The Power of Pricing Strategy
Location, Location, Location.
This is the standard answer you’ll get if you ask a real estate agent what the most important factor is when it comes to selling a property. But as we all know, pricing is also very important when you’re looking to spark a buyer’s interest. In the case of this 105-year old Victorian property, an effective pricing strategy made all the difference, helping the property go under contract in just a few days.
The Original Strategy
Before my involvement with this property, this four-apartment, multi-family house was initially marketed and priced based primarily on total square footage, number of bathrooms, etc. This is appropriate when selling a single-family residential home, but for investment properties such as this one a review of the income the property generates (or can generate) is critical to setting an appropriate price. Initially, improper pricing caused the property to remain on the market and not sell. Eventually, the property owner made the decision that it was time to take a new approach.
Reassessing the Plan
There were several things that I took into consideration when I was asked to help develop a new pricing strategy for this property. It was clear to me that this house needed to be marketed as an income property, so by combining this understanding with my knowledge of investor attitudes toward risk, I was able to assist the owner in developing a new pricing strategy designed to specifically attract a buyer pool made up of real estate investors.
Once the pricing of the property had been adjusted, interest in the house dramatically increased. Almost immediately, several offers were made on the house, resulting in a bidding war between interested parties. Within a few days, the property was under contract.
One of the most important things to understand when getting ready to list a property on the market is the type of property you are looking to sell. In this example, just understanding the property type helped us to clearly define the likely buyer profile and enabled us to be more effective in our pricing and marketing efforts.
When deciding to list your property for sale, make sure that you are working with a professional that can not only understand and identify the property type accurately, but also has the knowledge base and experience to know what the buyer profile will look like and how to attract that group of buyers.
About Doug Donia