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NEWSLETTER #009

READ TIME: 4 MINS

A zero-sum game is a concept from game theory where the gains of one participant are exactly balanced by the losses of another participant. Tennis is a zero sum gain. You win, i lose. I win, you lose.

Applying the concept of a zero-sum game to home selling pits the interests of the home seller against those of the home buyer; such as when the a seller wants a higher price and the buyer wants a bargain. 

Here’s how this dynamic might manifest in your home selling experience:

Price Negotiations

The most straightforward zero-sum aspect in home selling is the price negotiation.

A higher sale price is a win for the seller but a cost to the buyer. Conversely, a lower purchase price is a gain for the buyer but a loss for the seller. In a zero-sum perspective, each dollar the buyer saves is a dollar the seller loses in potential profit.

Home Improvements and Perceived Value

House proud home sellers often invest in home improvements to increase the property’s appeal and justify a higher asking price. While this can potentially attract higher offers, it can also be viewed in a zero-sum framework. The investment in improvements aims to shift more value to the seller’s side by commanding a higher price, which means the buyer is effectively paying for these enhancements through the increased price.

Market Dynamics

In competitive markets, especially those with limited inventory, the zero-sum nature becomes more pronounced. Sellers aim to leverage high demand to maximise the sale price, while buyers compete to secure properties by increasing their offers, thereby driving up prices.

This becomes a win for the seller who accepts the highest offer.

Concessions and Contingencies

During the negotiation process, various concessions and contingencies can also create zero-sum scenarios. For instance, if a seller agrees to pay for certain repairs or closing costs, this represents a direct financial loss for the seller but a gain for the buyer. On the other hand, if the buyer waives certain contingencies to make their offer more attractive, they take on more risk, which can be considered a gain for the seller who faces fewer potential obstacles to closing the sale.

A contingency is preparing for a future event which is possible but by no means assured.

Emotional and Psychological Factors

The emotional and psychological aspects of buying and selling a home also have zero-sum tendencies. A house proud home seller can have a strong emotional attachment and a sense of pride in their property, often leading them to seek validation through a high sale price and favourable terms. Achieving these goals satisfies the seller’s emotional needs but robs the buyer of a sense of achievement or satisfaction, if they have overpaid.

Strategic Implications for House Proud Home Sellers

Understanding the zero-sum nature of home selling can help sellers adopt more effective strategies:

• Accurate Pricing: Setting a realistic asking price that reflects the true market value can attract serious buyers while still achieving a satisfactory sale price.
• Home Presentation: Investing in professional staging and minor improvements can increase the home’s appeal without overspending, ensuring that the perceived value is maximised.
• Negotiation Tactics: Being prepared to negotiate effectively, knowing when to make concessions, and when to stand firm can help balance the zero-sum aspects toward the seller.
• Market Timing: Listing the property at an optimal time when demand is high is advantage seller, potentially resulting in better offers and terms.

While the zero-sum game framework highlights the inherent opposition of interests between sellers and buyers, house proud home sellers can navigate this dynamic to their advantage by strategically enhancing the property’s appeal, setting realistic expectations, and negotiating effectively. By understanding that every gain for the seller might represent a cost to the buyer, sellers can better prepare for the negotiation process, and ultimately, achieve a successful and satisfying sale.

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'House Proud Home Sellers', is an online property styling course that addresses the home presentation needs of owner-occupied home sellers on any budget. It also equips professional home stagers, property stylists, real estate agents, interior decorators, designers and related trades with the skills to expand into occupied home staging.

 

Using The GOLD-Class system, award-winning occupied home stylist Tracey McLeod explains how to prepare, present, and profit from your home for sale - no matter your price point or budget for selling.

 

Your home will stand out and sell using a style of home presentation that attracts high buyer interest, multiple offers, and record sale times for motivated owner-occupied home sellers.