Is $100 really worth it? Can it cost you a showing or sale?

By
Real Estate Agent with MacMillan Real Estate

We have seen this pricing method in almost every aspect of marketing. Product pricing ending in 99 cents, gasoline ending in 9/10ths, and housing at $ XXX,900. All of this in an effort to make the price “look” more affordable. Is it fooling anyone? Well, yes. Maybe you!

Let’s take a moment to think about this. There are real estate price points where this method can hurt your marketing. One of the biggest is $199,900. How do we perform our searches when looking for a property to suit a Buyer Client? We search in price ranges, some dollar amount to another. Here is just one example scenario. (There are certain price points that this will matter more than others.)

Agent A has a property listed at $199,900. The agent explains to the Seller that their $200,000 home will look better to buyers priced this way. One Hundred Thousand dollars sounds a lot less expensive than Two Hundred Thousand, doesn’t it?

Agent B has a Buyer that is looking for a property and has a $215,000 approval and target price. Agent B begins the search. The Agent will most likely perform a search from 200k to 225k. Guess what? $199,900 will not be in that search. All for what, $100? Agent A has missed out on a showing and a possible sale.

Why not price the property right at $200,000? Then it would be in searches up to 200k AND in searches starting at 200k. BOTH searches! This could be true for the 25k, 50k & 75k marks as well. Also note that many online Real Estate Search Sites have pull-down price-range menus. These are usually in set increments of either 25k or 50k. This is yet another way your listing might not “make the cut!”

Personally, I do my searches that are 100k to 200k in Ten Thousand dollar increments. The 200k to 300k searches in 25k increments and so on. I do round those down to encompass the $XXX,900 properties, but I know that many do not. So why risk it? Why not consider pricing the properties at the round amounts and get in more search results by agents and online shoppers as well?

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Location:
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house pricing and search results

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Rainer
81,737
Corey Chase
Silvercreek Realty Group - Meridian, ID

Very good information! I can see the risk in how a property is listed.

Feb 17, 2010 11:57 PM #1
Rainmaker
621,534
Deborah Byron Leffler BzyBee Real Estate Lady!
Keller Williams Realty Boise - Nampa, ID

Good points... I also round up or down for my clients...especially if I am not finding what I need....

Deborah Byron Leffler, PMN, SFR   (Nampa Idaho)  Keller Williams Realty Boise

Feb 17, 2010 11:58 PM #2
Rainmaker
313,671
Glenn Roberts
Retired - Seattle, WA

Due to the bracketing most website "searches" use for price, I've found the round numbers much more effective.

Feb 18, 2010 12:04 AM #3
Rainer
57,456
Todd MacMillan
MacMillan Real Estate - Georgetown, KY
ABR, GRI, SFR

Good point Glenn! I had not addressed that at all, but it is the case. Thanks!

Feb 18, 2010 12:06 AM #4
Rainmaker
1,814,249
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

I totally agree, Todd. The prices that crack me up are $1,234,432, or $678,876.  We have one local agent who does that regularly; when I see a new listing priced in that manner, I already have a good idea whose listing it is (maybe that's why?)

Feb 18, 2010 12:30 AM #5
Rainmaker
757,634
Ritu Desai
Samson Properties - Ashburn, VA
Virginia Realtor-Fairfax/Loudoun/PW-703-625-4949

Good Point!! Leave those numbers for big warehouse and department store.

Feb 18, 2010 12:37 AM #6
Rainer
57,456
Todd MacMillan
MacMillan Real Estate - Georgetown, KY
ABR, GRI, SFR

Lottie, there is a psychological validation for the odd numbers. When numbers are odd, it lends the viewer to believe that the number is based on something real. Not just a mark-up. It is my opinion that this tactic is best used in the offer/counter offer stage of a sale.

Feb 18, 2010 12:55 AM #7
Rainer
9,457
Mindy Kaye
MindyK Photographer - Charleston, SC
Real Estate Photography by MindyK

I never agreed with that 99 pricing. I have seen some agents listing condos for 159, 524 and I think huh? Is that supposed to rake me in to the opportunity?  Not!

Being realistic about your pricing is the best thing you can do for yourself as a buyer or seller.

Feb 18, 2010 01:18 AM #8
Rainmaker
1,560,731
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Agent B doesn't know how to perform a search for their clients.  If they're keeping it within a very small price range of MERELY a $25,000 spread, as in your example.  Not sure if this is how an agent with a buyer who is approved for >$200,000 would logically think. 

Feb 24, 2010 05:45 AM #9
Rainer
57,456
Todd MacMillan
MacMillan Real Estate - Georgetown, KY
ABR, GRI, SFR

I agree Carla, but it appears that many do not really think about it. I've asked. So many were surprised that they were not going about it in a way that would pick-up on those xxx,900 listings.

Feb 24, 2010 08:53 PM #10
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Todd MacMillan

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