Surprising as it may seem, I've seen agents break pricing rules in real estate sales as long as I have been in the business (which has been since 1996) and thought I would share a very easy technique that I began using my first days in the business and it still works today. What do they say if something aint broke, then don't fix it, right?? LOL
If you pay attention to many of the major real estate websites which advertise your listing such as Realtor.com, they all price in $5k, $10k and $25k price brackets. So when I discovered this, I broke down my pricing strategy into three simple steps when listing a property for sale...
STEP ONE: Which $25k price bracket does the home fit BEST within... I.E, $175k-$200k OR $200k-$225k? Ideally, you do not want to be at the very Top or the very Bottom of any bracket. Lets just say that our comps are showing $177k-$190k.
STEP TWO: Which $10k price bracket do our comps show we compete with best?? As I just mentioned, $177=$190k is what the comps are coming in at so I round and use $175-$185 because in the market we must be better priced than the competition. *Keep in mind that studies show a market will never let you undersell a home. NEVER. IF you price it aggressively, and your product is nicer and better priced, you may even receive multiple offers and or even more than asking as people will compete for a product that is priced well. So at this time, we have enough info to take the property to the market and select a price of lets say $180k.
STEP THREE: This is a fine tuning step and I highly recommend that it be made within 3 weeks of the initial pricing and beginning the showings on a property as the most activity studies show take place within the first three weeks of initially showing it. Secondly, serious buyers in many markets are shopping for less than 6 weeks, (that is two cycles in my system) which gives time to adjust the price and bring back some of those that may have already seen it but weren't captured by the price it was being offered at last. So step three is a fine tuning step and if the first to steps were executed correctly, the third step is rarely necessary. In a buyers market, or in a market that may be declining, this third step is essential.
A RARE STEP FOUR: And for those that were just way off in the first two to three steps additional adjustments may need to follow. As above, I reccomend that pricing be reviewed every 3 weeks. Adjusting your price may seem painful in some cases especially if you had to adjust more than once or twice. Studies show in the end that homes sell for more the first few weeks on the market so do yourself a favor and use the guidlines of the market.
ADDITIONAL WORDS OF WISDOM IN PRICING: Never price in the middle of any $5k bracket, I.E $177, 500, or $182,000. When you adjust your price from $182,000 to say $179,900 there is no bite really. Or adjusting from $177,500 to $175,000. Always adjust by a min of 3% or at least $5,000. ALWAYS PRICE to edge out the competition. I.E, if three other active properties are $175,000, $174,900, $174,900 then price yours at: $174,800 or even $174,877 and make it stand out from the rest. (I like using round numbers whenever possible except when there are other homes in the same area at that price already being offered for sale. Don't hesitate to use an odd number such as $174,977 as the buyer is more likey to remember your home out of the many they saw in their search.
This is very elementary. I've used it since 1996 but it aint broke so I won't fix it!