Pricing is a tricky thing but very important nonetheless. It's a bit of an art of persuasion as well.

Great explanation in the script.  Thank you for sharing!

Cyndi

555 is much easier in a normal market. Doesn't work so well when there are only 1 or 2 actives (if any) and 1 or 2 pendings in the area, all of which are well above any of the last 5-10 sales.  

Too many people do not understand simple economic theory. Once you do, maximizing sales prices becomes easy; and while the 555 concept is good to establish brackets, setting a price is even easier. All product pricing, including homes are driven by the market forces of supply and demand. you can make more than market if you create desire for that property.

To illustrate an easy pricing strategy, consider selling a $100 bill. If you wanted a fast sale, you might under price, if you wanted to maximize the sales price, you might list for $100, the actual value of the bill, and what the bill can appraise for. 

But if you want to do both, sell fast, AND maximize the sales price, then what? Again, UNDER PRICE THE BILL. That's right, UNDER PRICE IT. Just because I list a $100 bill for $90, does not mean that is what I have to sell it for, or what it will sell for. If I can get a bidding war going, I might even sell that $100 bill for $105, because people hate to lose!

When it comes to properties, I do the same thing, I list BELOW market rate, and sell for or above market rate, because it is the market that tells the value of the $100 bill ($100) and it is the market that will lead the offers to the true market value.

The trick is to WAIT for all offers to come in. Tell people that offers will be reviewed on a given day, and that no offer will be considered before that date. People will bring their HIGHEST and BEST offer, and often, the offer will exceed the market value.

DO NOT try to price a $100 bill, or a house, for true value, it is too hard to determine, and often leaves cash on the table!

I have to agree with the comment from Richard Daskam ... if you don't have the 5 actives, 5 pendings and 5 solds you can't do the 5-5-5. 

I would love to hear you in person... and to hear you at a listing presentation.

The one thing here is not to over price the home but to tell them the truth. Sometimes that is hard when you know you wont get the listing..because some folks don't want to hear the truth... but it is important to be consistent and yes the  truth shall set you free....and keep you on the right path.

My market never has 5 in any of these categories. Ha, we're lucky if we have 2 active OR pending OR recently sold that are in any way comparable. Matching land and interior square footage - or in my area the all-important view - is even more unlikely.

Price here is something savvy agents can estimate but 5-5-5 won't be our method.

Thanks for an informative and interesting pricing strategy, especially if agents are looking for additional tools to help them determine or recommend a selling price that reflects the existing market. 

I have my own pricing formula and many times, sellers choose another Realtor because their listing price is greater than mine.

While most agents will take a listing at any price, what does it say about their reputation as an agent when every listing had a reduction in the original sales price and a longer DOM until closed?  

We can usually find 5 active comparables, but not pendings and usually not solds. I do share comparable data with sellers and when they say, "What do you think we can get for our house?" I said, "You've now seen the data. What do YOU think you can get for your house" and then we have the discussion. Often, they say, "Well, I WANT...." and we have to focus on what the market wants to spend, not what they want to get.

I have turned down listings because the seller stuck to a listing price much higher than I would go. They always get another agent who will list it. However, no other agent has sold the home above my limit.

I liked your script, it makes clear that there are multiple people that have to be sold on the price.

As a new agent, this is extremely helpful. Like John Wiley, I have also turned down listings because the seller was unrealistic and would not compromise. I do not want to over promise and under deliver. An active listing means a NOT SOLD listing!! 

Brivity Platform ~ Well said. The two biggest Seller objections are the sales commission and the listing price. They should be the focus of the presentation. It should be handled with the most professionalism one can muster.

Tools that approach it analytically are highly desired by the Number's Person in the group. In Myers Briggs terms the "T" people. The Thinkers. Numbers speak to them in a different way.  It's smart to have a professional listing presentation using Art & Science.

It's catchy but gimmicky, but it's far removed from reality as an appropriate way to price a property. Reminds me of an old gimmicky political campaign called 7-7-7 - which was a disaster. So I won't be applying this approach anytime soon. In fact, never.

Readers should subscribe rather to one approach called RPA (Right Price Analysis) if they are looking for a good analysis to consider, and I think if my memory serves me correct it's from the CRS program...

Nice read. I do like some of the points in the script as well although, like many others, in my market its hard to find the comps (actives) at any given time.

Pricing a property right is an art, as well as a science. Part of the "art" is the persuasion and finesse with which you handle the client! 

I like some of the ideas you have presented, Ben. Thanks for sharing this information on how to help sellers price their properties realistically.

if the Pricing process / calculations (like a 5 -5 -5) takes longer to explain and understand,  than actually just explaining the 'Like' Closed sales, I think  you risk losing and confusing the Sellers.  And the Sellers might think you were once an engineer converted to a real estate agent ... LOL

KISS ... Kiss It Simple Stupid .... my recommendation

PS  Pending and Actives, don't count ... they are not closed

5-5-5 is a awesome idea. I have used it but sometimes you need to do a 3-3-3.

By the way great interview with Gary!

Helpful script copy--thank you!  Recently I had a seller say 'if it sells right away it wasn't priced high enough' UGH.

I have to admit, I have just taken a listing that I think is WAY over priced - simply because the seller said "that's what I have to have"

Don't get me wrong, I have fought tooth and nail over a period of 2 years to snag this VERY UNIQUE parcel.  I have sent comps, I have told the Seller it is to high - even had the Seller get mad because the REAL comps I sent didn't match his price!  I have even not responded to some of his emails (for months) hoping he would come begging!

Most times being the second listing agent is good, sometimes having something so unique and new to the market is beneficial too.

I will spend some hard-earned time and money trying to justify my reasoning!

Like the concept....How if I can make it work in our market

Great article with good points.  Only downside is in some parts of town there can be zero actives or pendings.  Market is hot and inventory is low.

Thanks for sharing. I could see this working in some markets.

Brivity Platform - interesting take on pricing a property. I was present at this Ben's presentation at KWFR few years ago.

I try to get as close comps as possible and finding 555 can be not that easy. It is a good start, but you have to add a condition of the property, views, lot difference, pool if any, RV driveway, etc. That additions can not be automated by a system. 

In our current market, for many, many subdivisions, we would be lucky to find 5 comparables of any category--active, pending, sold. In some neighborhoods we don't see but one home sold in the past year and nothing active.

This is pretty similar to what I use, as long as I can find enough comparables. Thanks, Ben!

It's difficult to find 15 properties without doing a great deal of adjustments, as appraisers do. For banks, only the solds are important.

A wise approach that all agents should be adopting.

Thanks for sharing this

bob

Pricing is key to everything but it can be tricky because there's a huge amount of psychology and understanding the other person or a little of stepping into the other person's shoes

Kevin is right! It's all worth I feel like having a little deeper is the smart back here

One large mitigating factor you didn't include in your calculations is Condition. The condition of one property Vs another  of the same sqaure footage and general layout and style will have an impact on the market price. The best way to mitigate this up front would be to get a home inspection prior to setting the price. Another, is to remeber that appraisals don't look carefully at property condition. Home Inspections do. Both are relevent and both are needed (for different reasons) in order to verify the asking price.   

Pricing a property is an art. Most appraisers need to be conservative. In our area lenders do not mind lend more with a desk top review. Sold/ list ratio is coming down from 135% to 106% meaning all offers are higher than sold data getting a loan with a higher downpayment.

The MLS yes, no, room count leaves a lot to be desired in differentiating the solds and listings competing with the property about to enter the market. You need personal experience and can tell the seller I listed, sold that one and he is how they stack up with yours in the turn your head and cough. But if the sellers starts to get agitated, shouting "not going to give it away" you have to decide without too much time lost at the kitchen table that he or she is not ready to sell. Thank them, move on and wait Get the listing the second or third year as the real estate silent salesmen come and go out on the front yard with the over priced listing price set in concrete. You don't just want to list it, you need to sell it.

You have to know the market and what the market is used to paying because otherwise everything is arbitrary almost.

Andrew Mooers I see what you're saying about the room count, but it's just better to strengthen the strengths of course. :)

Hello Brivity Platform 

This is a good tool that can be adapted for varying cross-sections of the markets

Every market is so different. But all can agree over priced listings hog time and money and don't sell. Take the ones that are realistically priced no matter how much you want some listing you wish would sell but won't during your contract period. 95% of our small rural market is list, sell what we catch and release. Cash sales, owner financed one on way lower priced properties and land parcels of all types... not just homes, houses peddled.

Thanks for sharing this technique.   I've used a variation of this.

That is a great way to do it, Ben!  Unfortunately that will not work in my market niche.  There are rural areas where not many comparable properties are sold, nor are under agreement.  Each farmand property  that is on the market has it's differences.  We try to explain to the Sellers that we make adjustments for the acreage, buildings, etc. on the so called "comparable properties".  Some still believe their properties are worth more than what the report states simply because they have put so much into the property to improve it.  With having experience in out niche, we tend to have a good idea as to what price range the property will sell.

Brigita

I currently use a similar approach when discussing price with sellers.  I like the detail in Ben's Pricing Script.

Thank you for sharing the strategy and for the great tips and script.

That sweet spot is always necessary when you first start out and then if you practice your swing enough, you're hit it.

Finding 5 of each in this current market is tough, but basically the same strategy can be used with fewer.  Wish all agents used this.  

If the sellers still want to overprice the house, ask them to visualize what will happen to their future plan if the house does not sell in three months, six months, or beyond.

Thank you so much for a very useful information on aproach to pricing right

Like using the three data sets providing the data is available or can be logically imputed. However, I like to look at other factors too like saturation, DOMs, listing history, amenities, taxes, HOA fees, offered (un)furnished, photos, views, upgraes, etc. to select within the range or possibly expand the range with my prospect.

It's also nice to review this one to to see a property in a thousand various markets

The best pricing strategy is one that you get from an (experienced) agent that combines art and science:
one that is familiar with the area and knows the range of conditions of the homes and the specific buyer market.

Without this experience, we must rely on a more "scientific" format and this process fits the bill. To be more thorough, I would also advise agents to visit the "active" competition in the area.

i use a variation of this as well!  Some good tips here!  Thanks for sharing Ben and Brivity!

I had to share it on my facebook https://www.facebook.com/Elena.Roud.Oahu.Realtor/ 

Thank you for your suggestions and script.

Very good. Thanks for sharing. 

Very informative article. Thank you for sharing. 

I like it! 

Thanks for a great new tool! 

Sounds like a great new tool to use.  Thanks for the info.

These type of pricing blogs never really get old and are always useful. Always a valuable thing!

Any article on getting listing is worth reading today and if it is touched by Ben Kenney, no one should miss it. THanks for sharing 

Tx For sharing. Have an awesome weekend. Love the nuggets

Thank you for sharing your 555 pricing strategy. I currently use a similar strategy, but you put it so well into words. Great way to educate our sellers into selecting the right price to list their homes.

Excellent info! i just toured a local open house down the street from me and the LA sure could have used this advice. Price was off!

Great information and I use a very similar strategy as well! I'm looking forward to another conversation with Kristin!!  ;-) 

Great details for listings... I use a similar system for listings but will incorporate more of this system. TX

For listing it is often an issue to tune down home owners greed that their home will sell more than what it is worth. I bring my credentials on valuation from 3 largest companies often have to give them a relality check.  I suggest they can get the home appraised and often they either do not want hear it and then back down.

I'm always a little bit surprised how many people don't know how to price properly on whatever they're selling

Excellent information, and I will definitely use it on my next listing. Thanks for the tips.

Great article, really appreciate the presentation. 

This type of post is always very informative no matter how many times in various forms.

This is another great universal evergreen topic that always has a place because the only to know how properties are going to sell relative to whatever goes on A follow

I like your idea of involving the Sellers in the review process by acrtually participating rather than just sharing the results of my analysis.  Thanks for the suggestion.

Thanks for sharing this one - great tips.  I love the part about sharing with the seller you have to sell the home 3 times.  This is so true, sometimes the Realtors control which homes the client will see, & if the appraiser doesn't see the value, nothing is going to happen!

I've lost out on several listings in the past year because I told the seller honestly what I thought the property was worth based on comps - usually by looking at more than 5 actives, pendings, and solds. In these cases, another agent told the seller to list at a higher price, and we all know that it's hard for sellers to dismiss a higher price even if there's no guarantee it will sell for that!

In this low inventory market Lee, I have lost a few this year....I never lose!!!

However, sellers are hearing homes are multiply offers and they are looking for more money so those not so ethical agents who give higher prices are getting attention.

Probably one of the best articles this month. Great advice. Think I'm going to reblog this for my followers!

Seem like a great process. Getting the sellers on board with the correct pricing is often difficult and this will help get that done.

Thanks for sharing,
Bruce

Thanks for sharing these great tips Ben!

I do not understand about Pending. We do not know the contract price on Pending properties. What it gives you? What is the difference between Active and Pending then?

Intresting read. Always great to hear what others are using with success 

Great details for listings.  Thanks for sharing these great tips,  Ben!

WE all need to keep these points in mind when pricing a home to sell

Love Ben Kinney! Great article. Shared! :)

Again, this is tricky but a positive approach like this can only be down to get you a lot of traction as any seller.

I work mostly with buyers, so I'm always interested in hearing other Realtors' selling strategies.  Thanks for sharing.

This is a good one Ben.

Thanks,

Thank you for sharing, I loved it... have a nice weekend.

Ecellent advice. Great post. Thank you for posting this! 

This is some of the best pricing advice I've ever read. Thanks.

One trend lately is price is way lower to get the attention of buyers. At 1st opne house the listing agent raise the price. While permittable it is like bait and switch. One should price as close to true value in a honest way.

I find myself coming back to this every couple of days now for some strange reason, but I love it!

Good to know, thanks for sharing

This is a really good solid strategy for pricing a home Ben.  Thanks for sharing.  I'm definitely adding this to my listing presentation.

Pricing is key to selling a home.  If a home is not priced properly it rarely will sell.

If I was an agent, I would so use this. Genius

Nice method. I wonder how comparable sold properties are evalauted when factoring in the condition. i.e. if it needs a new roof, was the electrical updated, is the furnace 35 years old, what about the shed in back that has collapsed? Was the new roof warranty voided because it was improperly installed?

How are these factored in the price? And how do you get access to sold properties to find out what the condition of those properties was at the time of sale?

Very good information Ben.  I often show them the homes right there on my computer as well to show them THEIR competition.  I have had sellers say, well darn I am not as good as that house and we price it right!

As always, a great post and fabulous information!

As always a great post and fabulous information

Good article for sure.  When the house you are selling does not have 5 5 5 comps available..... it makes it a bit tricky, but the thought process is the same.

The facts definitely take the emotions out of the conversation.

Thank you for the great tips. I will use these the next time I am on a listing appointment.

 My first Broker taught me this, only it was 3 or 4 solds, active, and pending.  If I can find 5, I will use 5, thank you!

As always pricing is a key component to success in this business.  My "toolbox" remains open to smart ideas/strategies.  

This post never gets old because we all need to know a good price point each region, But a lot of the same rules apply across the board

Michael Marciano, CBR, CDPE, SRS It is a key point but more importantly it has effects down every other sector

I'm ordinarily not a script fan, but this is so accurate, sincere, and just plain truth.  Thank you!  I will definitely use this information to explain the importance of pricing the home correctly and fully believe it's an ideal method! 

Good information.  Pricing is so important.  An easy method to remember.

Thank you for sharing.

I am so going to now look into integrating this into my cma system

Ah!  If only I could find 5 active comps in any of the areas where I sell!  I'm trying to figure out how to implement this in inner-city neighborhoods where there are tremendous differences among the architecturally diverse hundred-year-old homes.  Great information!

Great post- and I like the explanation to the sellers- who many times just want things to work in their benefit!

Great information. A systematic approach to pricing backed up by facts can be compelling in determining a sellers pricing of their home.

From what I’ve seen, all of you have been pricing your stuff fairly accurately to what the market is suited for.

Very compelling overall, I would totally agree with you, John! Good luck in your market!

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

Great advice ... facts are hard to argue with & this helps the owners see their home as others would!

Good info. Even in a seller's market, overpriced homes don't sell!

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.

Genius, pure Genius, definitely going to include in my arsenal.

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

Great infromation. This makes it easy.

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

Great information, thank you for sharing!

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

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

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.

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.  

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

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

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!

Very good suggestions on a strategy and script to share with buyers.  Especially for those who want to price their home on the high side.

5 is a good number of comps! Not so easy to come by all the time - here in Southeast Florida we have many super-luxury condominiums that rarely sell - comparing one building to another often does no justice.

The whole psychology of price never fails the fascinate me no matter how much I’m used to it because of how well it works.

Good information that we all know, but it helps to be able to provide concrete facts to a stubborn seller asking why their overpriced home hasn't moved yet.  

this is getting so much SEO! It’s all really very impressive on so many different levels combined.

Nice to meet you,
Kevin Mackessy You’re totally right about the clarity of the message. There’s really no ambiguity here at al!

In my area, much of the time there are not 5 Actives, or 5 Pendings that are truely comparable. Lots of solds though!

What's great is when sellers think they know more than you, especially if you taken these above steps.  They only believe they know what the price is and it is not founded in experience of local knowledge.  

Very good advice. The more data you can provide, the better the decision. But more importantly,  in this day and age when people have to make so many decisions and sometimes freeze, the more information the easier it is to finally help people decide.

Great information .. thank you for sharing Brivity Platform! So simple and to the point. 

This is good information for us all.  Thanks for sharing..

Great information!  Thank you. 

great post! Always give a range, and have the sold data to back it up.
I also add in expired, as it shows what happens when a property is overpriced

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.  

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

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

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

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

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.

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.

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.

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!

This is such valuable information.  Thanks for sharing..

Excellent! This information is spot on.  Thanks for sharing

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....

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

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

Good information. How can we see a sample report?

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.

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.  

Great reminder and information.

Thanks for the post.

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.

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

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

This is awesome, look forward to using it

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

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

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. 

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

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

Great information for us all.  Thanks for posting it.

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

Thanks

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

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

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

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!!

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

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!

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.

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!