Recently, I was coaching one of my real estate agent clients, and the question of pricing came up. She wanted to know how to price a home. Well clearly the price, as you already know, depends on comps, condition, location and the general market conditions. I am assuming I don’t need to explain this part so let me go to the next part of the discussion and the “AHA” moment of my client.
Most agents realize that the market has changed from a paper advertising market to an internet based advertising market. This means that most of the buyers will come from the internet, in one form or another. Sites like Realtor.com, Trulia, and others are dominating this market. There is also a trend of smaller sites including Yahoo and Google showing listings as well (did I really call Yahoo and Google small?) and the potential buyers going to these sites are the clients you need to target in your pricing.
So how can you do this? Read on…
It used to be that real estate agents priced their listings to stand out. For example, in the old listing books, before the internet, you would make prices that stood out such as $297,812. This was to make the property appear different somehow to the potential buyer, and it worked.
Next was the idea that we should price on the 9’s; for example $299,999 instead of $300,000. This was the Wal-Mart philosophy; it simply made the price look smaller and again, it worked.
Well, times are changing and it is time to get into the internet structure of home pricing and forget all of the old ways.
To search for homes on the internet, people search homes in increments of either $25,000 or $50,000 ranges. Simply put, these are the price ranges that a potential buyer will select when looking for a home. For example, a buyer will look for homes between $250,000 and $300,000. That means all the homes listed in that “exact” price range will show up in a search.
You need to learn how to monopolize this search range and this is how to do just that;
If you price a home at the traditional Wal-mart pricing, you may price a home at $299,999. This would clearly show up in the $250k to $300K price range for those browsing the net. Here is the problem. If someone is looking for homes between $300k and $350K, your listing is left out; all because of one dollar. Isn’t your seller really listing their home at $300k? Yes of course they are, but someone looking for $300K homes, missed it completely.
The right pricing strategy is to list the home at exactly $300,000. This will actually get you twice as many showings. Think about it, now the people looking in the $250K to $300K range will see the home and the people looking in the $300k to $350k range will also see the home! This is how to price for the modern internet age.
I am amazed how often I explain this in my coaching of agents, and it is like a light bulb goes on. The best part is that within weeks, they tell me I was right. They tell me about more showings and more offers on a particular listing they were having trouble with.
Be smart and start thinking like your clients and potential buyers. Remember they will probably come from the internet. As a bonus, when you present this idea to a potential seller, you will quickly make them understand why you are the better agent for the job and get the listing over the competition.
I hope this was useful and I look forward to helping all of you agents sell more houses, make more money and live a better life.
Happy selling!
Larry Steinhouse
Coach, Speaker, and Author of the book “If I won 25 Million Dollars in the Lottery”
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