Real estate properties in general and residential ones specifically, are unique products which require creative marketing techniques. Real estate entrepreneurs and agents use various marketing approaches which enable them to sell properties at the highest price possible and at the shortest period of time. Video presentations, sample flats, models, advertisements and internet sites, are all used as acceptable selling techniques in this competitive market, which in part depends upon the buyers’ psychological needs.
A study conducted in Germany and the Netherlands in 2007-8 tried to examine an innovative marketing tool and its application as a selling technique for residential flats, both new flats which were being sold by entrepreneurs and second hand flats which were being sold through realtors. Each such property was examined by objective experts who composed a regional-environmental report. The report included an examination of various elements which concern the quality of life in that specific living environment, such as demographic data of the town and neighborhood, ecology, land-use, transportation, education, employment, etc.
The report was given to every potential buyer. The research examined the impact of the report through three measures: the actual price paid by the buyers vs. the preliminary selling price decided by real estate appraisers ; the amount of time it took to sell the property compared with previous records; examination of the potential buyers’ reaction to the report they were given through a statistical survey.
The research took place in four towns in Germany: Cologne, Freiburg, Munich and Kiel; and in two towns in the Netherlands: Utrecht and Nijmegen. Altogether, the research included 212 new flats that were offered by real estate entrepreneurs (in 13 different projects) and 58 second-hand flats that were offered by real estate agents.
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The findings were conclusive and showed that regional-environmental report is a highly effective marketing tool. With regard to the selling price of the properties, it was found that, on average, the flats were sold for a price which was 5.15% higher than the preliminary evaluations of the appraisers. New flats were sold for a price 5.36% higher and second-hand flats for a price 4.4% higher than market value. Altogether, 267 out of the 270 flats (98.9%) which were included in the research, were sold for a price higher than market value.
In addition, it was found that the time factor has also improved greatly. The time period from the moment the properties were put on the market for sale until 80% of them were sold, was examined in each new project, comparing with previous records regarding similar projects in the same towns. The findings suggest that the time period has become shorter, from 208 days to 122 days on average, which is a significant decrease of 41.3%. On a residential project in Cologne, for example, there was a 72% decrease in the amount of time the flats were on the market for sale. As for second-hand flats, the results were not substantially different – the period of time descended from 42 days to 26 days on average, which is a 38.1% decrease. 56 second-hand flats out of the 58 that were included in the research were sold in a shorter period of time, compared with historical data taken from appraisal institutes and real estate agencies.
The results of the statistical survey, which was conducted among 305 potential buyers who were given the report, reflected positive reactions towards this new marketing method. 82.6% of these potential buyers noted that the report has given them an incentive for purchasing the flat, whereas only 6.2% considered it as a negative reinforcement. For 11.2% of the potential buyers, the report did not affect their decision whether to buy the property. 77% indicated that the report provided them highly essential information, and 95.4% indicated that they would be interested to get this kind of report for every property they will consider to purchase in the future.
In conclusion, regional-environmental report, composed by experts and delivered to potential real estate property buyers is indeed a highly significant marketing tool, which is likely to raise the selling price of the property in question, and to shorten the period of time until it is sold. This kind of report is, to a great extent, an objective reference which influences buyers’ decisions positively – more than any other marketing tool applied nowadays. This is especially true regarding new projects where the properties are being sold “on paper”, since the buyers do not get a physical sense of the property they are interested in. In these kinds of situations, the regional-environmental report diminishes their uncertainties and strengthens their confidence regarding the purchase of the property.
With regard to real estate agents, providing the report to their clients adds credibility and objectivity to their professional image, which obviously can contribute to their success in selling the properties. In general, the report may be an effective marketing tool as a technique for reducing potential buyers’ concerns regarding areas that have a problematic image; as a technique for stressing certain advantages regarding areas that have a positive image; and as means of minimizing the significance of the flat itself, while maximizing the significance of its surrounding area, for flats that are not considered attractive by potential buyers.
German Institute of Real Estate Appraisers
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