Try This One Thing To See If Your Listing Agent Understands How To Market A Home For Sale
In every industry, you can find pricing techniques that are used to accelerate sales.
This study of pricing and its impact on profitability is a big business, and retailers have learned to live or die with how well they price their goods.
Real estate is not different, and those of us who take the time to measure performance and study the impact of pricing have found some important rules that home sellers need to know.
A Simple Question To Ask When Interviewing Real Estate Agents
Ask your listing agent what would work better, pricing a home at its fair market value, or pricing it $1 cheaper (or $100, etc.). For example, if you have a home worth $350,000, should you offer your home for sale at $350,000 or at $349,900?
The answer you receive will tell you whether or not the agent is a student of marketing (and marketing is the most critical component of a listing agent's value to you). Ask them to show you examples of their listings and look at the prices they have set.
Rounded Prices Versus The 9s
I suspect you'll get one of three answers. Either they will be a proponent of pricing homes with 9s, or they will have a reason to be against it or perhaps have no opinion at all.
There have been so many studies on pricing on the 9s versus that rounded number that is slightly higher. Your agent really should have an opinion, so "no opinion" is a sign that your agent is not well educated on pricing in marketing.
I recently read an article on the use of 9s in pricing on Kissmetrics. It referred to this as "charm pricing" and they found that this tactic produced significantly more sales. They referenced an experiment by MIT and the University of Chicago where a women’s clothing item was tested at the prices of $34, $39, and $44. Amazingly, the item sold best at $39, even more than the cheaper $34 price.
So how does this apply to real estate?
Why Pricing On The 9s Is So 90ish
Is does not.
Studies show this pricing tactic works for sales of products where there is not a readily apparent difference between the two items or where there are multiple duplications of the same product for sale.
But in real estate, where homes have unique differences that require the buyer to visit the home in person, we use price to draw them to the home. In other words, the way that we price homes merely determines whether or not the prospective buyer will come see the home, it's not like they will click on a "BUY IT NOW" button and get the home sent to them, right?
Real estate agents that price homes "on the 9s" are ignorantly trying to apply a concept that works for mass produced items on a store shelf to an environment where it will be ineffective.
Do you really want an ignorant agent helping you with the sale of your multi-hundred thousand dollar investment?
Pricing A Home For The Internet Age (Hint, this started more than 10 years ago)
The proper way to price a home is to do so recognizing pricing's role in marketing.
We have studied buyer behavior, and some simple things were evident right away, and continue today.
1. Buyer's use the internet to look at homes. The annual study of homebuyer behavior by the NAR continues to show that almost everybody (94% of buyers) shopping for a home uses the internet.
2. The majority of homebuyers use a price range to narrow their field of choices. There are more than 2,000 homes for sale in Tallahassee, and most buyers do not want to look at all of them. Instead, they narrow the field, starting with a price range. For example, somebody wanting to buy a home for $350,000 might shop homes for sale in Tallahassee from $325,000 to $375,000. Nobody shops from $324,999 to $374,999. So imagine your agent recommended a price of $324,999; would it be seen in as many home searches as one rounded to $325K?
3. The more a home is seen online, the better chance it will be visited offline. The reason we market a home on the internet is to get prospective buyers to want to come see the home. We know we won't sell it online, we can only promote it so that it can be sold offline. Any buyers that are eliminated online are likely eliminated offline, and that is not good.
4. It only takes one. This is a load of garbage spoken by real estate agents when referring to finding a buyer. They know only one buyer will buy the home, so they are only looking for one. But we have proven that the more buyers interested in a home, the higher its price will be bid. Hire the real estate company with the best online marketing, and you will get more money for your home than you would working with an agent who says "it only takes one!"
Make sure you ask your real estate agent where the "sweet spot" is for your specific home. Price it there and you will draw the most prospective buyers for your home, allowing you to get top dollar during the sale. Even in today's hot seller's market, we are seeing many homes sell for less than their potential.
Wanna Know Why Most Real Estate Marketing Plans Don't Work?
Because most real estate agents don't work a plan!
With roughly half the listings in the Tallahassee MLS failing to sell during their initial listing period, you have to wonder if real estate agents are lazy or if they are ignorant.
Who would you rather hire, somebody too lazy to market your home EVERY DAY, or somebody who does not realize that daily marketing is essential?
If neither of those options appeals to you, let us know by making contact with us below. We'll take it from there!
If you would like to know more about selling your home at top dollar, just drop me a note and we'll be in touch right away.