Using Buyer Psychology to Target Your Most Likely Home Purchasers
Consider these two statistics:
- Homes stay on the market for an average of 68 days.
- Only 23.5% of homes fetched more than their asking price in 2018.
Even in today’s solid housing market, home sellers struggle to sell their home faster and for maximum profit. This shouldn’t be the case.
The solution is to leverage buyer psychology to target the most suitable buyers. In this article, we’ll discuss what you need to know about buyer psychology in real estate. We’ll also discuss how you can use it to your advantage as a seller.
Understand the emotions of home buying
A home is the biggest purchase most people make. So, buyer psychology functions quite differently during home shopping than, say, TV shopping.
Most importantly, understand a home purchase is more than an economic transaction. Sure, buyers consider price, value, and loan terms. But there’s an emotional attachment too.
That means you must focus on sweeping buyers off their feet—both with online marketing and in-person showings. Make them fall in love, and you’ll potentially sell your home for more money.
This makes the first impression crucial for sellers. As psychology experts, first impressions carry weight (for better or worse).
At DLP Realty, our Success Managers stress to sellers that buyers want to imagine themselves in the home. That’s why we stage the home to be as warm, inviting, and clean as possible. We also remove personal belongings, such as family photos.
By doing this, you make it more likely that potential buyers form a connection to the place. Once that emotional attachment is there, you have a much better chance to sell your home faster and for more money.
Of course, first impressions aren’t everything. Home buying takes time and consideration of one’s finances and lifestyle needs. It’s no surprise that 71% of people think buying a home is overwhelming. As a seller, you must understand that. And you must make an effort to understand what buyers want.
In short, market your home to the buyer’s needs. This is where working with the right real estate agent can help a lot. Good real estate agents have not only done the market research to understand local buyers, but they understand the psychology of home buying. They can read buyers well and speak to their needs. And that’s ultimately what will push the prospect into making you an offer.
Price to entice home buyers
Did you know that most homeowners value their property at 5-10% more than what it’s actually worth?
As a homeowner, you have an emotional attachment to the price. But this could negatively affect you.
How could this happen?
Think about this: 93% of home shoppers begin their search online, according to the National Association of Realtors. That indicates buyers have more market knowledge than ever before. When they search, they not only look for homes in their price range, but they also research your area to understand the market. They see if properties go for above listing price or below, and use that knowledge in negotiations.
During their research, buyers inevitably will compare the price of your home with a similar listing in the area. If your property has a much higher or lower price, they’ll want to at least know why. Or worse, they’ll skip over your listing for concerns they’ll pay too much (if the price seems too high) or end up with a home in bad condition (if the price seems too low).
In short, pricing a home is a real art. List at too low of a price, and you could end up with much less money than you should’ve. List at too high of a price, and your home could sit on the market for way too long.
Simply put, home buyers want to feel they’re getting a good value. Otherwise, they’ll look elsewhere.
At DLP Realty, our Success Managers combine intimate local and national market knowledge, an analysis of past sales, and an exhaustive study of similar homes in the area to arrive at the optimal list price. This ensures you can sell your home faster and for the best price possible.
Real estate agents can utilize pricing strategies that work as well. Similar to how retailers have more success pricing a product at $9.99 instead of $10, “just below” pricing proves more effective in real estate.
In fact, a study by the Journal of Real Estate Finance and Economics found that sellers using a “just below” pricing strategy got 2% more on average. That’s a lot of money if your home is worth a few hundred thousand.
As Michael J. Seiler, the co-author of the study, notes, “people have these psychological price barriers,” and they do matter when selling your home.
Moreover, “just below” pricing doesn’t mean you ask for less. It just means you put the price below a certain barrier. For instance, if your home is worth $195,000, pricing at $199,900 can yield you a higher sale price. And that’s what you want, right?
Utilize dynamic marketing strategies to meet buyer expectations
With any real estate marketing plan, know what buyers want at certain price points. As consumer psychology teaches us, people have certain expectations. And those expectations are tied to price.
For example, if you have a luxury home in your area, research details that buyers expect things like smart home automation, a prime location, a pool, spa-like bathroom, and high energy-efficiency. Make sure your marketing efforts highlight those high-end attributes.
If you have a mid-end home, buyers still expect features like Energy Star appliances, hardwood flooring, walk-in pantries, and a patio. Home storage needs are also important, a survey from the National Association of Home Builders tells us.
Knowing this, your marketing should go beyond beautiful pictures, virtual tours, listing on MLS, and signs in the yard (though you need to do all that well). You must speak to the needs of what your target market desires and motivate them to take action. Your online and offline marketing should:
- Show how your home offers everything buyers need and want: The best salespeople show customers how a product solves something for them. Real estate is no different.
- Create a sense of urgency: Marketing research shows creating urgency increases conversion rates. So, highlight the unique advantages of your home and show how it won’t last long on the market.
- Form a relationship: You or your agent should establish yourself as an ally with each prospect. Show you’re here to work with them, and it’s more likely a mutually beneficial deal gets done.
As much as possible, you should personalize your marketing. This requires communication and listening skills. Get to know your potential buyers. Again, the right real estate agent can make all the difference here.
For example, if your neighborhood is known for good schools and a young family looks at your place, make that information available in a brochure. If you live in a condo high-rise that mostly sells to young professionals, mention property amenities and nearby dining and entertainment in the online descriptions.
Leverage buyer psychology. Make the big sale!
By leveraging buyer psychology, you could earn 10%+ more in profits on the sale of your home. It’s all a matter of pricing your home correctly, understanding the needs of your potential buyers, and marketing effectively to those buyers.
In the ever-changing landscape of real estate, utilizing buyer psychology to your advantage can get difficult. That’s why it pays to have the right real estate agent on your side. They know the ebbs and flows of the market, and can meet buyers where they are.