Appraisers: Expert or Commodity?
Editor's Note: Unless you can distinguish why you're worth more, you will always compete on price. This story is written for real estate agents but there is much to consider for appraisers.
Appraisers: Expert or Commodity?
By Peter Berman, CGB
Successful owners, developers and investors understand their properties must possess appealing virtues that attract potential buyers and/or renters. Preferably, those features are perceived as different and better, which can lead to higher price premiums and profits. One only need consider the real estate owners and developers who have achieved brand status for their properties. They persevered in distinguishing their brands during the recent frothy real estate market and now stand out even more during the crunch.
The obvious question is how to make a property (or your product/service) appear different and better than your competitors'. Unfortunately, the answer is not easy. To facilitate the process we offer the model in this article which is an adaptation of a model first presented as a business marketing tool to differentiate commercial products. The focus of the model is to create non-generic buyer perception which leads to marketing-oriented buyer behavior.
Generic or Non-Generic?
Regardless of what is being offered (including you/your service), buyers can perceive it in one of two ways: generic or non-generic. Generic perception means the buyer perceives what is offered as a commodity, just another item in a sea of similar products. In this case, the buyer generally concentrates mostly on price, specifications and on time delivery, with price the overwhelming deciding factor. (Sound familiar?)
Generic perception leads to non-marketing oriented buyer behavior. This means that the buyer will focus primarily on price because they see the property or service as a commodity-like a piece of gold, only distinguished by its type and/or size. This forces the seller to enter into a simple money-losing negotiation with the buyer.
Why We Pay More
Non-generic perception is when buyers perceive the property or the professional as different and better because the seller has developed attributes to foster this perception. The same is true for a professional service. This perceived difference creates the opportunity to increase price in exchange for improved value and moves buyers to marketing-oriented buyer behavior. The key for the seller is to determine which attributes to emphasize and to successfully execute them.
In this scenario the buyer recognizes the distinguishing characteristics of the property (or professional) and is open to accepting a higher price in exchange for higher value. The entire premise of marketing is to explain or convince a potential customer that there is enhanced value in the offering. This is the first step to creating an atmosphere in which the buyer will accept your marketing efforts. Once this perception has been created, you can effectively use marketing to focus the buyer on value rather than price. Often a negotiation will still ensue but it has a higher chance of favorable outcome for the seller.
Creating Non-Generic Perception
Step 1: Do market research to identify the market segment(s) to be targeted. If the segment is determined by self-desire, market research is needed to determine its viability.
Step 2: Determine what attributes will appeal to this segment to make this property (or your service) non-generic. What would add value to the property/service? What would enhance the image/make it a status symbol? Is your strength the developer's reputation or maybe a successful brand? In the case of an appraiser: do you have a particular expertise or niche?
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