Walk through any mall and you will see a thousand so called "sales," discounts on items from kitchen towels to doggy sweaters that will expire in just a few days or hours unless "you act now" or "buy today"! But hold on, if these sales are really sales shouldn't they end at some point? You would think so, wouldn't you? But they don't. Why not? Because retailers learned decades ago that shoppers like to feel as if they beat the system, cracked the code, and won the cold war by getting a pair of Levi's for 20 percent off the sticker price. Because of this most stores now have perpetual sales, sales that may end for a day, but like a computer after a power outage, immediately reboot.
In real estate sales incentives can be a great way to motivate an otherwise reluctant buyer to get off the fence and come running like a teenager to the ring of their Blackberry. As the real estate market has become more competitive, Ruth Simon of The Wall Street Journal Online has noted this trend among the nation's top builders: "Across the country, builders are stepping up their incentive programs. Ryland Group Inc., which builds homes in 27 markets, now budgets an average of 3.7 percent of a home's purchase price for buyer incentives. On a $254,000 home, the builder will kick in roughly $9,400 for extras such as a "bonus" room, landscaping and window coverings. In addition Ryland is offering home buyers free flat-screen TVs in Atlanta and a choice of upgrades, including stainless-steel appliances and the first year's homeowners' association dues, in Minneapolis."
So as a listing agent what are some ways you can use sales incentives to drive up interest in your new listing? One way might be to red tag your home, and hold a one day only sale!
Angie Martinson a top producing real estate professional from Southern Oregon has always been creative when it comes to marketing, but this time it was her assistant Gene, who stumbled on the idea of using a "One Day Only" sale. Gene came to the idea after watching a television commercial that ended with the famous tag line: "Limited time offer!" Why not apply that to real estate, Gene thought, and the next morning brought the idea to Angie.
Angie, loved it, in fact, she had just the house to test the concept on. The home located in a nice of area of town, was well kept, and easy to show but unfortunately it just wasn't attracting enough buyers. Showings had been flat. The starting price of $219,000 had been competitive but now the sellers were willing to adjust the price to the next major price point of $199,000.
Instead Angie made the suggestion to try a "one day only sale" in the form of an open house. The seller's jumped on the idea and the open house was set for the following weekend. To promote the event Angie first told her co-workers and MLS colleagues, called all of her investor friends, and placed an advertisement in the local newspaper. She also teamed up with another agent to handle the traffic, and invited a local lender to help qualify buyers on the spot. Finally on the morning of the open house Angie and her partner canvassed the neighborhood, set up signs, balloons, and flyers and then planted themselves at the listing.
So did it work? Absolutely! The one day only sale was a huge success! Angie and her co-host showed the home to ten groups of buyers but more importantly two of the buyers asked to write an offer on the spot and one eventually purchased the home!
Now, of course, it's impossible to say for sure what finally inspired the buyers to reach for their pen, but it's no doubt that the catalyst, the starting point of getting people to the front door of the home was the limited time offer, combined with a substantially lower price. Using this technique is a classic example of something that we in the real estate business call the fear of loss close, which simply means that people hate to lose.
A great example of this is during an auction. If you have ever been to an auction, whether it's a charity event at your children's school or a late night caffeine induced splurge on eBay, it's interesting that when you begin to bid on something that you may have been mildly interested in, it can soon become something you can't live without. Why? Because other people are bidding against you! They are trying to take away something that you now desperately must own. Psychologically you have a tremendous fear of loss.
So will a "One Day Only" sale work in every situation? It depends on the situation. In this case the seller was prepared to make a substantial price reduction down to the next major price point. This combined with the fact that the home was in good condition, and in a good location only fueled the fire of interest. But if your seller is considering a major price reduction this could be just the ticket to slapping that sold sticker across the sign in your sellers front lawn.
