Real Estate Auction: A Superior Pricing Strategy

The property auction system of selling real estate when implemented effectively is without a doubt the most successful method of sale available. The auction system is designed to remove the price as an objection and encourage purchasers to act based on the benefits and features of the property itself.

Property is not unlike any other commodity whereby ‘the market’ will ultimately determine the final selling price. Naturally, the quality of the selling system implemented and the caliber of the salesperson can have a positive effect on the end result.

It is fair to say that the highest amount of activity generated for a home is normally in the first three to four weeks from the date the home is announced for sale to the market. A property auction is designed to capitalize on this high buyer activity period as the auction date set’s a date for the buyers to act after a 3-5 week marketing period.

Doesn’t it make sense to sell your home in competitive environment and in a period when the maximum amount of buyer interest is at hand?

Non Fixed Price Strategy Vs Fixed Price Strategy

The most common objection we receive from buyers, which often prevents them from inspecting property is based on the perception that the property is too expensive.

The auction system removes the price as an objection and ‘casts the net’ over the widest range of prospective purchasers. Our objective in an auction-marketing program is to make sure that all the likely buyers for a particular property are sold on the benefits of the home rather than the perception of price. Even buyers in slightly lower price ranges should be encouraged because we know that basic buyer psychology tells us that buyers buy up and they will normally pay 10-20% more for a property once thy have become emotionally involved in a property. We make sure that we don’t exclude buyers in lower price ranges who could end up paying more for a higher range property once they have been given time to become emotionally involved.

For example, let’s just say that we had two identical homes that are both worth around $100,000. House A decides to use the traditional method of marketing and uses an asking price of $119,000. House B however is being marketed via the auction system and calls for interest in excess of $90,000 and has set a date for buyers to act.

Now if you’re a buyer in the $90,000 – $120,000 price range, which home do you think you would inspect first?

Of course it would be House B.

What has happened with House A, with an asking price, is the buyer has been encouraged to inspect the home based on an unrealistic price. Most buyers are obviously interested in buying well and as a result they have probably inspected House B first.

This is the pricing tool used in conjunction with an auction campaign.

– See more at: http://frogpond.com/Real-Estate-Auction–A-Superior-Pricing-Strategy-FP1-datherton01#sthash.sQJfHUwh.dpuf

Written by Dane Atherton
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