If it Works for Selling Cereal, It Works for Selling a House

Share Button

A couple of Buying Principles:  Consumer Behavior, in the consumer goods market:

1)  Having the PRICE clearly marked on the box of cereal (or any product) is a key enabler to sell your product.  

It doesn’t matter if you’re selling $5 cereal or $20 steaks, people want to know how much an item costs.

2)  There is a saying in retail:  “Out of Stock means out of business!”  When the product is not on the shelf, consumer can’t buy it from the retailer.  Game over.  

Some call it Distribution, as part of the outdated 4p’s of marketing mix model.

Now to the star of this post, real estate….

What is wrong with this picture?

The real estate market, competitive and critical to the economy

Each sign has the basic information:

  • The Real Estate Company, agent name, basic contact info.
  • A box to load the specifics of the property, the listing “brochure”….

But what is painfully missing?  The brochure box is empty.

My Experiment:  Over the past 4 weeks, I biked around 15 different subdivisions and about a 5 mile radius from my home.  Here’s what I’ve found:

  • Approximately 100 houses with For Sale signs.
  • AT LEAST 80 of these homes had EMPTY brochure boxes.  These were not new construction homes; these are subdivisions with re-sales.
  • Nothing that stood among realtors:  In other words, well-known local realtors had empty boxes at the same rate as agents I’ve never heard of.  And the boxes that were empty are not “1 timers”, they are always empty….

If I was taking notes while sweating the % of boxes that are empty would probably be HIGHER than 80%.  Take your own poll on your next Sunday drive around the neighborhood; you’ll be surprised how many boxes are empty.

What’s the big deal?  Can’t people go on line to check the price & specs, or call the realtor listed on the sign?  ABSOLUTELY!  That’s not the point.  Here is the point:

  • IF price matters for a $5 box of cereal, wouldn’t it matter for a $300k house?  
  • Why gamble on a prospect and make them hunt for a key variable in selling your house?  

Ironically, I have yet to meet a realtor who was NOT quick to pull the “drop the price” trigger when marketing my home after it’s been sitting for 90+ days.   Doesn’t matter that I’ve had only 3 showings in 90 days (market is dead), the price is the answer so says the experts you are paying 5% of your biggest asset……..take a look at this 3 minute video from the author of Freakonomics, a best-selling study of how humans respond to incentives, in particular how realtors and homeowners may NOT have their interests aligned.

This all sounds critical of realtors, and that is not the intent.  I know a ton of great realtors……they are all great people-people, involved in their communities and genuinely concerned for the well being of their clients.  I am lucky to call most of them friends.

However, while a realtor only gets paid when a house closes, I suspect that a fair number put more energy into “getting the listing” vs. moving the listing.  I’ve seen many creative pitches for listing my house with them vs. their competitor.  Great power point, reference lists, statistics, etc.  Then when they get the listing and it does not magically move?  DROP THE PRICE.  

How about we start with the basics?
Keep the brochure box full if the homeowner is out of state.  If you can’t personally fill them, fine.  Pay their neighbors with a creative gift to fill their box; a falling price won’t help them either.

Sounds like nitty-gritty work keeping these boxes full?  ABSOLUTELY.  Hustle cuts across every profession.  Not always sexy, but always needed.

In real estate, in a 5 mile radius around my house, I can tell you that a degree of Hustle is missing from a tiny aspect of House sales process.  It may not be a big deal in the process.  

Maybe the rules of cereal do not apply to a $300k house sale.  It certainly doesn’t seem to concern all of these homeowners and their agents.

Marketing is about being different, and standing out.  It applies to cereal, and it applies to service professions like Realtors.

I never heard a realtor make a guarantee on something so simple.  Maybe that’s not needed, or not possible.

For me, the Realtor that says it (and demonstrates it) would certainly stand out, and earn MY listing.

The one’s with empty boxes, I won’t be inviting them in.  And unfortunately for them, they won’t even know it.  It’s an unfortunate truth in Marketing.

The Realtor has established their brand in my mind.  “Branding” is what happens in the minds of consumers, not the marketing material.

It is hard to read minds, but you can certainly earn positive (or negative) mind share.  You do that by showing up.  Working hard.  And not leaving your boxes empty.

The good news for realtors?

Many potential home sellers do not sell $3 items for a living……

Share Button

Comments

  1. Great points, Mark.

    It comes down to how you view housing. Is it a commodity? If so, you want that box full so people know the price right away. But when are you really comparing apples to apples in a home purchase? If you view each house as a highly unique product, a one-of-a-kind customized box of cereal, then maybe you don’t want the price front and center. Maybe you want to lead with features and close with price. Especially since we’re not talking about an impulse buy. In fact, my last agent who sold our house didn’t even bother with a box. And I’d rather have no box than an empty box, since an empty one just looks sloppy and unprofessional.

    But I think the more important point is the agent’s incentive to keep a box empty vs full. Sure, they hustle to get signed on, but they only get paid when the house sells and they typically only have a 6-month window to do it before the contract is up for renewal or termination — so they DO want to sell. But what the agent knows is this: home buyers who already have an agent on their side are going to have access to the house info, price, and even to the house itself for a showing. Home shoppers WITHOUT an agent… well, if you can get one of them to call you directly, you get to represent the buyer and seller at closing and double your money. So from an agent’s perspective, that’s a good reason for an empty box. Make them call you and you might have found yourself another client.

    Personally, I’m completely in agreement with you. After just going through months of home shopping, I was very annoyed at all the empty boxes. But I think it’s indicative of an industry that, as a whole, isn’t very consumer-friendly. FSBOs are more popular now and realtor.com has given us all access to a lot more information (especially their mobile app, which frankly makes those info boxes obsolete), but the agents are still the main hub for sales activity, and they want to keep it that way.

    • Awesome points as always Tom. Did not look at this from that angle, the incentive for picking up an additional client. This industry is in the midst of disruption but the realtors still have a foothold, longer than I would have imagined if this were 5 years ago. I wouldn’t be on my heels if I were in this business

  2. Realtors most certainly need to work to sell a home and not just list it. But if they are marketing the home correctly, they have an outgo of funds long before they get paid their commission. Having just bought my 4th house and sold my 3rd (in the past 9 years), I can say that sooooo much “shopping” is done online now. In fact, showings overall are much fewer now than they were in past years because there’s so much information available that either a realtor, home buyer or both can glean ahead of time, making it easy to eliminate a bunch of potential homes and being more effective with time spent on showings.

    Also, I think an element that’s missing here is who – or should I say, what – dictates price. The market dictates price. Both from my experiences and the thousands of hours I spend watching HGTV real estate shows, I can confidently say that there is a mindset among many homeowners that *they* set the price and they *need* to get a certain dollar amount out of their house, etc.

    Taking that one step further are the realtors who willing walk away from a potential listing due to the fact that the homeowners are being unreasonable about what they want to sell their home for.

    If you have a realtor who is going to actually market your home vs just putting it on the MLS and letting it sit (because there are plenty who do only that), AND you have a homeowner who listens to the comps and their realtor’s advice regarding a price the market will bear, your home will sell.

    With or without paper flyers. 🙂

    So, are you guys selling your house?!?

    • Great thoughts Liz. No doubt that the debt level/equity in the house (or not) will create irrational price setting. Sellers are paying a Realtor for their professional advice and the key is setting a smart price backed with data, ignoring that and you discount a key part of their value. I agree, many probably do. We are not selling, just stumbled across the empty boxes and poof! Our experience is similar to yours with 4 primary homes purchased (3 sold) and an investment property with a completely different story. I wish this track record was over 9 years though 😉

  3. John E. Stamps says:

    If these guys had any sense at all or more depth in their knowledge of Real Estate and human behavior they would not give this advice. They need to be schooled by a knowledgeable Real Estate Broker on other scenario’s and conditions that should be considered, instead of just trying to be cute and sell their small minded philosophy which in turn belittles and devalues real estate agents and the industry in general! As in ANY profession, you need to align yourself with someone who knows, studies and understands their profession on a deeper level than you do ..Thank you for allowing me to speak alittle of my mind 🙂

    • John E. Stamps says:

      As far as flyer boxes being empty, I agree. It is a pet peeve of mine and irritates buyers in the market. The agent should or could use a QR code or a 1-800 # that will give the information to buyers 24/7!

      • John E. Stamps says:

        One more thing!…..How would your philosophy work if you took it on the road to Las Vegas…..Say, on the roulette wheel ? ….Oh! …”I just won some money and now I am ahead, but I really feel I need to hold out, keep spinning the wheel and get more money!: If I just spin the wheel a few more times I will definitely win more!, NOT!!….Its a gamble anyway you look at it…
        but, if you had listened to your agent who said, “I am not thinking of my own self interest, but of yours and I would advise you to take your winnings and leave while you are ahead….. I’m just saying…… In the Real Estate market we have been experiencing I have seen both sides……The sellers who held out waiting for the market to get better, which cost them more money long run….and the sellers who made decisions to move forward in their lives and are better for it…! again Thank you for reading..!

        • Love your comments John, thanks for taking the time to share them! Looks like the freakonomics guys got under your skin! They are certainly controversial, the topic of Realtors was actually their LEAST controversial topic (subject for another day!). My experience is that Realtors genuinely have their clients best interest at heart, we have had pretty positive experiences and think fondly of all of them. Your analogy of the roulette wheel is a good one…..I’ve seen a ton of sellers get consumed with today’s price without looking down the road at potential risks associated with holding costs, and the intangible “baggage” of not moving on with their lives. High stakes gambling indeed!

      • Great thought on QR code. I’d personally put a stack in 4 neighbors homes, pay a teenager $5/day, have them take a time stamped photo, send it my way, etc. THe curse of being a consumer products marketer!

    • Thanks so much for taking the time John! Love to hear the views of a local pro, and one I’ve always admired!

Speak Your Mind

*

Follow

Get every new post delivered to your Inbox

Join other followers: