Defining or Refining the Product

Product 1: The House

Whether you are starting with a blank slate or you already have what you think is a completed house to sell, it’s never too late to consider if there are any changes you could make to better match your target markets’ preferences in relationship to your competition.

This is a moment when you really must understand the competition for your target homebuyers, and be honest about how your product compares. If you haven’t already done so, get out and look at other homes for sale in your price range, being sure to also look at homes that are priced as much as about 20 percent more or less than yours. What features do they have? What finishes and floor plans? Appliances and systems? What is the overall visible quality? The curb appeal? What does your real estate agent say about them? If your target markets have a lot of choices, you need to be sure that your homes compete. Click here for a worksheet to help you compare properties in your price range.

If you are embarking on new construction or a new renovation, take a moment to search online for the latest information on homebuyer preferences, and see if you can incorporate some of them into your plans. The National Association of Home Builders and the National Association of Realtors both collect extensive data on homebuyer preferences, including which tradeoffs homebuyers are willing and unwilling to make. Both sources sell their full reports, but you can usually find out the highlights for free from their posted press releases, presentations, or articles in online newsletters and magazines.

One of the trends home builders report is that today’s homebuyers have high expectations for visual appeal and comfortable design. They read catalogs from retailers like Pottery Barn and Crate and Barrel. They watch reality shows on home makeovers and home shopping. And they know there are a lot of sellers competing for their purchase. You will want to be sure that your home has curb appeal and quality finishes, new appliances and closet space. Homes need to be sparkling clean, and you should consider staging them with plants, flowers, bathroom towels and shower curtains, mini-blinds, a bowl of fruit on the kitchen counter, etc.

If you find that you under-budgeted your acquisition and rehab costs, try not to make up the difference by compromising on everything that is visible to a prospective buyer. Saving a few hundred or a few thousand dollars on finishes and curb appeal can backfire if your property sits on the market for months accumulating carrying costs and vandalism damage. Systems are important, but finishes sell houses. If basic funding is too tight to cover the finishing touches needed to sell the properties, you may try to put more money into the rehab from another source. Seek advice from a real estate agent and/or builder on the highest-impact improvements.

One common misstep for housing developers is to not look past the property’s footprint enough to see that privacy plantings or fencing would mask an unpleasant neighboring backyard, or that mini-blinds on the upstairs windows could soften the visual impact of the vacant property next door. When you walk through your properties, look out all the windows and think about the impact of what you see from a buyer’s point of view.