How to Price Your Home to Sell

Robbie has asked me to look at creating a consumer video about pricing.  It would be something Help-U-Sell brokers and agents could use to emphasize the importance of proper pricing and to describe the process.  I started reworking the script I used for the longer broker/agent training piece we did for Help-U-Sell Pro-Coach Univeristy and have shared what I have done so far below.  Please take a look and give me some pointers.  Bearing in mind that we want to be a brief as possible, what other things ought to be included in such a video?  Is the price trend information too complex for public consumption?  Your help is appreciated!

Pricing to Sell

I’ll let you in on a little secret:   pricing is the single most important thing you’ll do to ensure the salability of your home.  All the marketing in the world can’t cause an overpriced home to sell.  An army of top salespeople can’t cause an overpriced listing to sell.  Overpricing means your home sits and sits until either the market catches up to it or you reduce it back to where it should have been from the start.  Unfortunately, if you start out too high, you’ll miss the most important marketing period for your home.  Here’s why.

At any given time, there are a certain number of people looking for a home like yours in a neighborhood like the one in which your home is located.  Let’s  call them your ‘Best Buyers’ –  these are the ones who will recognize the value of what you have and will be willing and able to pay top dollar for it.  It might be a few people or dozens of them.  The moment your property hits the market you have the opportunity to be in front of the largest number of these ‘Best Buyers’ you will have during the course of the listing.  Yes, more will trickle in as time goes by, but the initial weeks of your time on the market present the greatest opportunity to reach that larger pool of buyers who are already looking.

Now think about those people out there looking for a house just like yours.  They’ve already looked at dozens, even hundreds of houses on paper and they are probably a little tired of the process. What they want to do when they look at new listings (like yours) is to quickly narrow the field, eliminate anything that does not meet their basic needs,  and then investigate the few that might work for them.  This narrowing and eliminating process usually involves three things:

  1. Location – is the house in an area they’d consider
  2. Beds and Baths – are there enough
  3. Price – is it within a range they would consider

If any one of these three items does not match the buyers criteria, the home is eliminated from the list of possibles.  Now you can’t do anything about the location and the number of bedrooms and bathrooms is pretty well set. The one thing you can control is price.  And you want to hit the market with a price that is within the range of market value so that you end up on the list of possibles for the largest number of ‘Best Buyers’ who are in the market at that moment.

There are three things to consider when setting a price:  the price of similar properties in the area that have recently sold, the trend in prices, and the current competition.  The data is readily available, however, you are wise to rely on the information provided by your Help-U-Sell broker.  What’s available to the general public is often confusing and sometimes inaccurate.  We use the most up-to-date and accurate database in existence.

Sometimes, there are enough sales of similar properties in the previous six months to give an indication of value.  At other times, we may have to look back a little further.  But it is always important to remember that you are looking back in time at prices.

For example, assume you have a comparable property that sold six weeks ago. That’s the date the sale closed.  The actual date the buyer and seller agreed on a price was probably earlier – at least a month and most often two months or more earlier.  So when you look at comparable sales, remember that you are looking back in time three to twelve months.  To arrive at a proper price for today you must anticipate and adjust for the trend in prices.

Are prices rising in your neighborhood?  How much?  How rapidly?  Or are they declining?  And how does this information factor into your decision about pricing?  If prices are rising rapidly and you base your price on recent sales, you could be underpriced from day one . . . or the opposite could be true!  These are the things your Help-U-Sell broker will help you weigh as you establish a range of value for your neighborhood and then a proper price for your home within that range.

So far we’ve been fairly scientific in our discussion of pricing; but there is another side to this process and it is not scientific at all; it’s emotional.  We love our homes.  We work hard to make them comfortable and welcoming.  We decorate and improve them to reflect who we are.  Even if we’ve outgrown them, even if they no longer meet our needs, the value we place on our homes can still get strangely tangled up with the value we place on ourselves.  While self-esteem is a marvelous thing . . . it really has nothing to do with the price and salability of your property.   It is very important that you understand the moment you put a for sale sign in your yard your house stops being a home that reflects who you are and starts being something very different:  a product.  A product that has to compete with similar products for the attention of buyers in the marketplace.  I know that sounds cold, but it is the right attitude for a home seller – as opposed to a home owner.

Please, don’t go fishing outside the range of value for just a few thousand dollars more thinking you can always come down.  You’ll miss that pool of buyers in the marketplace looking for a home like yours right now!  And please don’t cling to an unsupportable price because your house has been so special for you and your family.  It’s a product now. It has to compete on every level including price.

Tech-Turkey Tip: How Share/Email/Embed a Video

Great truth about (some . . . many . . . maybe most) Great Realtors:  We tend to be all thumbs when it comes to technology.  We want so badly to be right there in the thick of Google/Facebook/YouTube/LinkedIn and so on, but somehow that chromosome was left out of the cocktail shaker when were were hatched.  Oh, sure, we could learn this stuff, if we could only find an hour a day.  Unfortunately there hasn’t been one of those for, well . . . years!  So we continue on, trying to type the Gettysburg Address using only our thumbs! We are indeed, Tech Turkeys!

Now therefore, I’m going to drop in an occasional post on how to do the simplest (though for some the most frustrating) electronic tasks.  First up:  Video!  Which usually, but not always, means YouTube.  Let’s assume there is a great video on YouTube you want to share.   Let’s assume it’s this one:

Assuming you found this video somewhere other than on YouTube, i.e. on Facebook, click the play button.  When you do, a navigation bar will appear at the bottom of the video.  See it there, on the video just above?  Go ahead and hover your mouse over the YouTube logo.  See?  It lights up and says ‘Watch on YouTube.’   If you were to click on the logo it would take you to this video’s YouTube page.  It would look like this:

Look below the video, and below the title, where it says ‘Share This Video.’  There are logos for most Social Media sites there, starting with Facebook.  If you wanted to post this video to your own Facebook page and share it with your friends, you’d just click that button.  It would open up a Facebook window with the video and a place for you to comment.  No need to hop out of YouTube, it all happens right there.

Now look below the logos.  There is a URL highlighted in blue.  That’s the link to this video on YouTube.  If you wanted to email the video to someone, you’d right-click on that link and select ‘Copy.’  Then, go to your email message, right click in the body and select ‘Paste.’  You’ll be sending a link to the video because emailing video is . . . well, it’s a mess.  Video files are so big, most email servers will reject them and even if they get through, the time it will take your recipient to download and then play the video will be irritating to say the least.  Send a link as outlined here and your recipient can stream the video almost instantly from the Internet.

By the way, you’ll notice an ‘Email’ tab above the Social Media icons.  If you are logged in to YouTube, you can email a link directly from there.  However I find it just as easy to copy/paste the link as outlined here.  That way it doesn’t matter whether you are logged in or not.

Also above the Social Media icons you’ll see the word ‘Embed.’  Click it and you’ll see something like this:

The code highlighted in blue can be used to place the video on your website or blog.  Again, just right-click/copy the code, then go to your website or blog editor and right-click/paste.  Notice below the highlighted code there is a drop-down menu for Video size.  You are given a handful of options here and should pick the one that will fit the page into which you are pasting the video.  In this screenshot I’ve selected 560 x 315 because the web page into which I want to paste the video has a column width of exactly 560 pixels.

And that’s enough for now.  You don’t want to know the history of video compression and which codec is best.  You just want to know how to share one, right?  And that’s it!  Ciao.

The Stupidest, Dumbest, Lamest, WORST Ad in Real Estate History

I don’t want to offend anybody.  I know a lot of really good Century 21 agents and a bunch of good Century 21 brokers.  But, come on!  The ads over the past several years have been so bad that they are embarrassing!  I mean look at the stupid thing that graces the back cover of the latest California REALTOR Magazine:

Century 21 Ad

I guess this is an improvement over the ads in this series that ran over the past 3 or 4 years.  They featured beautiful actors and actresses smiling – or more often smirking – confidently at the camera, pretending to be Century 21 agents while glowing adjectives flowed below.  This ad makes no pretense at reality.  It’s a cartoon.  It’s a parody of the company’s own advertising.

If I were a Century 21 person (and I was for more than 20 years) I would be insulted, first by the color scheme.  There’s not one drop of gold in the damn thing.  Century 21 corporate declared war on gold sometime in the early ’90s (sad to say I was there and in on the discussions; I dissented).  But no matter what they’ve done, no matter how hard they’ve tried to eradicate it, to distance themselves from that color,  twenty years later THE PUBLIC still sees GOLD as Century 21’s color.

I watched an episode of ‘Breaking Bad’ last night – from the first season.  They wanted a real estate agent on screen to be easily identified as such.  What did they do?  Put her in a gold coat.  No question.  Instantly anybody watching knew that was a real estate agent.

That kind of brand equity is priceless.  And it’s very difficult to achieve.  Century 21 owned the color gold and blew it up . . . and replaced it with . . . Green?  No, Bilious Green?

But let’s take a wholistic view, too: let’s look beyond the bad color and the dumb message.  Where is this ad placed?  Back cover of REALTOR Magazine.  That’s a $50,000 – $75,000 pop, depending on how big the contract is.  The ad seems to be aimed at the buying and selling public . . . but it’s placed in a publication for REALTORS.  So it’s suppposed to be a recruiting ad?? Or are we just becoming a little unfocused in our old age?

Again, the first ads in this series really were recruiting ads.  The idea was by showing actors as bright, confident and beautiful Century 21 agents, failing agents at other companies would want to jump ship for a chance to be just like the ‘agents’ in the ad.  (With logic like that is there any wonder per person productivity at Century 21 is said to have been in decline for decades?).

So back to the placement of this ad:  I guess REALTORS seeing this ad are supposed to feel as if Century 21 agents have some kind of super-human advantage over them with buyers and sellers.  Really?  From this silly, embarrassing ad they are supposed to feel that?  If I were a competitor in the field, I’d put this ad in my listing presentation to illustrate to potential sellers how stupidly some real estate companies spend their money!

Listen:  I got a PhD in Branding and Marketing at Century 21 in the 80s and 90s.  I learned from legends like Bruce Oseland, Elaine Hamilton, Dick McKenna, Rick O’Neil, Don Martin, Marty Rueter and many others.  This was one of the things Century 21 did extremely well in the early days. They did it so well that, in the late 70s – early 80s, the effectiveness of their marketing was scary!  They pretty much owned the concept of ‘Real Estate’ in the consumer’s consciousness.

The monkeying with with brand that started in the mid-nineties and continues to this day has undone that once very special organization.  Today,  Century 21 stands for generic real estate at its most mediocre.  There is nothing special about the consumer offer (it’s just like everyone else’s), nothing special about the operating system (It’s an old -fashioned, percentage based, agent oriented model), and nothing special about the identity.  If the function of marketing is to express the culture of the organization . . . well, I guess this ad has succeeded because today, Century 21 stands for nothing.

And it breaks my heart.

Hey, all of you marketing scholars out there!  If you want a great case study on how to build a powerful brand and then systematically destroy it . . .well, here it is.

Footnote:  There is a Help-U-Sell logo on this blog.  It is a brand and operating system I happen to love.  I do not, however work for Help-U-Sell.  I did, but not now.  Please don’t assume that I speak for that organization or anyone in it.  This is my blog and my opinion; so if you are sharpening your arrows, aim them here. -JD

Musing About Help-U-Sell, The Franchisor

I’ve been rather silent for a few weeks and I apologize for that.  I have some BIG deadlines looming and that’s pretty much occupied me.  I have had lots of time for musing, though,  and here’s what’s been on my mind:

The Help-U-Sell Consumer Offer and Operating System are amazing.  During our last growth spurt (2004-2006, when the real estate  bubble was beefing up), almost anyone could do very well as a Help-U-Sell franchisee.  It seemed all you needed to do was buy a franchise, announce that you were open in the local market . . . and Sellers would knock each other down to get in the door!  Ordinary Brokers sneer:  ‘Sure you were doing lots of business because you were giving away the store!  You couldn’t have been making any money!’  Not so.  We did WAY MORE than our share of business and we were wildly profitable because, in addition to a better deal for the Seller, we had a completely different Operating System, one that didn’t squander resources chasing after non-productive agents.

The ‘anyone can be successful’ principal blew up on us as 2007 dawned.  Turned out a lot of those ‘anyones’ didn’t have the skill, the desire or the HEART to continue when the market turned.  They came to us when it was easy; as soon as the market became difficult and you had to WORK to make it, they left.  Today we don’t have any Brokers in passive, wait for the business to come in the door mode.  Our guys have gotten very good at grabbing the business by the shoulders and shaking it until something happens.  Bravo.

Infinium, who owns Help-U-Sell Real Estate, has been an incredible parent.  They have done everything they possibly could to ensure our offices survived and thrived.  When the business shrank to a trickle and people had to choose whether to pay their Royalties or their  electric bills, they agreed to put the Royalties on non-interest bearing notes, to be paid by adding additional dollars to future Royalties.  In other words:  if you didn’t close anything, you didn’t have a note to pay.  You only paid when you had income.  Go ahead, ask Coldwell Banker or Century 21 if they’ll do that for you.

In addition, Infinium temporarily reduced Royalties from the 6% specified in the Franchise Agreement to 5%.  That temporary reduction is still in effect today and I have no information about when it may go away.

They also suspended the National Ad Fund contribution.  Not only was this easier on our offices in a down economy, it was also done in recognition of  a truth:  Help-U-Sell has always been about establishing the brand LOCALLY.   It’s a target marketing business model, rooted in the idea that you carve out a piece of local geography, market to it and garner big market share there.

Meanwhile,  other franchised real estate offices were usually paying a 6% Royalty (7% in some cases) and a 2% National Advertising Fund contribution on every sale.  8% . . . that’s 3% more than our guys were paying during the toughest market in history. *

Hey, as long as we’re just musing, let me come out of the closet with a secret.  I know this is true for one Franchisor; others may have similar programs.  What agents in successful (NAME OF THAT OTHER FRANCHISE DELETED, But use your imagination) real estate offices don’t realize is that their office is not really paying 8% out of every transaction to the Franchisor.  That Franchise has a program for reducing Royalties and NAF contributions for very productive offices.  So when the agent brings, say, $5,000 into the office, the office usually deducts the full 8% for Royalties and NAF (@$400) and splits the balance with the agent . . . But the office turns around and only pays the franchisor, say, a total of 5% (@$250).  In this made-up example, the office would pocket the additional $150 and the agent has no idea . . .

I guess that’s snippy of me.  I apologize.  But I’m trying to make a point here:  as Franchisors go, Infinium and Help-U-Sell have been pretty benign.  In fact they’ve been more than nurturing.  Rather than creating a secret profit center for good offices (at the expense of their agents), Infinium chose to suspend NAF all together and cut Royalties for everyone.  Having worked for other Franchisors in the past I can see this as a matter of attitude.  The other guys always seemed very clear that they weren’t in the real estate business at all, they were in the franchising business.  Real estate simply provided the revenue stream from which they derived their income.  Their business model was all about selling more franchises and getting more agents to affiliate with the company (agents whose average productivity has declined every year for the last 15).

The Infinium/Help-U-Sell Franchisor attitude is very different.  We are in the real estate business.  All of us. Our Franchisees are partners.  We all live and die by how effectively we serve Sellers and Buyers in local markets across the country.  There are no Vice Presidents running around the halls of Help-U-Sell Corporate who came from rich careers in, say, Hotel or Car Rental Franchising .  We are real estate people.  We think like Brokers and before we pull the trigger on any idea, we talk to our Brokers . . . because they are a little closer to the consumers we all serve than anyone in the Corporate Tower.

 

*Our competitors might say the suspension of the National Ad Fund was a stupid thing  for Help-U-Sell to do, that it made us less visible to consumers at a time when visibility was essential.  We decided that being visible in, say,  the State of Montana, where we have no offices to serve any consumer who stumbles across our marketing really would be stupid. . . especially if we used monies from our offices in , say, Pennsylvania, to do it. So we suspended the Ad Fund which in theory gave our offices more dollars to spend locally establishing the brand in a way that would benefit them.  I think it’s also important to look at how the other guys spend their Ad Fund dollars.  If you look at their marketing and where it is placed, it’s clear the objective is not to help their offices sell more real estate, but to help the Franchisor sell more franchises.  This is sold to the offices as marketing that will help them recruit more agents . . . . and that’s a whole ‘nother topic.