Probably the #1 piece of advice I can give to home sellers is to remember that, while it is true that this is your home and you have an emotional attachment to it, it will become a product you are now offering to potential buyers. Assuming you will want to net the highest price for your home, you need to focus on what is most important to BUYERS in your market and offer a product that meets BUYERS' definition of value. For what - what location, condition, features and benefits - are buyers in your market willing to pay a higher price, and can your product meet these expectations?
Simply put, the process of buying a home is nothing more than shopping for a product, and the behavior of shopping is, in the simplest terms, the process of elimination. Buyers start with a need – their “why” – to want to buy a home. For example, they are either renting and want their monthly payment to go toward their own asset. Or perhaps they are relocating for a different job. Or maybe they need a bigger (or smaller) place as their family grows (or children start leaving the nest). After they’ve made the decision to buy, they start deciding the “where” and “what” part of the selection process. Here is the general process a home buyer follows when deciding where and what houses to buy.
This is the more macro-view of a buyer’s search. Sometimes this comes obvious to buyers – sometimes it isn’t. Many people stay in close proximity to where they grew up and perhaps to where family is close. Some people move across the country for job opportunities and know no one, nor the area very well to know where they ultimately want to live. So narrowing down the overall regions or cities in which one wants to buy is typically the first step, and this is done by eliminating the areas and cities in which buyers DON’T want to buy.
Once a buyer narrows down the area and/or cities in which they want to live, then they start identifying and researching potential neighborhoods. Sometimes neighborhoods are selected based on price range, and many times other amenities will distinguish between neighborhoods. According to a National Association of Home Builders (NAHB) 2013 study of new construction vs. first-time home buyers, here are the top reasons that compel buyers to choose one neighborhood over another.
Generally, the third step in the process is for a buyer to select a home on which to make an offer. Most buyers choose a home based on criteria of specific features the home must or should have. From the same NAHB study cited above, here are the top reasons that compel buyers to select one home over another.
It is important to note that, as buyers go through the process of elimination, there may be multiple cities and/or neighborhoods that are not initially eliminate from their search, and ultimately the city and/or neighborhood could become the deciding factor(s) between one home or another.
Features vs. Benefits
One final note about buyers. The marketing & advertising industry has spent billions of dollars researching consumer behavior to understand why one consumer buys one product over another - for example, why might one consumer buy a Lexus and another consumer buy a Toyota? They both provide transportation. This must mean there is something else that distinguishes these two brands to these individual consumers. The marketing & advertising industry found that there are 14 underlying reasons to explain this, which are listed below with their definitions.
Tying this back to the graph above, one buyer might define the benefit of a yard/view as Entertainment whereas another consumer might define the benefit as Aesthetics. Layout/Design could be defined as Convenience or Value... or even Comfort. These are all subjective to each individual buyer, so there really isn't one "right" answer or benefit relative to a feature. However, it is important for sellers to become familiar with consumer benefits and how they influence buyers' purchasing decisions, as well as the value one buyer might assign to a property vs. another buyer, or even your OWN opinion of value as the seller. As the seller, in order to give yourself the best chance of netting the highest sale price for your home, your product should satisfy as many of these perceived benefits as possible, so that you attract the highest number of potential buyers.
Taylor, Heather & Fu, Jing. “Characteristics of Home Buyers.” Economics & Housing Policy, NAHB, www.nahbclassic.org/generic.aspx?genericContentID=246591&channelID=311 Accessed 17 April 2020.
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