When MLS comps are not enough
Tour a new home to help prospects set a price baselineBy David Fletcher, Tuesday, July 3, 2012.
Question: Would you be willing to buy a home if you were not comfortable with the price?
If not, then why are we surprised when resale home buying prospects who have seen the home they wanted, decide to wait?
The fact is there is a price/value vacuum in today's resale market that is bringing the "I think I'll wait" excuse to a virus level.
If you have ever spent weeks with a buyer who decides to "wait until the market turns around," you know what I am talking about.
Fortunately, there is a cure for this disease.
Hesitant buyer prospects blame their indecision on the economy. But the truth is they couldn't get comfortable with the fact they could pay too much.
They may have liked the asking price, which may turn out to be illusory, and there's also the foreboding, unknown expense of unexpected maintenance and renovation.
In other words, finding the home of their dreams -- which we promise the market we can do -- is not enough today. We must be able to find the right home, and present price in a way they that buyers can evaluate it with confidence.
MLS resale comps are not enough. Your comps are great for available inventory, but today you need a more stable price measure than other resales. These comps may look official and credible the eyes of the seller. But in the buyers' eyes? Not so much.
Comparing one resale to another may be an answer, but it is not a solution. The solution is simple: Add a new home model tour to your comps.
The purpose is not to sell a new home. It is to help your resale buyers understand what they can buy, and for what price. A dependable, non-negotiable price baseline that takes the price/vacuum right out of the room.
Now and only now does your prospect have a reliable starting point. a way to measure the price/value of the resales you show.
And in my mind it is one of the subtle reasons new homes sales are increasing. People know exactly what they are getting at the lowest possible price they can get it.
This all occurred to me recently when I co-brokered a new home sale with a couple who asked me to help them buy one.
This couple ended up shopping several new homes communities, but there was never one question about price. Not one question about which lender would provide the mortgage, or the fact that the builder pays $5,000 toward closing costs and includes a $5,000 upgrade incentive.
And there was that subtle part about an extra $5,000 in upgrade incentives for the next three buyers who purchased in a section with very limited released homesite inventory. The question was not whether they could get a better price. They knew the price was solid.
The built-in urgency was worth $5,000, plus homesite inventory was extremely limited. There was only one lot available across from the planned park. The wife, with two dogs, fell in love with it.
Her attitude went from "I don't really want to move," to, "Let's give them the $15,000 deposit today, because I don't want to lose this lot." True story.
I use this as an example of the importance of certainty when it comes to money. The point is that can help embed the price and value of a new home in your resale prospects' minds -- before you show the first resale.
Can you imagine how much clearer your resale values would be if you had a dependable price comparable? So what if it's a new home? Whether they buy a new home or resale doesn't matter. What you need is a ready, willing and able prospect who can make confident judgments about what you show.
Do you think it is possible that your buyers could quickly grasp the market and better evaluate resales even in different locations if they have seen what they can purchase, for what price, in terms of square feet, standard features, price and mortgage cost?
I am not trying to sell new homes here. People buy resales for a lot of good reasons, location being a big one. But I am strongly suggesting that you add a new-home sales office to your showing schedule.
My point is to give you a tool -- a new homes showing -- to help you make more sales, be they new or resales.
Try it. Take your next resale prospect to a new homes model. The fact that they don't want a new home doesn't matter. What matters is that they have a price baseline from which to evaluate resales. You might start selling more resales, and pick up a new sale you might have lost along the way.
Not because the new home has the latest and greatest everything. But because the new homes price/value replaces the resale price/value vacuum with a real price. Something today's homebuyers desperately need.
David Fletcher, a licensed real estate broker and lifetime achiever, is founder of EMentoru, a company dedicated to helping real estate agents and homebuilders help each other make sales. Contact him by phone or text at 407- 234-2349, or by email at firstname.lastname@example.org.
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