Adjusting your real estate pricing strategy after interest rate changes can have both pros and cons for promoters. Let’s explore them in detail:
Attracting more buyers: Lower interest rates generally make borrowing more affordable, which can attract a larger pool of potential buyers to the real estate market. By adjusting your pricing strategy to reflect the lower rates, you may make your property more appealing to buyers who are motivated to take advantage of favorable financing conditions.
Increased affordability: Lower interest rates can increase the purchasing power of buyers. When you adjust your pricing strategy to reflect the lower rates, it can make your property more affordable, potentially attracting buyers who were previously hesitant due to higher rates.
Competitive advantage: If other sellers in your market have not adjusted their pricing strategies to reflect the interest rate changes, you may gain a competitive advantage by doing so. Your property may stand out as a more attractive option compared to similar properties that have maintained their pricing.
Faster sales process: Adjusting your pricing strategy in response to lower interest rates can potentially lead to a faster sales process. With increased affordability and a larger pool of interested buyers, you may be able to sell your property more quickly and avoid prolonged listing periods.
Perception of desperation: Adjusting your pricing strategy after interest rate changes may give the impression that you are desperate to sell. Some buyers might interpret the change as a sign that there is something wrong with the property or that you are in a rush to offload it. This perception could lead to lower offers or negotiation leverage for buyers.
Potential loss in profitability: Lowering the price of your property to align with lower interest rates may result in a reduced profit margin. If you purchased the property at a higher price or have invested in renovations or improvements, adjusting the price downward could impact your potential returns.
Limited impact on overall demand: While lower interest rates can stimulate buyer interest, adjusting your pricing strategy alone may not significantly impact overall demand if there are other factors affecting the real estate market, such as economic conditions or housing supply. Lowering the price may not guarantee a substantial increase in buyer interest or a faster sales process.
Market perception and comparables: Adjusting your pricing strategy can affect the perceived value of your property in relation to similar properties on the market. If you lower your price too much, it may set a lower benchmark for comparable properties, potentially affecting their pricing strategies as well.
Conclusion: Adjusting your real estate pricing strategy after interest rate changes can have both positive and negative implications. It’s important to consider the specific dynamics of your local market, the impact of interest rate changes, and the potential consequences of adjusting your pricing strategy. Consulting with a real estate professional or financial advisor can provide valuable insights tailored to your specific situation, helping you make informed decisions that align with your goals.
This is it – you have graduated or dropped out from college and you are all set to follow your dreams and develop that awesome game with your killer dev team. Eventually you have been able to develop your MVP while on your pizza and caffeine all-nighter diet and now you wonder how you will fund marketing. We feel useful to recap what type of partners you will encounter on the bumpy road of fundraising, what makes the ideal candidate for it and finally, how to approach them.
Who are the usual gaming buysides?
In terms of funding game development, there are two worlds: asset managers and gaming industry. Asset managers as a buyside category vary from indie family offices to private equity including venture capital and business angels with each one having their own ticket size and investment approach in the sector, whether they prefer F2P or premium, usually preferring minority tickets, limited ownership and less gaming-related discussions because the art of being a VC can compare to betting on the right horse and have him or her run his or her laps faster than the rest of the row. This approach is not magic neither because you spend more time discussing balance sheet and financials but you have to remember than asset managers have a portfolio of startups and/or studios to live on – and they live with cash. Therefore, the VC who has chosen you has already decided which market you should serve and will fund you for it – or he/she will pick another market you find attractive if you fail.
As for industry, corporate M&A departements also differ one from another in terms of leaning towards conserving their golden cohort and selling it more titles or going full potential in new territories with local partners. In practical, the industry approach is more likely based on full or majority ownership, important strategy meddling but market synergies being the rationale of the transaction from the beginning, your game can use a piggyback ride to get that extra million Chinese users because it does not only require a translation of your content in Mandarin. Finally, money is not the issue with them since you will seldom encounter a ticket size problematic – both by lack of excess. We have already seen AAA corporates chipping in series A rounds with 200k tickets along with their competitors just to be sure they will not miss a hit while their following acquisition has cost them more than $2 billion.
Am I ready?
Reaching the goal of funding game development is not a sprint, it is a marathon. You may be familiar with the odd vocabulary of finance such as teaser, roadshow, roadmap, LOI, MOU – not to be confused with an offering memorandum. Undertaking your first round not only takes guts but also time and skill. While we are not preoccupied about the gut part, we believe the first point on your checklist should be budgeting. If you feel your demo is not up for it or that you should add more levels, just improve first. While VCs will not bluntly reject you, they will stay in touch until they feel you are ready anyway so you should not waste your precious time prematurely pitching rather than doing more development because in both cases it will push the real talk back to several weeks if not months. Exceptionally, a VC here and there will want to enter as early as possible – in their own words. But in practice, they are gathering leads in their pocket and will fund the sexiest studio.
Thus, as much as there is a time-to-market, there should be a time-to-finance term. For each stage of your studio and this applies to startups too, there is a possible funding roud so the first question you should answer is where do you stand on the startup financing cycle. One does not need to consider this chart as the ultimate truth however, its underlying principles are useful for you as an apprentice because they help you establishing your plan and decide at which stage you can start pitching or looking for an advisor if suitable. The typical VC can review many thousands of decks per year, he or she is not happy when you waste his or her time and you should not be either. You do not necessarily need a new equity partner now. As we have said previously there are viable non equity-based options among publishers. You want to make the best use of your time but it implies chosing the right moment.
How do you want to approach a buyside?
Is funding game development art or science? Each one of you can raise money by itself – there is no doubt. There are a lot of global and local events scheduling meetings with VCs for you or via their favourite mobile app and there is a plethora of tutorials or online services helping you drafting your deck and pitching it. The job of selling is not rocket-science, and raising money consists in selling an investment in your company therefore raising money is possible for you. To put it differently, just because you can, does not mean you should – there are many pitfalls of going my way or the highway in this business. We see one main exception here in early stage funding. One VC even told us clearly systematically reject a pre-seed/seed deck if it already has an advisor at this stage but this is easily overturn by hiring the advisor as an employee or giving the person a board position. Finally, you will agree that the later stage you are, the more rational and investment banker-friendly your deck has to look.
This being said, finance has its own culture and terminology – as my strategy professor used to put it: “You need to speak an expensive language”. As we put it earlier, it is all shiny and stuff when you prep up to raise your first ticket but once you have made it to the deep end of the pool, it gets more complicated and this is where you start lacking time and energy on finance and where comes the what-is-the-risk-free-rate sort of question. Actually, raising money at later stages than series A gets more and more sophisticated both in terms of capital source and pitching techniques. Also, this is where valuation may run out of control and eventually miss its target. Even though we have explained earlier than in some cases, ticket size does not matter, it will still be a casus belli when discussing with a high-caliber fund and even though it may feel like taking a gun to a knife fight, you have to come prepared. Besides, a private equity fund manager has already explained us why they preferred to be approached by advisors for that matter: a direct approach from the buyside would make the valuation take-off while if an advisor proper process outlines the limit of each discussion and each topic is well expressed at the right time. The process is mastered and you can focus on creating awesome games while we focus on our mission.