Our Likely Buyer Pool And Buyer Enquiry Pricing
Introduction
There will always be the right type of buyers, as well as the wrong type of buyers for our home. The right type of buyers, or more specifically, the most likely and promising buyers for our home, make up our likely buyer pool. Here I go into more detail about our likely buyer pool, as well as buyer enquiry pricing, and how we can use this pricing strategy to get the most buyer engagement from the pool.
Our most likely and promising buyers
Every property has its own right type of buyers, or more specifically, it’s most likely and promising buyers. In previous sections, I’ve discussed the possible right type of buyer for our home in terms of personal taste or preference. Here, I want to discuss the right type of buyers for our home in terms of price bracket, or more specifically, our likely buyer pool.
To understand who are the most likely and promising buyers for our home, i.e. our likely buyer pool, let’s turn our attention to the buyer enquiry range, with the help of the image below.
BUYER ENQUIRY RANGE
As an example, let’s assume that our home has a market value of £1,000,000.
Our home sits at a certain point in the range on the market, i.e. at around the £1,000,000 price bracket. Properties that sit to the left of our home in the range represent less expensive properties (or properties in a lower price bracket) on the market, and properties that sit to the right represent more expensive properties (or properties in a higher price bracket) on the market.
Our likely buyer pool typically sits directly to the left of our home’s market value.
Why is this?
Buyers tend to buy towards the top of their price range, and in some cases, are prepared to pay more than they initially expected for a chance at securing their ideal home. In fact, according to Rightmove, 70% of buyers pay up to 20% more than they initially expected to pay. And interestingly, according to an article published on the Hamptons website, approximately 13% of viewings conducted across England and Wales in 2023 were of homes above the purchaser’s budget. In London and the Southeast, this number was 17% in the same year. Click here to read the full article.
Therefore in our scenario, the buyers from our likely buyer pool, are those that are buying towards £1,000,000 as the top of their price range.
What if we were to price our home above the market value?
If we were to price our home above the market value (i.e. over ambitiously price or overprice our home), say £1,100,000, then our home would sit too far to the right in the buyer enquiry range, with a good chance of it landing in the next price bracket above and being among the higher-value properties in the bracket - thereby completely missing our likely buyer pool altogether who are buying towards £1,000,000 as the top of their price range! In other words, our home would now be priced too high for our likely buyer pool!
OUR HOME MISSES OUR LIKELY BUYER POOL
We will miss our likely buyer pool, either because those buyers will come across our home and consider it to be beyond their price range and/or not offering the best value in its price bracket (i.e. our home is less saleable or even not saleable at all compared to other properties in the same bracket) and therefore ignore it; or our home will not visible to them at all in their search results because it falls outside of their search/price criteria.
Simply put, we will miss out on our most likely and promising buyers who are our best chance of selling our home to!
Clearly, our home in this scenario, would be mispositioned in the buyer enquiry range relative to its market value!
Is it a good idea for our home to land in a higher price bracket?
The short answer is: no, because this can present a set of problems for our home on the market.
While it may be tempting to test the market with an overly ambitious price - overpricing our home, as mentioned, will misposition it in the buyer enquiry range, and therefore the market, to completely miss our likely buyer pool!
If overpricing our home does in fact land it in the next price bracket above, then it will unavoidably be compared unfavourably to higher-value properties belonging in the bracket, especially to those properties that are more realistically priced for their value. In other words, our home will be unsaleable among higher-value properties (especially those that are more realistically priced for their value) in a higher price bracket where our home does not belong!
Thanks to the wealth of property resources and data that are readily and freely available, buyers are informed and savvy to the market and can easily compare and recognise which properties belong in a particular price bracket and which are overpriced and do not belong there.
Buyers seeing our home among higher-value properties will most likely perceive it to not offer the best value in the price bracket; which will only serve to benefit the higher-value properties, especially those that are more realistically priced for their value, making them seem even more attractive, more desirable and better value in the eyes of those buyers - thereby only serving those buyers to better recognise what good value looks like at that particular price bracket, while consequently diminishing the appeal and desirability, not to mention the time value of our own home on the market!
After all, buyers buy by comparison.
It’s worth noting that even if overpricing our home does not land it in the higher price bracket, but is nevertheless still competing with higher-value properties, especially with those that are more realistically priced for their value, in the same price bracket where our home belongs; then the point is still applicable here, as buyers can just as easily compare and recognise that they can get better value from those properties than with our home!
For example, pricing our home at £1,050,000 may not necessarily land it in the next price bracket above and it may remain in the same bracket where it belongs. However, our home will now be competing with higher-value properties in the same bracket that are more realistically priced at around £1,050,000. Buyers seeing our home among those properties can just as easily compare and spot the discrepancy between price and value!
A higher price bracket means buyers with higher expectations
With a higher price bracket comes a different pool of buyers with higher price ranges, along with higher expectations. Buyers who are looking in a higher price bracket than the one our home belongs to will be looking for properties that rightfully belong in that higher bracket. A property priced to be in the higher bracket but offering value that falls short of the standard expected from the bracket will certainly not cut it in the eyes of those buyers!
So if our home lands in a higher price bracket where it doesn’t belong; the buyers who are looking in that bracket, particularly those from the buyer pool, for example, who are buying towards £1,100,000 as the top of their price range, can easily recognise that it doesn’t measure up to the higher-value properties in the bracket, especially those properties that are more realistically priced at around £1,100,000, nor measure up to their own expectations, and will therefore disregard it!
In fact, some buyers may simply ignore our home altogether without any consideration, particularly those from the buyer pool that sits beyond the £1,100,000 market value in the buyer enquiry range. Buyers from this pool will have even higher price ranges and even higher expectations! As mentioned, buyers tend to buy towards the top of their price range - which means in this case, those buyers may simply bypass our home altogether and buy towards even higher-value and more expensive properties at the top of their price range, for example, properties priced at around £1,250,000 or above.
BUYER ENQUIRY RANGE ZOOMED INTO THE HIGHER PRICE BRACKET
Clearly, our home would be marketed to the wrong type of buyers if we choose to price it above the market value, as the buyers who are most likely to see our home belong to different buyer pools that are looking for higher-value properties that rightfully belong in the higher price brackets. Simply put, as a consequence of over ambitiously pricing or overpricing our home, it would be marketed to buyers who are not part of our likely buyer pool!
However, assuming we are indeed able to attract buyers belonging to different buyer pools other than our own likely buyer pool, we’d still be attracting fewer buyers than what we could have otherwise attracted from our ideal pool.
This means that we’d be relying on too few buyers to put forward offers. And even if we do receive an offer; it is less likely to be a strong and competitive offer, since there’d be too few buyers to create the level of interest, competition and demand we’d need to spur the best offers, not to mention there wouldn’t be enough buyers to negotiate with for us to achieve the best price!
Also, those buyers may only be mildly interested in our home, likely considering it as their second, third, fourth or even fifth choice to their top choice that is much closer to the top of their price range, as well as closer to their expectations. The strength of their competitiveness for our home, as well as any offer they put forward, may be just as mild as their interest!
All of these points I’ve covered regarding higher price bracket buyers are reasons why our likely buyer pool does not sit to the right of our home’s market value!
OUR LIKELY BUYER POOL SITS TO THE LEFT (NOT TO THE RIGHT) OF OUR HOME
Buyer enquiry pricing
A much better way of pricing our home, especially to get the most buyer engagement from our likely buyer pool, would be to implement buyer enquiry pricing.
Buyer enquiry pricing is a form of accessible pricing to make one’s home more saleable than the competition!
A buyer enquiry price is a price point that is likely to excite buyers (particularly those from our likely buyer pool) and stimulate their interest to want to make an enquiry about our home, particularly with the intention to book a viewing. Simply put, a buyer enquiry price is a price point that is likely to encourage strong buyer engagement.
To get the most buyer engagement from our likely buyer pool, we should determine a buyer enquiry price that would sit within the pool. This will allow for our home to be seen by and appeal to more buyers within the pool.
How should we price our home using buyer enquiry pricing?
To understand how we should price our home using buyer enquiry pricing, let’s refer to the example in the image below.
BUYER ENQUIRY PRICING
The general rule of thumb is to price at around a 5-10% range of the market value. This means pricing our home at around 5-10% to the left of the market value in the buyer enquiry range.
At around a 5-10% range of our home’s market value would mean pricing it at around £900,000-£950,000 - this price range would certainly sit comfortably within our likely buyer pool.
At around £900,000-£950,000, this price point is clearly more accessible to buyers compared to £1,000,000, and is a price point that is more likely to encourage stronger buyer engagement, especially from our likely buyer pool, for our home!
At around £900,000-£950,000, our home would certainly be more saleable than the competition (particularly competing properties of lesser value) that are also priced around that range, as our home with a market value of £1,000,000 would be offering more property for the same money as the competition, and therefore offering the best value in that particular price bracket!
At around £900,000-£950,000, regardless of whether our home lands in the next price bracket below or remains in the same bracket it belongs, it will be compared much more favourably to competing properties (particularly those of lesser value) belonging in the same bracket, including to those that are realistically priced for their value, but especially to those that are overpriced for their value! In fact, all of those competing properties will serve to benefit our home, making it seem even more attractive, more desirable and better value than the competition in the eyes of the buyers!
As mentioned earlier, buyers are informed and savvy to the market, and if our home offers tremendous and attractive value, which it does in this scenario, then such value will be easily and quickly apparent to the buyers, especially those within our likely buyer pool who are looking in the price bracket where our home sits; therefore capturing their attention and interest for our home over the competition!
At around £900,000-£950,000, our buyer enquiry price will sit fairly deep within our likely buyer pool, where our home can be seen by and appeal to more buyers within the pool than if the price (i.e. £1,000,000) remained at the top of the pool (i.e. remained directly to the right of our likely buyer pool). And since buyers tend to buy towards the top of their price range, not only will our home be seen by and appeal to buyers within the pool who are buying towards £1,000,000; it will also be seen by and appeal to buyers within the pool who are buying towards £900,000-£950,000! In other words, our home will most likely capture the segment of buyers within the pool that we would have otherwise missed out on than if we decide on strictly pricing our home at fair or market value!
And the deeper our buyer enquiry price sits within our likely buyer pool, the more buyers within the pool our home is able to be seen by and appeal to, meaning the stronger the buyer engagement our home is likely to receive! For example, our home is likely to receive stronger buyer engagement at around £900,000 than at around £950,000.
Does pricing at around £900,000-£950,000 mean that we are looking to sell for that price?
No, that is certainly not the purpose of buyer enquiry pricing. The pricing strategy is not about selling our home for less than its true market value.
Buyer enquiry pricing is an extension of accessible pricing and saleable pricing for the purpose of encouraging strong buyer engagement.
Our ultimate objective is very much to achieve the best price, which in the case of our example, is to achieve or exceed the market value of £1,000,000.
Remember, strong buyer engagement is what brings the strong level of interest, competition and demand we’d need to achieve the best price. And to receive strong buyer engagement for our home, we have to give the buyers something to be excited about!
Rather than listing our home at a fixed price, if we want to make it clear to the buyers that we are expecting to sell for a higher price, then we can certainly list it at, for example, ‘Offers Over £950,000’ or ‘Offers in Excess of £950,000’.
Encouraging the strongest buyer engagement
If we are aiming to encourage the strongest buyer engagement possible for our home, one can suggest that we can try and go deeper into our likely buyer pool and price our home as far as around £840,000-£850,000.
Why price at around £840,000-£850,000?
(Please note that for simplicity and ease of understanding of the example, I have rounded up the price range to £840,000-£850,000. Paying up to 20% more would take the price slightly over £1,000,000)
As mentioned earlier, according to Rightmove, 70% of buyers pay up to 20% more than they initially expected to pay.
At around £840,000-£850,000, our buyer enquiry price will sit as deep within our likely buyer pool as it reasonably can to encourage the strongest buyer engagement possible. The buyers within the pool who are buying towards around £840,000-£850,000 will be the lowest price bracket buyers our home is able to capture who can feasibly pay up to 20% more (than they initially expected to pay) to meet our home’s market value if, our home with a market value of £1,000,000, is indeed their ideal home that they want a chance at securing!
Should we be concerned with receiving less desirable offers?
It’s understandable to be concerned with potentially receiving less desirable offers, i.e. offers that fall below our expectations, when pricing our home lower than its market value. However, when priced correctly, we need not be concerned at all.
While receiving less desirable offers are unavoidable no matter how optimal our pricing may be, those offers can be overcome by the strong offers we are also likely to receive if we price our home correctly.
As mentioned earlier, buyers are informed and savvy to the market and are able to understand and recognise the true value of a property. Even if our home (implementing buyer enquiry pricing) is priced lower than its market value, buyers can still easily recognise the value, in that it offers a value proposition greater than its price (i.e. more saleable), especially when comparing it to other similarly priced but lower value properties in the same price bracket. And when spurred by strong enough interest, competition and demand for our home, buyers are prepared to contest eachother, pushing up the price or offers to meet or exceed its market value!
If interest, competition and demand for our home is indeed strong enough, buyers are prepared to meet our home’s market value or exceed it, even if our home is priced lower than the market value. So if our home has a market value of £1,000,000 but is priced at £900,000; buyers can be spurred to meet or exceed £1,000,000 with strong enough interest, competition and demand.
Buyers are generally prepared to meet (or exceed) a property’s true market value if they recognise that value - and it’s natural to perceive something as being more valuable the more people that want it!
Strong buyer engagement is what brings the strong level of interest, competition and demand. An accessible price is what stimulates the strong buyer engagement. And buyer enquiry pricing is a strategy for presenting an accessible price.
Receiving less desirable offers is more likely to become a concern if we choose to over ambitiously price or overprice our home, or even price it at fair or market value! (As such price points are not optimal for attracting the strongest buyer engagement, nor the strongest interest, competition and demand for our home!)
Getting in touch with me
If you would like to discuss any of the above points with me further, or if you need help or have any questions in general, click here to get in touch with me.
As effective as buyer enquiry pricing can be, there is in fact another pricing strategy that takes the very same idea a step further, which I personally call band pricing - a strategy that Rightmove and Zoopla themselves recommend!
And so, I invite you to join me in the next section, where I discuss band pricing in more detail.