think. Your comments, questions, suggestions are welcome!
Psychological pricing is a technique designed to make customers believe they are paying less than they are. It was developed from a more than 100 year old sales trick.
The practice is rampant in real estate today. 1/3 of all properties for sale in Manhattan are listed in accordance with the 95/99 pricing strategy. Unfortunately, this marketing ploy only serves to support the generally poor image the public has of the broker as a self-serving salesperson.
Your credibility as an agent aside, there are other reasons why 95/99 pricing may not work to your advantage:
* Most psychologically engineered prices signal a final price, but in real estate it is perceived as the asking price, so it loses an important aspect of its intended effect.
* It ignites the idea in the buyer’s subconscious mind that not only is a price negotiable, but MORE negotiable.
* It keeps the property listing out of any search which starts with 00 (e.g. the search is $700K to $800K, but the listing is $699,000).
* The only area in which a real estate price tends to be perceived as final is in New Construction where the developer’s odd pricing (e.g. $1,374,540) is based on other considerations. It is noteworthy in this context that developers tend NOT to use 95/99 pricing.
* Real estate buyers generally decide what they can spend before shopping unlike, for example, with a car purchase where added features and flexible financing are part of the negotiation and decision.
* It offends the potential seller to hear your advice to ask $1,995,000 when $2,000,000 might have kept the good atmosphere and sealed the exclusive.
Broker_Confidential is not suggesting you discard psychological pricing in all situations. We ARE suggesting you think before you act instead of just following the herd. If you’re going to use it then learn something about it. There are many studies on the subject.
At the end of the day, honesty and transparency is the best policy. Real estate buyers are generally savvy people. You are brokering one of their most important purchases, not selling them a Walmart T-shirt. They are more likely to appreciate you respecting their intelligence by quoting the asking price as $1,000,000 than they are buying the apartment on impulse because it is ONLY $999,999.
Tell us what YOU think. Your comments, questions, suggestions are welcome!
Subscribe to:
Posts (Atom)