How to Price a Property so it Sells

By
Services for Real Estate Pros with Brivity
http://activerain.com/droplet/52HY

As a realtor, you know that property price determines the level of interest in a property you're selling. From the number of showings, to the number and quality of offers, to the way clients rate your services, price is key. Unfortunately, it is also something about which clients have very strong opinions—understandably so. They want a price that nets them the right amount of money, reflects improvements they've made, and captures some of their nostalgia for the home. It is incumbent on you as the real estate agent to walk the difficult line between pleasing the seller and setting a price that reflects true market conditions. This article teaches you how to set a price that reflects real-time, location-specific market realities while still catering to your clients, using Keller Williams real estate agent and ActiveRain owner Ben Kinney's pricing strategy.*

The Problem: Inconsistent pricing strategies

Implementing a fact-based pricing strategy addresses several challenges that realtors face:

  • Realtors list a property at the highest price possible to please the seller
  • Sellers argue that the price is too low (or doesn't reflect the amenities and features)
  • Banks won't loan on a price set higher than the appraised value
The Solution: Ben Kinney's 5-5-5 strategy

A successful pricing strategy is Ben Kinney's 5-5-5. By identifying 5 comparable active properties, 5 comparable pending properties, and 5 comparable sold properties, the pricing will be accurate.

Step One: Pick comparables 
Be sure to pick comparable properties that have the same features, lot size, and square footage, that are located in the same area: 
  • 5 Actives
  • 5 Pendings
  • 5 Solds
Step Two: Bracket the price
  1. Find comps that match the lower price
  2. Find comps that match the higher price
  3. Pick a range inside which you're willing to list the home
  4. Pick a goal price you feel is appropriate
  5. Pick a price that you wouldn't go above
Step Three: Show sellers the bracket during the listings presentation (but not the actual price)

Put the comparable properties in front of the sellers and let them pick the price.

 

 


Brivity CMA automates the 5-5-5 strategy, setting up bracketed pricing based on actual active, pending and sold properties, rather than a pre-written price.


 

If you show them the facts, they can't argue. Facts take emotion out of the discussion. This puts the responsibility on the seller to identify the price.

Why the 5-5-5? What to say to sellers about pricing

Remember, the goal here isn't to tell sellers their home is worth the highest price possible. It's to tell them the truth.

Ben Kinney's Pricing Script

To the seller:

"I'd like to share a strategy that allows both you and me to figure out how to price the property because I need to sell the property three times. Number 1 - I have to sell it once to an agent so they'll show it to their buyers, because 86% of sellers are represented by real estate agents. Number 2 - I have to sell it to the buyer to get them to write an offer. Number 3 -  I need to sell it to the bank, and the bank's appraisers to get them to give a loan on the property.

Since it has to be sold so many times to so many people, you have to use the same data that all those people use when getting a home price. And the appraisers, the banks, the agents, and the buyers use active home listings, pending home listings, sold home listings. This is why we developed the '555' that allows us to accurately price a property by picking out 5 comparable active properties, 5 comparable pending properties, and 5 comparable sold properties. 

These properties together create a bracket. The bracket is the highest price you'd consider selling your home for and how many days on market that that will take. You might be able to price your property 5% higher, but it could then take you a year to do it. Or, the lowest possible price for your home might sell in a day. We need to pick where in the range you'd like your home sold. Does this sound like a good way to price your home?"

By using the 5-5-5 strategy, you use the data to tell the price, which takes the emotion out of the equation and keeps potential sellers from being offended. With 5-5-5, you're using the same method as successful ActiveRain Owner and real estate agent Ben Kinney. This will get you more offers and ultimately allow you to sell more properties.

 

 

*Who is Ben Kinney?

Ben Kinney is a nationally-known entrepreneur, professional speaker, trainer, author and real estate agent. He is the author of Soci@l; is listed in The Wall Street Journal and REAL Trends Top 100 agents for both total units sold and total sales volume in the nation; and was named "Innovator of the Year" by Inman News. The Ben Kinney Companies includes 1000+ agents in nine Keller Williams brokerages spanning from Bellingham, Washington to Austin, Texas and across the pond to London, England; a collection of real estate-related software companies, including ActiveRain, Kwkly, Brivity and Blossor; and the Ben Kinney Training Organization.

 

Ben's newest product, Brivity Platform, connets all of your Brivity systems and other industry tools into one platform, so you only have to pay for one bill. Brivity Platform, the only system that guarantees success in real estate. Sign up for a demo here!

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Re-Blogged 7 times:

Re-Blogged By Re-Blogged At
  1. Michael J. Perry 04/05/2017 08:49 AM
  2. Ginger Harper 04/23/2017 03:11 PM
  3. Denise Samouilidis 08/06/2017 12:27 PM
  4. Jay McHugh 08/13/2017 06:56 AM
  5. Danielle O'Brien 09/12/2017 07:13 AM
  6. Faye Taylor 02/14/2018 09:37 AM
  7. Bob Crane 02/15/2018 10:25 PM
Topic:
Home Selling

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Anonymous
Alberto Pacheco

Ben thank you for sharing. I will be taking a listing in about two weeks and I am going to use it. Thank you again.

Alberto Pacheco
Realtor Keller Williams Porter Ranch
www.sfvalleyhotproperties.com

Oct 30, 2017 09:48 PM #121
Anonymous
Bert Spangenthal

Great information! This one is a keeper.

Dec 01, 2017 09:11 AM #122
Ambassador
1,921,410
Fred Griffin
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

 My first Broker taught me this, only it was 3 or 4 solds, active, and pending.  If I can find 5, I will use 5, thank you!

Dec 01, 2017 10:08 AM #123
Rainmaker
2,785,279
Michael Jacobs
Coldwell Banker Residential Brokerage - Pasadena, CA
Los Angeles Pasadena Area Real Estate 818.516.4393

As always pricing is a key component to success in this business.  My "toolbox" remains open to smart ideas/strategies.  

Dec 01, 2017 11:00 AM #124
Rainmaker
2,513,261
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

This post never gets old because we all need to know a good price point each region, But a lot of the same rules apply across the board

Jan 04, 2018 09:13 PM #125
Rainmaker
2,513,261
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Michael Marciano, CBR, CDPE, SRS It is a key point but more importantly it has effects down every other sector

Jan 04, 2018 09:15 PM #126
Rainmaker
8,716
Anthea Adair
Ebby Halliday Realtors - Frisco, TX
14 years of real estate experience | TX, CA, HI

I'm ordinarily not a script fan, but this is so accurate, sincere, and just plain truth.  Thank you!  I will definitely use this information to explain the importance of pricing the home correctly and fully believe it's an ideal method! 

Jan 21, 2018 10:24 AM #127
Rainmaker
74,316
Karen Simms
Century 21 Arizona Foothills - Queen Creek, AZ
Horse Property Specialist

Good information.  Pricing is so important.  An easy method to remember.

Thank you for sharing.

Jan 21, 2018 07:29 PM #128
Rainmaker
90,641
ERIC TRAUTMANN
Weichert Realtors HQ - Denville, NJ
I Know NJ, I Sell it Everyday!

I am so going to now look into integrating this into my cma system

Jan 28, 2018 04:51 PM #129
Ambassador
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Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Ah!  If only I could find 5 active comps in any of the areas where I sell!  I'm trying to figure out how to implement this in inner-city neighborhoods where there are tremendous differences among the architecturally diverse hundred-year-old homes.  Great information!

Feb 02, 2018 09:04 AM #130
Rainmaker
42,991
William McClain
London Foster - Miami Beach, FL
Your South Florida Waterfront Specialist!

Great post- and I like the explanation to the sellers- who many times just want things to work in their benefit!

Feb 05, 2018 10:28 AM #131
Rainmaker
491,810
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Great information. A systematic approach to pricing backed up by facts can be compelling in determining a sellers pricing of their home.

Feb 05, 2018 03:20 PM #132
Rainmaker
2,513,261
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

From what I’ve seen, all of you have been pricing your stuff fairly accurately to what the market is suited for.

Feb 05, 2018 05:49 PM #133
Rainmaker
2,513,261
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Very compelling overall, I would totally agree with you, John! Good luck in your market!

Feb 05, 2018 05:52 PM #134
Rainmaker
107,024
Mike Schneider
10 YRS with Active Rain ! - Lake in the Hills, IL
ABR, CDPE, SFR

Thank You for sharing a terrific concept. I agree it's a great approach including the seller participating as for selecting, a "market value". I would like to add...I like to "interview the seller" as much as they "interview" me....this is a good time to determine two other factors....."ME".  No not "me",..."Motivation and Education"  (seller 's ) tartget for closing and Educate them regarding their Localized Market Trend".....if values are declining, or additional assessments, "buyer or seller" market trending, etc etc. Combining the 5-5-5, along with the "ME" Motivation and Education variables (seller) ..would compliment the strategy, I believe.

Thanks again and best wishes,  Mike

Feb 08, 2018 12:48 PM #135
Rainmaker
249,069
Samantha Smith
214.422.0729 www.SamIAmHouses.com - Rowlett, TX
Sam I Am Houses, d+b Real Estate, Lake Ray Hubbard

Great advice ... facts are hard to argue with & this helps the owners see their home as others would!

Feb 11, 2018 09:38 AM #136
Rainmaker
32,243
Jared Wangsgard
BHGRE | Franklin Group - Kaysville Utah - Kaysville, UT
REALTOR - Utah Real Estate Sale SLC to Ogden

Good info. Even in a seller's market, overpriced homes don't sell!

Feb 11, 2018 09:33 PM #137
Ambassador
3,209,914
Bob Crane
Woodland Management Service / Woodland Real Estate, Keller Williams fox cities - Stevens Point, WI
Forestland Experts! 715-204-9671

Thanks for sharing this, used it on a large tract of land recently, they told me to take a hike.

Another agent listed it back in November for the requested price, still not moving.

Feb 15, 2018 10:21 PM #138
Rainer
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Feb 17, 2018 03:28 PM #139
Rainer
357,101
Hrisco & Associates
Hrisco & Associates | eXp Realty, LLC. - Roanoke, TX
-"When Experience Matters - The Agent You Need!"

Genius, pure Genius, definitely going to include in my arsenal.

Feb 17, 2018 08:12 PM #140
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