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Apr
2007
12

How to price a home so you don’t lose thousands of dollars for your client!

by Matt

Ok, here is a questions for you agents out there…how do you price your listings.

I personally think, no matter what the comps are, you have 5 price points:

  1. $519,950
  2. $529,950
  3. $549,950
  4. $579,950
  5. $599,950

The first digit (5) doesn't mean anything, it is the $10K range that I'm focusing on.

I say this because most the home searchers out there do not set their max prices at $509,950…they usually set them at the prices above, with $549,950 and $599,950 being the most popular.

It's one of my pet peeves to see houses priced at $465,700…WHY? Glurps because of the comps? that house should be listed at $479,950 because you are going to get the same number of lookers at that higher price. I'm not saying grossly overprice homes, but you represent your sellers, you better get them more mullah.

Also, the last 3 digits, should always be 950…not 888, not 500, not 123.

Before you respond, I know what you are going to say…

Because of the advent of the internet, the traditional pricing models do not reflect the best way to price a home in today's market. This is because the internet doesn't know what you really want. So take $499,950…if someone is searching for homes with a minimum price of $500K, they will not see the home for $499,950, even though the potential buyers will probably be interested in seeing a home that is only $50 less then their minumum. The same ideas apply to square feet. NEVER SEARCH BY SQFT. there are so many homes on the market with 1,298 sqft, or 1,189 sqft. If you do a search for homes with at least 1,300, you will not see the smaller home, even though the lack of 2 sqft will not make any difference.

so why not just make home searches that make a buffer and include homes that are within a margin of the min and max price? Well if we did that the entire internet would fall apart…basically.

So how do you price your listings? 

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    • 6 Responses to “How to price a home so you don’t lose thousands of dollars for your client!”

    1. Ben Feltes

      I’m looking forward to reading some comments on this post. Reading this led me to another interesting article that deals with the psychology of pricing.

      April 16th, 2007 at 8:47 am

    2. matt (http://realivent.com)

      interesting stuff.

      For example, marketing experts say that products with an even-numbered price are considered higher-quality than those with an odd-numbered price. For example, a stereo selling for $200 is thought of as better and higher quality than one that sells for $189.99. If you are seeking to sell high end items then, price them with an even number.

      I would have thought differently. Maybe because I never see an even price in any stores…Also, I can see why Walmart has all their “Rollback” prices set to odd numbers like $2.37 for a 5 pack of underwear.

      April 16th, 2007 at 8:57 am

    3. shaun mclane (http://www.ekday.com/blog/blog.html)

      Interesting post. You made the comment, “So take $499,950…if someone is searching for homes with a minimum price of $500K, they will not see the home for $499,950, even though the potential buyers will probably be interested in seeing a home that is only $50 less then their minumum.” My thought goes the other way…Pricing it at $499,950 assures that house will be included in searches UNDER $500k. It doesn’t have to be $500k, you could easily list a home for $999,950 to stay under $1m.
      I worked for a builder for 4 years. 2 years it was Landstar Homes, then it was purchased by Toll Brothers. It’s funny, but all our prices ended in $…,900 with Landstar, and $…,100 with Toll. Never understood Toll’s reasonings.

      April 16th, 2007 at 6:03 pm

    4. shaun mclane (http://www.ekday.com/blog/blog.html)

      I forgot to answer your question….I try to price mine with $…,900. A bit of a habit I guess.

      April 16th, 2007 at 6:04 pm

    5. matt (http://realivent.com)

      hmmm…good point about getting the price under the highest search price. That makes sense.

      I sold my car about 2 weeks ago and my Fiance wanted me to price it at xx,888…which I did. It ended up selling for the asking price. I’m pretty sure it would have sold for xx,950, and maybe xx,999, it was only lucky for the guy that bought it, he save about $100 bucks.

      April 16th, 2007 at 6:09 pm

    6. Ki Gray (http://www.escapesomewhere.com/)

      I usually price mine at $500,000. But I think my market works differently. When people search for houses on our mls they generally search for something like 200k to 500k. If that is the case my home will be included in that search. If someone search for a home that is 500k to 700k the home will also be included. So by pricing it at 500k we get included in both searches. I think that might be particular to our mls because Im sure different mls systems are programmed to behave differently.

      May 26th, 2007 at 5:42 pm

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