Comparison Shopping– and how it impacts your real estate business!

My goal today is to help you better understand how a buying principle that you have all heard of can have an impact on your ability to teach your clients the fundamentals of pricing, take better priced listings, and secure price reductions!  I have found that having a solid understanding of how buyers make decisions to purchase has had a dramatic impact on my ability to sell more homes.

The principle I am going to be talking about today is comparison shopping. The comparison shopping buyer has a certain amount of money they want to spend and they are comparing products or services to see where they will find the most value for that money. There are two fundamental ways we can create value and give the buyer a reason to purchase…

value image

 

1-      Give the buyer a comparable product– with more amenities– for the same price as the competition.

2-      Give the buyer a comparable product–with comparable amenities– for less money than the competition.

 

We absolutely must do one of those two things above if we are going to sell anything to anyone…ever! So how can you use this principle to build your business?

 

Pricing Your Listings Better

Understanding this principle and being able to explain how it works to my clients has been immensely helpful over the years in me taking better priced listings and securing price reductions. Here is why: Because helping our clients understand why they should price their home 20k less than what they thought means that we have to build trust with them. They have to trust that what we are telling them is true. And using an analogy they are already intimately familiar with helps build this trust. Our clients understand the concept and process of comparison shopping because they do it every day. Here is the dialogue I have used for years with my clients…

 

“When it comes to pricing your home we have to create value! What I mean by value is this: Buyers shop for homes just like they do for cars, electronics, appliances, and anything else. They are comparison shopping. They are looking for value!   They have a certain amount of money in their pocket and they are looking for where they can get the product they want, with the most amenities, for the amount of money they are willing to spend. So there are two ways we can create value (then I explain the two points above).”

 

Using this script has not only helped me teach pricing by using an analogy that the client is already very familiar with but it has also done something else very powerful. It has laid a foundation that has helped me overcome their desire to price their home higher because of the updates they have done to it. Once they understand this principle they realize that if they simply price it higher because it has more updates then they won’t have created value. They need to create value by pricing it similar to the home that doesn’t have the updates and then the buyer has a reason to purchase their home and not the other one!

 

There is of course another application to this principle you can use to build your business and I am sure many of you have thought of it already. I won’t go into the details in this post for the sake of brevity but we will certainly discuss it in the future. It is the dynamic of how you are using this principle to your advantage to better market yourself and your services! What I mean is this: Clients are using this same principle when deciding which agent they should list their home with! They are looking for value! They are willing and expecting to pay a certain commission and they are interviewing agents to see which one will offer them the best shot at selling and will provide them the most services. I would encourage you to give thought to this principle as you decide how to structure your marketing packages to increase revenue!

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2 thoughts on “Comparison Shopping– and how it impacts your real estate business!

  1. Great read. I read this post when it was first published, but was drawn back to it after reading the same advice in “Selling the Invisible” which is very true.

    • Thanks for the feedback David!! I haven’t read Selling the Invisible, maybe I will have to check it out!!