Our industry loves to say that a real estate transaction is one of the most important events in a person’s life. The phrase has become something of a cliché, but like most clichés, it’s rooted in truth.
For sellers, the questions start long before a sign goes in the yard.
- Am I getting the full value of my home?
- Is this the right time to move?
- Is my home truly ready for the market?
The answers affect far more than a property. They shape financial decisions, family plans, career moves and what comes next.
Given those stakes, why would we approach a home’s path to market any differently than other industries approach the launch of their most valuable products?
What other industries get right
Whether it’s a tech company, movie studio or restaurant chain, products and marketing campaigns aren’t launched after a quick look at the recent competition. Rather, they follow multi-step processes layered with beta testing, focus groups, limited releases and other tactics, all of which are carefully calculated to gather feedback, build demand and maximize value.
Earlier in my career, I spent nearly a year helping a financial services company prepare for an IPO. That process included an extensive roadshow with prospective investors designed to test market demand and understand how investors valued the company before a final offering price was set.
This is standard practice in the business world. After all, a company only gets one shot to launch a successful public offering, and a mispriced stock becomes apparent almost immediately once it begins trading. No one would approach a moment of that magnitude without first testing assumptions and gathering market feedback.
A better approach to price discovery
Why should a homeowner’s most valuable asset be brought to market any differently? Comparable sales, absorption rates and list-to-sale ratios remain essential pricing tools, but they provide a view of where the market has been, not always where it is heading.
Historical market data is one part of the pricing equation. Current market response is another. By gauging early market interest, agents can gather information that helps validate pricing assumptions before a home’s full market launch. Every inquiry, showing and offer provides insight into current demand.
In some cases, that process may lead to an offer a seller is willing to accept. More often, it simply provides additional information before a home is broadly introduced to the market. No approach can eliminate uncertainty, but consumers are generally better served when decisions are informed by both data and direct market feedback.
Benefits for buyers and sellers
The result has benefits for parties on all sides of a deal: fewer gaps between buyer and seller expectations, greater confidence in pricing and a more informed transaction process overall.
Buyers spend less time trying to determine whether a home has been priced aggressively, unrealistically or somewhere in between and more time evaluating the opportunity itself. That can mean fewer public price reductions for sellers and fewer surprises for buyers as they navigate the offer process.
From policy debate to consumer value
Our industry spends a great deal of time mired in policy debates around visibility, exposure and distribution. What often gets overlooked is that a more informed approach to price discovery offers tangible benefits across every layer of the market.
If we truly believe a home sale is one of life’s most important financial decisions, then its market launch deserves nothing less than the same discipline, testing and preparation that other industries bring to their most important moments.
Ginger Wilcox is the President of Better Homes and Gardens Real Estate.
