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 10 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
  9. Ron Barnes 02/07/2019 06:51 AM
  10. Elaine VonCannon 04/14/2019 04:46 AM
Topic:
Home Selling

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Rainmaker
1,932,041
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
917,202
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
Rainmaker
2,858,705
Richard Weeks
Dallas, TX
REALTOR®, Broker

Great information.  Don't know why it took me so long to find this blog.

Dec 10, 2018 04:50 AM #193
Rainer
5,309
Taylor Chiu
Chiu Properties LLC - Heber City, UT
Real estate agent / investor in Utah

This is awesome, look forward to using it

Dec 13, 2018 12:47 PM #194
Rainer
7,931
Joshua Lother
Gwen Fowler Real Estate - West Union, SC
Real estate pro serving the Golder Corner

Great info. I've been doing something similar, but with only 3 comps at each point. More will be that much better.

Dec 14, 2018 08:49 AM #195
Rainmaker
4,431,606
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for the listing strategy. I like the idea of providing a range for listingprice.

Dec 18, 2018 04:18 AM #196
Rainmaker
1,138,911
Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

I am getting into the mindset of using positioning instead of pricing. It may be symantics but go to a seller and tell them we have to lower the price, versus telling them that we need a re-positioning strategy. 

Dec 18, 2018 04:41 AM #197
Ambassador
932,319
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor

I like the phrase I have to sell it three times. The rest I already do but now will include this. Tks

Dec 18, 2018 08:05 AM #198
Rainmaker
782,379
Kevin Mackessy
Blue Olive Properties, LLC - Highlands Ranch, CO
Dedicated. Qualified. Local.

One of the few posts I don't mind seeing in the featured list month after month.  

Dec 18, 2018 11:50 AM #199
Rainmaker
917,202
Ginger Harper
Coldwell Banker Sea Coast Advantage - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

 

Great information for us all.  Thanks for posting it.

Jan 03, 2019 07:42 AM #201
Rainmaker
31,717
Peter Spain
Cancasa - Punta Cana, DR

Excellent information and something that will prove useful as a reference.

Thanks

Jan 31, 2019 05:49 AM #206
Anonymous
Charlie sells RE

I take 5 like comps and drive them to each, we sit outside and study the homes. We go back to clients house all is considered, condition of their home, curb appeal, lot premium, upgrades.
Then I show them past sales in 6 months and DOD the market before a offer. High to low almost all low priced sold in 90 days, the rest either reduce and sold in six months or still sitting.
This program I use puts emotion away and enter reality.
I generally tell them 5% higher than lowest price give it 90 days or 5% lower and start packing. I made a lot of money in the business with this formula.
BTW, if they say go 5% above the highest price lets hope and see I dismiss myself from the listing, very politely of course but I never take it.

Feb 18, 2019 11:07 AM #207
Rainmaker
2,726,650
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I like to see one new people comment on this section because it’s really useful! But the good work keeps moving

Feb 18, 2019 11:35 PM #208
Rainmaker
2,726,650
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Make sure the other poster is not spam. I’m really not sure about that one. All the best!

Feb 18, 2019 11:37 PM #209
Rainmaker
2,726,650
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I could probably use this content to really formulate a cohesive thought about the profession. Love and light and every good thing

Apr 08, 2019 11:12 PM #210
Rainer
23,970
Steven Pomeroy
Wilkins and Associates - Stroudsburg, PA
Your Dream is my Passion.

Selling the house three times is a winning schpeel. It is absolutely true. And its a great, useful way to educate the seller.

I prefer to use more than 5 comps as I find that only showing such a limited number of comps leaves a lot of creative room for the realtor to cherry pick.

It's our role to choose "the right 5" in each category though, and your method sounds very good!  If you can tell a story that you can believe, your seller can believe, and your buyer can believe, based on real math, you sold that house!!

Apr 18, 2019 02:40 AM #211
Rainmaker
917,202
Ginger Harper
Coldwell Banker Sea Coast Advantage - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

 

I am so glad that you posted this.  Thanks for putting it into words..

Apr 18, 2019 06:40 AM #212
Rainer
59,236
Diane Lombardino
Keller Williams Realty of Jupiter - Palm Beach Gardens, FL

Great post! I agree with showing the seller the facts to take the emotion out of the price! Makes it easier on us Real Estate Agents. Love the 5-5-5 strategy!

Apr 18, 2019 12:36 PM #213
Rainmaker
805,903
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

Love the pricing script of how you have to sell the property 3 times-To the agent,buyer and the bank and its appraisers to get them to give a loan on the property.

May 02, 2019 09:21 AM #214
Rainmaker
322,222
Karen Rice Madison AL Realtor
Keller Williams Realty Madison - Madison, AL
434-282-7936 Call/Text

This is a great strategy.  "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."  Truth!

May 23, 2019 10:23 AM #215
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