Why Selling Duplexes Is Like Selling Shirts

minneapolis duplex salesThe other day the New York Times ran an article about retail shopping that also talked about pricing duplexes to sell.

I’m sure the journalist at the Times didn’t intend to write about real estate, but she may as well have.

The article quoted the CEO of JC Penney, Ron Johnson, who said, “The customer knows the right price. We can raise the price all we want; she’s only going to pay the right price. And why is that? Because she’s an expert.”

This consumer expertise comes from hours spent on the Internet studying and comparing prices. Thanks to their research, consumers know they can get a better deal at either another store, or by ordering the item online.

The article detailed how several retailers, including American Eagle and Urban Outfitters, are reworking their pricing strategies to adjust to web-savvy consumers.

Duplex buyers are every bit as savvy as someone looking for a new bedspread. In fact, they may be even more so, as real estate is a much bigger purchase.

I often have duplex sellers they want to go against my counsel by pricing their duplexes 10 percent or more above my recommended number.

Their thinking is they can “always come down”, or, buyers can “just make an offer”.

The trouble with this logic, however, is that a duplex buyer is educated and if a property is over-priced from the outset, they won’t even go through the front door. Because they’ve been shopping online, they know they can get a comparable property down the street for less.

And once the property’s been sitting, to consumers, it becomes like last fall’s sweaters– too expensive for what it is. At that point, the only way to sell it is at a discount.

In other words, when the duplex goes “on sale” at a price usually below what it might have brought had it been priced right from the start.