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So, there you stand at the shopping centre with a choice to make. Two supermarkets are side by side, one with fully stocked shelves and one that appears nearly empty. Which would you choose?
Now consider this: you’re on a busy restaurant strip and are wondering which establishment to dine at. One restaurant is packed to the brim full of patrons, and the other is half empty. Which of the two are you more tempted to try?
The answer to both these questions is obvious. There’s little point shopping at an empty supermarket, and a busy and bustling restaurant is far more alluring to dine at.
Now for the bigger question – how on earth does this relate to real estate? Well, please give me a minute to explain.
It’s about perception
As different as real estate might seem to retail, there are some similarities. People will choose you for the volume of products you offer and the range of items that’s available.
Just as it’s more appealing to shop with a supermarket that boasts fully stocked shelves, it is more appealing to enter (either virtually or in real life) a real estate agency with a display packed full of listings.
There’s a sense there’s more choice and a greater likelihood that something will be available to suit that client’s needs.
In other words, those agents who “carry” more listings and are perceived to have the “stock” will have a greater appeal and reach in the market. And that’s particularly the case in a slower market.
The place to sell
Now continuing that supermarket analogy, consider this: if you were a food supplier, what type of supermarket would you want to stock your products?
Is it the one with less stock on the shelves and fewer buyers walking through the doors, or the one packed full of stock that everyone goes to for the product range?
Let’s lock in option B, shall we? Again the same applies to real estate. Sellers are more likely to want to work with an agency that boasts an array and volume of stock.
It creates a sense of activity. It gives them a sense of reassurance that this agency must be doing something right due to its volume and turnover.
It’s also a balance
Now while it’s important to have stock available for buyers and also create a sense of being “the place to be seen” for sellers, there’s also a balance involved, particularly when it comes to “holding” stock that’s clearly overpriced.
Again a busy supermarket offers a great analogy. The stock on any supermarket’s shelf has a lifespan, and if that stock is not turning over, it will be discounted to the price point the buyer is willing to pay.
Although simplistic, the same absolutely applies in real estate. There’s a balance between stock volume and holding items that are clearly not in line with market expectations.
In the cases where a price adjustment is absolutely needed and likely to be significant, that’s when you need to be having tough conversations with your sellers.
Here’s where things get tricky
However, here’s where things get complicated. There’s a big difference between something that is clearly overpriced and represents an unrealistic price point and something that is just a little beyond what the market is currently willing to pay at this very moment.
I’d argue there’s nothing wrong with carrying quality listings that sit in this second category. These types of listings add choice and volume to your “shopfront” and help you build your pipeline for the future.
That said, they have to be the right type of listings. If you’re carrying quality and slightly higher priced properties, it should be on the following proviso.
1. It should be vendor paid marketing.
2. The vendors should be good people to work with.
3. While the market motivation might not be here at this particular price point, you remain keen to work with the seller and they’re keen to work with you.
4. It’s the right type of stock for your brand and image.
What store will you be?
Just like a major grocery store, agencies need to tread a fine balance between volume, choice, and market demand. But what store would you rather be, the one with stock and patronage or the one with bare shelves?
Manos Findikakis is the CEO of Agents’Agency.
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