Every property I have ever sold has gone for above the property ceiling price at that time – read below to understand how it has been achieved;
I am writing this as a follow up to a video I put out last week (video link). I wanted to expand the point further as you can gain a much broader depth of a subject with a written format
There are several ways to look a property ceiling price. If it’s just the maximum price a property of that type, in that area, has ever sold for, then its relatively easy to break through in a rising market. If, however you are taking a wider view and considering it to be the maximum value of a property, relative to others in the current market, then it’s much harder to achieve
Often, I will hear people remark on a property that’s just been sold with “oh that place is NEVER worth that much money” (especially in recent years). I have no doubt this exact dialogue has been shared for centuries. You see as a rule, prices increase over time. It often takes people a bit of time to recalibrate. For example, a property that seemed to be a bit above average on price in January 2020 could appear to be an absolute bargain now – that’s in less that 3 years
One of the key factors that people fail to appreciate with pretty much anything, is perceived value. Would I see the value in buying a Chanel handbag for £5,000 when I could buy one that does the same job for £50? Well actually, I would not see the value in a £50 one, as I don’t need a handbag. To the right person however, that £5,000 Chanel handbag might be an absolute bargain. If the general sale value is £7,000 then I may consider buying it (although I’m not sure I would have any outfits to match ;-P )
Often when I talk with estate agents, I will ask questions around the current pricing of property, how they have got to a certain valuation? What the current market is doing? They will sometimes remark, saying they were surprised that a property went for a certain price. The thing most estate agents know is, the value of anything is determined by what someone is willing to pay for it
In the west country (where I am based) the market went absolutely crazy after the 2020 lockdowns; properties were selling for HUGE amounts above what they would normally go for. This is because the lockdowns had created a new appreciation within society for having nature on your doorstep and a larger amount of space around your property (the race for space as it is now known)
I bid on 5 properties in as many weeks in 2021, each and every one went to sealed bids within 3 days of being put on the market, every one sold well above the guide price (I know this as my bids that were above guide, were not high enough), in most instances the went to cash buyers (I know this as the agent will give feedback as to why the offer was not accepted). So, were these people massively overpaying for these properties? Well it depends on who you ask – to me these places were not worth that much, but to them they were – we are back to the handbag example
What a lot of people in property fail to recognise is this relatively simple piece of marketing psychology. The more perceived value you give to someone, the more they are willing to pay. This is exactly how branding works, whether it be by scarcity or association to quality and prestige
One of the things I have always done in every company I have been involved in, is over deliver on value, that way people are more than happy to exchange a larger sum of money for the goods or service
One of the many strategies I have used in property renovation and development since 2012 is to understand the end buyer before I even start designing what is going to be done. This is a popular marketing technique called creating an avatar. Essentially you build up a profile of the person / people. I will think about things like;
Are they single, couple, family?
Age?
Retired, in work – if so what sort of work?
Hobbies and interests?
Reason they are moving, upsizing / downsizing?
Things that would attract them to the area?
If a change of lifestyle what are they looking for?
Where do they live currently?
What type of property do they have right now?
What improvement’s do they require?
What sort of style do they have / like?
This is by no means an extensive list, the more detail you can put into this the better. I will work out who the ideal buyer is, give them names, really get into their mindset, understand how they would look at things, understand what sort of things are of value to them.
For example, if it’s a retired couple who are downsizing, kids have let home, then the things that are likely to be important to them are storage space, spare rooms for kids / grandkids coming to stay
By understanding the mindset of the end buyer, it puts you in a much better position to make fast effective design decisions, you simply need to ask “what would Mr & Mrs x want?”. This comes into play as much with the general design as it does with the dressing of a property (il save that for another post though)
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Thanks for reading, as always, any questions please do ask?
Regards George B
