How to Price a Property so it Sells

By
Services for Real Estate Pros with Brivity
http://actvra.in/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 5 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
Topic:
Home Selling

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Rainmaker
509,147
Elva Branson-Lee
Solid Source Realty GA - Atlanta, GA
CDPE - Atlanta Real Estate & Short Sale Agent

This is some of the best pricing advice I've ever read. Thanks.

Sep 06, 2017 09:30 AM #104
Rainmaker
786,671
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

One trend lately is price is way lower to get the attention of buyers. At 1st opne house the listing agent raise the price. While permittable it is like bait and switch. One should price as close to true value in a honest way.

Sep 06, 2017 09:20 PM #106
Rainmaker
2,474,843
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I find myself coming back to this every couple of days now for some strange reason, but I love it!

Sep 11, 2017 10:01 PM #107
Rainer
116,237
Bob Betel
Allstar Home Mortgage, Inc. - Sweetwater, TN
President, Allstar Home Mortgage, Inc

Good to know, thanks for sharing

Sep 12, 2017 06:04 AM #108
Rainmaker
438,438
Jerry Murphy, CRS, SRES
Long Realty West Valley - Anthem, AZ
Anthem, Phoenix, and Scottsdale AZ Real Estate

This is a really good solid strategy for pricing a home Ben.  Thanks for sharing.  I'm definitely adding this to my listing presentation.

Sep 12, 2017 03:34 PM #109
Rainmaker
1,315,908
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

Pricing is key to selling a home.  If a home is not priced properly it rarely will sell.

Sep 12, 2017 06:26 PM #110
Rainmaker
365,179
Scott Seaton Jr. Bourbonnais Kankakee IL Home Inspector
SLS Home Inspections-Bradley Bourbonnais Kankakee Manteno - Bourbonnais, IL
The Home Inspector With a Heart!

If I was an agent, I would so use this. Genius

Sep 17, 2017 05:11 AM #111
Rainmaker
66,913
Walt Fish
Bay Area Home Inspection, LLC - Marquette, MI
Upper Michigan's Most Experienced Home Inspector

Nice method. I wonder how comparable sold properties are evalauted when factoring in the condition. i.e. if it needs a new roof, was the electrical updated, is the furnace 35 years old, what about the shed in back that has collapsed? Was the new roof warranty voided because it was improperly installed?

How are these factored in the price? And how do you get access to sold properties to find out what the condition of those properties was at the time of sale?

Sep 17, 2017 07:14 AM #112
Rainer
317,287
Joan Valverde
Synergy Realty Group Inc - Colorado Springs, CO
GRI,CDPE,CNE, Colo Springs, Monument, Black Fore

Very good information Ben.  I often show them the homes right there on my computer as well to show them THEIR competition.  I have had sellers say, well darn I am not as good as that house and we price it right!

 

Sep 17, 2017 10:16 AM #113
Rainmaker
883,617
Corinne Guest, Managing Broker
Barrington Realty Company - Barrington, IL
The Choice of Professionals

Our market is very custom. Nevertheless I am going to try this today, I just don't have any pendings or even homes under contract, so will use actives and solds. I have my numbers in my head because there are 2 properties to be sold either together or seperately. Wish me luck, I am prepared to walk away. Total value I have is $2.2 million, so we're not talking cookie cutter homes here.

Sep 22, 2017 06:41 AM #114
Rainmaker
883,617
Corinne Guest, Managing Broker
Barrington Realty Company - Barrington, IL
The Choice of Professionals

Oh well that failed. As with all custom homes, there are things you don't know til you get there. Like another 3000 square feet. I got the listings anyway! Ended up at $3.7 million. Fortunately took some listings to prove he was not that high, in the end they were great comps.

Sep 22, 2017 12:11 PM #115
Rainmaker
232,151
Gordon Crawford
Gordon Crawford Home Selling Team - Morristown, NJ
Your Morris County Specialist!

As always, a great post and fabulous information!

Sep 24, 2017 04:52 AM #116
Rainmaker
232,151
Gordon Crawford
Gordon Crawford Home Selling Team - Morristown, NJ
Your Morris County Specialist!

As always a great post and fabulous information

Sep 24, 2017 04:53 AM #117
Rainer
317,287
Joan Valverde
Synergy Realty Group Inc - Colorado Springs, CO
GRI,CDPE,CNE, Colo Springs, Monument, Black Fore

Good article for sure.  When the house you are selling does not have 5 5 5 comps available..... it makes it a bit tricky, but the thought process is the same.

Sep 24, 2017 11:42 AM #118
Rainmaker
210,961
Shirley Coomer
Keller Williams Realty Sonoran Living - Phoenix, AZ
Realtor, Keller Williams Realty, Phoenix Az

The facts definitely take the emotions out of the conversation.

Oct 15, 2017 07:14 AM #119
Rainmaker
3,714,924
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for the great tips. I will use these the next time I am on a listing appointment.

Oct 15, 2017 04:33 PM #120
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
1,853,970
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
2,779,936
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
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