The Unconditional Blog

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To what extent does price marketing effect property appeal?

Posted on: January 17th, 2010 | Filed in Agent Tips, Buying / Selling a home, Online marketing

There have been regular articles and commentary throughout 2009 related to the merits or shortcomings of advertising property with a price or not; whether to market as an an auction, or to display no price “and let the market decide”!

Many views and opinions lie behind these approaches. I decided (as I often do) to dig into the numbers and see what the facts say. Is there more evidence that displaying a price increases viewings and what is the predominant method of price marketing for property?

Judged purely on consumer feedback I would have been drawn to say that putting a price on a property would be the best approach as we regularly receive emails from users of the site, advocating the full and transparent displaying of a price on every property.

Realestate.co.nz breakdown of listings by price marketing 2009Firstly the fact is that the most popular method of marketing a property on the web as judged through all property listings in 2009 was a fixed price – 63% of all properties featured on the site were marketed with a clear price.

As property price ranges rise there is a move towards other forms of price marketing. In the sub $200k range a fixed price represents a majority 68% of all listings, whereas for property over a $1m it falls to just 37%. Between $200k and $500k it is 67% and between $500k and $1m it is 54%. So agents seem to favour less specific price indications as property values rise.

Realestate.co.nz breakdown of listings by price marketing 2009 - property priced over $1mIn the $1m plus category of the property market the most popular pricing method was “Negotiation” representing 38% of all listings just ahead of the fixed price at 37%. Third place comes Auctions with 14%.

Auctions are more significantly favoured interestingly for high price properties. Between $500k and $1m is the peak of Auction pricing with 15% of all listings in this category being marketed as an auction, over $1m it is 14% and in the below $200k category the level is 11% and interestingly between $200k and $500k it is only 7% being marketed as an auction.

Tenders are one of the least popular means of marketing properties representing just 1% of all listings, although in the higher price category of between $500k and $1m and over $1m it represented close to 2%.

Having outlined the make up of listings by pricing method the big question was, is there any appreciable difference in viewing performance between the differing pricing methods – do property with a clear price receive proportionality any more viewing??

The bottom line is no! – properties without a price are not ignored by viewers!

In terms of viewing properties there is interestingly very little difference in the relative viewing between properties with a price and properties without a displayed price. This did come as somewhat of a surprise as some of the extreme comments of emails we receive state that these people completely ignore properties without a price.

Realestate.co.nz breakdown of listings by price marketing 2009 - Viewing by price marketingOverall if anything Auctions actually generated more viewings than listings in general by around 11%. This could be because auctions are marketed for a shorter period of time and tend to focus attention and generate repeat viewings online prior to the auction.

Realestate.co.nz breakdown of listings by price marketing 2009 - Viewings by priceThe other very noticeable fact is that higher priced properties are viewed more than lower price properties – this could be around aspiration from prospective or casual viewers of the site, or could be that simply higher priced properties are just more attractive!!

Note: This analysis is based on all properties featured on the website of Realestate.co.nz during 2009 – a total of 87,500 listings. The price range segments quoted are reflective of the displayed price, or the indicative range, which is provided by the agent to us to use to power the search result, whilst not being displayed on the site. For these properties with a price range we used the mid point average as a price guide.

Article Discussion

  1. Excellent analysis, topical and relevant.

    Nothing much more I can add other than to say that my experience is that my ‘priced’ listings attract a larger percentage of tyre-kickers including nearby potential sellers who visit to compare my listing to their home. I possibly get more future listings from my ‘priced’ listings than actual sales.

    Accurate pricing in my average range ($1.1mil) is difficult, so I often recommend auction or by neg.

  2. IanC says:

    Did you consider that houses with a wider (and obviously hidden) price range for your searches will come up in significantly more price ranges and get more clicks?

    Also, how much lower is the percentage of Auckland houses with a price?

    While I have the option for 2c worth, I’d note that I personally dislike auctions and won’t participate as you have to spend money for the “privilege” of bidding (assuming you’ll do your due diligence), without having any guarantee that you’ll be anywhere near being able to buy the house.

    And finally (and sort of unrelated) no matter what anyone says, the CV is a useful check in particular where the auction price range is 20% + (you can roughly work out the hidden range by searching in price bands and seeing where the house does/doesn’t crop up). Certain agents – especially Barfoots – don’t list the address. This is incredibly irritating. Its not a secret (99% of the time), and I shouldn’t have to waste my time calling the agent to find an address. Rant over!

  3. IanC, agree the CV is a good rough guide. I find that most customers ask about this. In future I believe it will be noted on every web listing. By way of explanation (not defence!) Barfoots properties that have an open home scheduled display an address. All others don’t. It’s a company routine that may or may not change in time. I believe provision of maximum info is the way to go…it results in better qualified enquiries and less time wasting all round.

  4. Alistair Helm says:

    IanC

    Appreciate your comments. Some response in addition to those of Steve.

    1. The extent of the range for a given property should not effect the degree of viewing after all the property will attract attention by a viewer or not regardless of the number of times it appears in searches.

    2. In terms of the regional impact, this will require a further analysis – thanks for the enquiry, I will endeavour to fulfill this request shortly.

    3. You are correct, it does not take much time or effort to disclose the hidden search range from search results. As to CV’s – they can be useful but are not always a true reflection of recent changes to the property that could effect the valuation as they are in the main a computer model taking account of recent sales and any local consented works on the property.

    4. The address of a property should be a mandatory display requirement of all listings by all agents. We advocate this approach, but equally do respect the view that the listing agent makes the call as to whether the address should be seen. Clearly some agents view the lack of an address as a means of requesting a call to the agent.

  5. IanC says:

    Thanks guys – as further feedback for both of you, I will very rarely call an agent to find an address (out of bloodymindedness). Whether I’m being rational or not, I am a client who is not considering a house simply because it lacks an address. I can, by the way, understand it where there is a requirement for privacy from a vendor. However, as most will have a sign out the front of the house, privacy isn’t the reason.

    Alistair – I think the range does matter. If you search for $500-600k in Auckland, you will find:

    – houses marketed with a price in the $500-600k range
    – houses with no price but a “hidden” range including $500k (and thus potentially as low as $300k), and more importantly
    – houses with no price but a hidden range including $600k (and sadly with price expectations potentially as high as $1m, based on what I’ve seen).

    Naturally, a person searching for houses in the $500-600k range will click on these expensive ones (as they look like good value!). If they had a range that **actually reflected the price expectation** (or a stated price), they wouldn’t show up and wouldn’t get clicked.

    Does that make sense?

  6. Ross Brader AREINZ says:

    Ian C – since 17 November all real estate people must now provide an appraisal in writing at listing time – ie an actual figure – not a range. So just ask the salesperson “what price did you appraise it at?”

    To not provide the address, google mapping, maximum information etc is a big mistake and will not be tolerated by purchasers in the future.

  7. Justin says:

    Interesting article but I feel it is missing one more piece of analysis and that is, what is the percentage of times the agent is contacted in relation to properties with a price as against those without a price? The click through to contact rate.

    I’m with some of your other viewers, if there is no price and no address I move on to the next one.

  8. Alistair Helm says:

    Justin

    A very valid point. However there is an issue in regard to judging lead generation as a measure of appeal of property. The motivations for an enquiry can be a function of a variety of issues. For example if the property is inadequately profiled in terms of information, but is appealing may generate an enquiry (albeit a frustrated enquiry). On the other hand a well presented / comprehensively presented property may generate no email enquiry and yet sell very quickly at a great price precisely because the buyer did not need to ask the agent any questions – they merely turned up at the open home or office and proposed an offer.

  9. Elle says:

    Do these conclusions hold up in the regions as well as the metropolitan areas? Would be curious to know if Southland listings, for example, still attracted the same amount of hits for no price marketing as those marketed with a price.

  10. André says:

    If it has no price, I simply skip over it. As another article points out here, house-hunting is incredibly time consuming. I do not have the time to check up on the unpriced.

    Why not set up a poll on this site? It will be intersting to see what other buyers really think of pricing.

  11. Alistair Helm says:

    Andre – a good suggestion I have thought we could use a poll to elicit some valuable feedback and user opinions.

  12. Michele says:

    I am a buyer, with a very good deposit, with an approved amount from the bank. Surely this means that I am the sort of buyer agents want to connect with? But the amount I have to spend is smaller than the amount I need to buy the house I would like to buy in the very defined area I want to buy in. This means I am looking for the best house I can get for the smallest price (along with every other buyer). The ONLY think I want to know is 1) where is it and 2) how much is it? Only then can I look at it with any real possibility.
    I am so irritated by no prices I refuse to ring to ask. Why should I spend my money to ring a cell phone to ask the agent the one thing they should put in the ad? Often I turn up at open homes I think might be in my price range and 90% if the time find have wasted my time. Even with extreme organization and almost military precision, at most I can get to 8-10 open homes on Saturday and less on Sunday. I would like my time to be well spent – and as the vast majority of houses have no prices my time is often wasted. There is no point in viewing a house I can’t afford even if I love it (which I probably will).
    Auctions are also a waste of time – unless they are in my price range.

  13. Alistair Helm says:

    Michele,

    Thanks for sharing that perspective. Clearly as a buyer you would want to ensure that your time is spent productively and a key part of that is not wasting time viewing properties (or worse being seduced into property viewings) for properties that are outside your achievable budget. After all for the vast majority of property purchases there is a budget which cannot be exceeded.

    I guess our role in running the website and providing this communication vehicle of this blog is to open up the debate and provide those agents who read this blog to be able to get an honest perspective on the view of buyers, something that may be harder to do face to face with an agent.

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