How to Price a Property so it Sells

By
Services for Real Estate Pros with Brivity
https://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 8 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 Copeland 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 Y. Taylor 02/14/2018 09:37 AM
  7. Bob Crane 02/15/2018 10:25 PM
  8. Ricardo Romero 02/28/2018 12:30 PM
Topic:
Home Selling

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Rainmaker
728,608
Kevin Mackessy
Blue Olive Properties, LLC - Highlands Ranch, CO
Dedicated. Qualified. Local.

Will add to be able to stand up to the seller and reassure them that the highest price they have in their mind is not something that is realistically attainable.  

Sep 21, 2018 11:51 AM #172
Rainmaker
2,663,272
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I’m revisiting these and realizing that I can use some other techniques to do some staging. Thank you.

Sep 23, 2018 10:45 PM #173
Rainmaker
2,663,272
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Not everybody can be that realistic because they don’t have the experience that other people do and you have that specific kind of experience that is really vital. Kevin Mackessy

Sep 23, 2018 10:46 PM #174
Rainmaker
177,153
Kevin Vitali
EXIT Realty- Massachusetts Short Sales & Residential Sales - Tewksbury, MA
Helping Massachusetts Home Buyers and Home Sellers

Great post and a great approach to working with sellers to get the best list price.

Sep 27, 2018 06:25 AM #175
Rainmaker
914,848
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Get strategy to get homes priced right. There is nothing worse than price homes over its value.  

Oct 11, 2018 05:19 PM #176
Rainmaker
252,336
Shirley Coomer
Keller Williams Realty Sonoran Living - Phoenix, AZ
Realtor, Keller Williams Realty, Phoenix Az

Sellers want top dollar for their homes, but they usually are responsive to a strategic approach.  We are seeing an exception to this, however, people selling their homes to the Open Doors and Offer Pads of the world are looking for convenience relative to money.  We need to be addressing how the seller gets top dollar while understanding how "convenience" sensitive they are when it comes to selling.

Oct 20, 2018 06:29 AM #177
Rainer
245,217
Stephen Turner
TriCorner Homes (TriCorner Realty) - York, PA
The BIG Guy of NEW HOME SALES

Thanks for the script, I love the "I have to sell this property 3 times..." bit.

Also, I tend to focus on the Pendings more than most. Sellers seem to look at others list price and don't want to see the sold price (especially minus any concessions!) Yet the pendings tell me what price it took for a buyer to take action and at least make an offer.

Oct 20, 2018 09:38 AM #178
Rainmaker
274,381
Gordon Crawford
Gordon Crawford Home Selling Team - Morristown, NJ
Your Morris County Specialist!

Great information!  I also have available the "neigbhor's house" that just sold 2 years ago.  Sellers forget how long ago that was and it isn't a valid comp.

Oct 25, 2018 05:14 AM #180
Rainer
3,785
Michael Clancy
Keller Williams of the Lowcountry - Bluffton, SC
Seller Rep, NAR Green Designation

As a new agent I am concerned with correct pricing and presentation. The last thing I want to do is simply get listings and reduce the price as a selling strategy. As a person who has been though 15 real estate transactions personally, I have experienced poor pricing startegies and watch my last property sit without a single showing for the first 90 days due to too high of  listing price, which I argued againt. "Do you want to list your home, or do you want to sell your home?" Great strategy that I will start to implement today!

Nov 01, 2018 07:05 AM #181
Rainmaker
900,773
Ginger Harper
Coldwell Banker Sea Coast Advantage - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

This is such valuable information.  Thanks for sharing..

Nov 01, 2018 09:21 AM #182
Rainmaker
252,792
Elisa Uribe Realtor #01427070
Golden Gate Sotheby's International - Oakland, CA
California Homes for Sale in the East Bay

Excellent! This information is spot on.  Thanks for sharing

Nov 01, 2018 01:28 PM #183
Rainmaker
914,848
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

It has worked to list the lowest in the neighborhood. People flock over and seller raise the list price to what seller wants. Then the bidding starts 10-15% over.

Sine summer it does not work. So you make it lower or take it off the market....

Nov 01, 2018 08:26 PM #184
Rainmaker
2,663,272
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I don’t ever see this not top listed because it’s so popular and it’s always pertinent information.

Nov 01, 2018 11:44 PM #185
Rainmaker
2,663,272
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

It has worked to list the lowest in the neighborhood, you’re totally right about that and the range helps people have a more expanded view. Right on, Sam Shueh

Nov 01, 2018 11:45 PM #186
Rainmaker
206,772
Janice Hope Zaltman Realtor,LEED AP
United Realty Group - Boca Raton, FL

Good information. How can we see a sample report?

Nov 08, 2018 08:23 AM #187
Rainer
100,324
Adam Feinberg
ANCHOR ASSOCIATES - Manhattan, NY
NYC Condo, Co-op, and Townhouse specialist

I am always amazed when a listing goes up and I speak to the listing broker- and their price was entirely shooting from the hip. Your post highlights that brokers should have a strategy and data that backs their price. Love it.

Nov 08, 2018 11:54 AM #188
Rainer
36,186
LaShonda Solomon
Atlanta Communities Real Estate Brokerage - Kennesaw, GA
Serving Cobb, Paulding, Douglas, Bartow Counties

Great information!  I always provide sellers with a bracket price based on the comp.  I also like the script about selling the home 3 times.  This is so true.  I will definitely be implementing this on my next listing presentation.  

Nov 12, 2018 07:44 AM #189
Rainmaker
289,711
Wayne L. Brown
Franklin Advantage Inc. - Alpine, CA

Great reminder and information.

Thanks for the post.

 

Nov 12, 2018 11:59 AM #190
Rainmaker
1,899,340
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

Timing is everything to avoid the over priced listing with too much wiggle room that pendulums to accepting an offer or a chainsaw size price reduction that swings way way too far the other way. Price it realistically upfront and market full throttle to not linger on the market and develop real estate price tag mold.

Nov 30, 2018 03:57 AM #191
Rainmaker
900,773
Ginger Harper
Coldwell Banker Sea Coast Advantage - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

This is such good info for us.  I am bookmarking for us..

Dec 07, 2018 07:40 AM #192
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