It was January 9, 2007 at the Macworld Convention in San Francisco. Apple CEO Steve Jobs announced that, after two years of development, his company would release an industry-changing phone in five months.
The revolutionary “smart phone” would feature the music capabilities of Apple’s iPod, allow users to surf the web, and include a touch sensitive keyboard and icons screen. All of this would come in a 3-½ inch package for just $499. The lines started forming (in consumers' minds) that day.
Apple’s masterful iPhone pre-launch marketing strategy made history. Nine years later, consumers still stand in line for hours to purchase each new version of the iPhone.
What does this have to do with selling your home at 3%-8% above market? A lot. Many think a home's value is determined by the sale of similar homes. It's not. This is one of the biggest misconceptions in real estate.
True, the sale price of homes in your area influences the value of your home (like the price of Samsung phones influences what Apple can charge for its iPhone). But sales of cell phones, homes and just about everything else only set a range of value... a general guide for what people expect to pay.
The challenge is to convince buyers to pay a "top of the range" price for whatever you have to sell; in this case your home. And that is the lesson from Steve Jobs.
Apple's modern, constantly improving pre-marketing strategies build pent up demand before it puts products on the self. That's why Apple sells its computers and phones at top of the range prices compared to similar products.
It's nuts that we don't do this in real estate! We are still selling homes like we did 50 years ago. Throw up a sign, toss it into MLS, run some ads, host open houses and hope it sells. Look around, this is the way every home is being sold in this market, no matter what their marketing ads state.
It's head in the sand thinking. It's hope marketing.
Think about it this way... if Apple were a real estate firm would it be using a 50-year-old process to sell homes? Of course not. Yet that's what we do.
So precisely what does Apple do that the real estate industry does not? Apple uses a multi-step, constantly evolving pre-marketing plan to generate buzz and pent-up demand before their products are offered for sale. In real estate, this would mean pre-marketing homes before a sign is placed in the yard, before the home is placed in MLS, even before buyers are allowed in the door.
Forward thinking real estate agents who do use modern pre-marketing plans are seeing spectacular results, estimating that they are selling homes 3%-8% higher than they otherwise would. It appears that San Francisco has the highest percentage of real estate agents pre-marketing their newly listed homes. The result? A stunning 25% of San Francisco homes are selling "off MLS," at higher prices than sales of similar homes.
Specifically, how does pre-marketing increase the probability your home will sell faster, for significantly more?
1.) It gets buyers excited. Pre-marketing builds enthusiasm before buyers enter the door. This makes them likely to offer more.
2.) It generates “social proof.” When agents have the time to generate interest before the official first day on the market, they can schedule back-to-back showings on the very first day. Buyers see other buyers, creating visible proof of desirability.
3.) It creates fear of loss. Fear of loss is one of the most powerful price enhancers for any product. A flurry of showings on the first day creates urgency in interested buyers and makes them more likely to act quickly and offer a higher price to avoid losing out.
4.) It puts buyers in a “higher price frame of mind.” Put yourself in a buyer’s shoes. Your agent calls to say that a fellow agent has just listed what appears to be the “perfect home” for you; there is no sign in the yard and it's not yet in MLS, so you are the first to know. If you are like most buyers, you’re frothing at the bit to take a look... and will likely pay a premium price to lock it up before others have a chance.
5.) It allows home sellers to test their price, risk free. In addition to generating a higher price (and a faster sale), pre-marketing gives you the chance to “beta test” your asking price with minimal risk. If buyers react favorably, your home will sell quickly. If not, there’s still time for you to adjust your price before submitting it to MLS.
6.) It allows your home to be marketed without ticking up price depressing “days on the market” for buyers to see. The MLS discloses your home’s days on the market to buyers (one of my biggest peeves). When your home has racked up days on the market, buyers typically perceive that it must be overpriced, or is flawed. So they pay less(comma here) even if your home has no flaws and is priced correctly, but just hasn't found the right buyer.
I advocate a minimum 30-day pre-MLS marketing strategy, with a comprehensive plan to promote the home to other agents, neighbors and potential buyers via traditional media, social media and open houses, and with MLS as a second tier tool to flush out additional buyers in the event your home doesn’t sell.
The bottom line? When it's time sell your home, take a lesson from Steve Jobs.
Hire an agent with an intelligent pre-marketing plan.
Don't let buyers in the door until your agent has them all whipped up and frothing at the bit to get inside.
True, your agent will have to expend more effort and spend money upfront to properly pre-market your home. No doubt it's easier and cheaper to throw up a sign and toss it in MLS. But if you care about faster and higher, don't let your agent get away with easier and cheaper.
Take a lesson from Steve Jobs on how to boost the value of your home.
Pre-marketing drives up demand and pushes up value, because (think about it), your home's value is really its price upon sale.
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