The New York Times published a story about a trend beginning in Long Island where sellers and listing agents are starting to offer flexible pricing. The scenario is that a range is given, for example, $250,000 to $300,000. If I hadn’t recently endured a series of videos from an enterprising agent in Florida who was taking flexible pricing to an extreme, my reaction would have been, “Why would anybody offer anything at the top of the range if you had already signaled that you would take less?” The answer…within the framework of 4 P’s marketing…is that the goal of most promotion is not to sell the home but to get showings.
The agent in Florida is quite explicit in explaining his strategy. He wants to bring in the bargain hunters and bottom feeders and get them bidding against each other. He takes very short listings…a weekend…and promotes that the property will be sold during that period. He promotes a price that he claims is half of the true market value. The catch is that this is a point at which the sellers will consider offers but there is also a “reserve” price. The reserve price is familiar to anyone who has ever bid on anything on ebay. It determines the price at which the seller acertains that he will accept the offer. The agent advertises the property on Craigslist, that famous favorite of bargain hunters, and also claims that the strategy is a fabulous way to get buyer leads.
In the approach used on Long Island the price range can be used to establish a basis for negotiating other factors, including contingencies, repairs, earnest money, closing dates, etc. In other words, the more favorable they are to the seller, the better the price will be for the buyer. The real key though is precisely what our guy in Florida is doing…getting traffic through the door. Few things will do that faster that the promise of a real bargain. Few houses are bought sight unseen and the more feet across the threshold, the better the chances are that someone will see something they love…or can live with at a great price.
The NY Times article is at http://budurl.com/jz1009
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