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 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 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 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
2,557,411
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
2,557,411
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
108,279
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
258,131
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
34,085
Jared Wangsgard
Better in Utah Team - Aubrey and Associates Realty - East Layton, 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
3,353,174
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
365,657
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
Rainmaker
480,891
Ellen Caruso
Daniel Gale Sotheby's International Realty - Glen Head, NY

Perfect strategy that works, I use it when pricing properties even when the seller disagrees it always results in the range I set.

Feb 28, 2018 06:15 AM #141
Rainmaker
23,706
Kezie Odunukwe
Fathom Realty AR, LLC - Bentonville, AR
Real estate agent serving Northwest Arkansas

Great infromation. This makes it easy.

Feb 28, 2018 06:11 PM #142
Anonymous
lijirahi

I loved the way you discuss the topic great work thanks for the share. Harvard Case Study Analysis

Mar 03, 2018 04:17 AM #143
Rainer
4,833
Julien Ray
Water Pointe Realty Group - Stuart, FL
Real Estate Wrtier For Water Pointe Realty Group.

Great words to know! how to get best deal for your property so people can't rejecct in any condition.

Mar 13, 2018 12:15 AM #144
Rainer
268,535
Jason Boone
Duke Warner Realty - Bend, OR
Principal Broker, CRIS, RENE

Great information, thank you for sharing!

Mar 13, 2018 09:09 AM #145
Rainmaker
480,891
Ellen Caruso
Daniel Gale Sotheby's International Realty - Glen Head, NY

Nicely put, I go for the 5,5,5 strategy all the time!

Mar 29, 2018 05:15 AM #146
Rainmaker
1,316,615
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

This approach looks very good.  I like the objectivity.  I'm going to try it out.

Mar 31, 2018 12:20 PM #147
Rainer
3,770
Debbi Buyers-Britten
GAP Realty Group - Southgate, MI
Experience Seller's and Buyer's agent

There are no other active or sold listings to compare my property to.  In fact, there has very little activity in that area.  Any suggestions on  how to price the property?  It was purchased 5 years ago at $140,000 and is an amazing home.

 

Apr 15, 2018 05:28 AM #148
Rainmaker
853,470
Kevin J. May
Florida Supreme Realty - Hobe Sound, FL
Serving the Treasure & Paradise Coasts of Florida

Fulfilling a 555 strategy is the ultimate goal although often many niches just don't have the numbers to keep it that simple. When they do it's a beautiful thing.  

Apr 15, 2018 05:55 AM #149
Rainmaker
227,912
Shirley Coomer
Keller Williams Realty Sonoran Living - Phoenix, AZ
Realtor, Keller Williams Realty, Phoenix Az

Great post and a great way to explain the pricing suggestion to sellers.

Apr 28, 2018 07:38 AM #150
Rainmaker
785,470
Lanre-"THE REAL ESTATE FARMER" Folayan
Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES

Valuable information that we need to utilize whenever we are going on listing presentation. Thank you very much for sharing the script.

Apr 28, 2018 01:18 PM #151
Anonymous
acing

i like post,, you are good

May 11, 2018 03:24 AM #152
Rainmaker
373,445
Tom Bailey
Margaret Rudd & Associates Inc. - Oak Island, NC

Very good strategy. Sellers need to remember that it doesn’t matter what they think it’s worth, it doesn’t matter what I think it’s worth, it doesn’t matter what they need to get out of the home. All that matters is what someone will pay for the home!

May 13, 2018 08:16 PM #153
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