Pricing a house for sale is easy in the 21st Century.

Quit overthinking it!

I’m going to try to make this as simple as possible…

I realized way back in 2003 that I was going to have to start thinking more like a digital search engine, and that the 20th Century-model of pricing a property at $x99,900, $x74,900 or $x49,500 was antiquated, deceptive in principle, and detrimental to the objective of the client. In the 21st Century, people are shopping for real estate on syndicated internet platforms in $25k, $50k, or $100k ‘brackets’.

I will never forget a phone call that I made in 2008 to a FSBO (For Sale By Owner) on Zillow named Matt Hall. Matt had a highly desirable starter-home property that was a 2-minute walk to the bus stop in a University town and was only one mile from the University. It was the type of home that is almost always in high demand for the college student parents that were looking to invest rather than rent for their student, graduate students that were needing to finish their academic career, or just the average first time home-buyer that was looking to begin a fresh, exciting, new chapter in their story. He had been marketing his home for around 10 to 12 days at $144,000. He was becoming concerned & frustrated because Summer was waning away and the market crash was in full effect. He also knew that he could have gotten $10-15k more for his property just a year prior, & he felt that he had it priced properly for the current climate. He had entertained several showings and was not getting any kind of constructive feedback.

I told him that he had it priced too low.

He thought that I was crazy!

I went on to explain to him how the principle of search engine bracketing works.

Imagine that you have 120 people that are looking for a property like yours who have set up an automated search between $100k-$150k. All of those folks have seen your property at the top end of their bracket, while they are most likely to be seeking a deal around $135k. While they may be qualified buyers for your property, they are not likely to be the ‘highest & best’. Meanwhile, there are another 80 people that are looking for a home like yours that have set up their search in a bracket between $150k-$200k and they have never seen you! These are the folks that are looking in a less affordable bracket, would likely be more qualified & able, and you may have exactly what they need while being able to save them substantially on their budget. Price your property at $150,000 even. NOT $144k, NOT $149,900, NOT $149,500, but $150,000 even. That is the way that you will have everyone in BOTH brackets looking at your property…

He was ‘under contract’ 2 days later at more than he was originally asking for $148,000!

People shouldn’t be played with or lied to.

Get REAL!

$299,900 is asking $300k. We are not stupid, & just because it starts with a ‘2’ does not change the mortgaging reality. And if you see an agent/agency/seller that is marketing a property with that strategy just know 2 things.

1. You are dealing with a 20th Century marketing mind that still thinks that the psychology of the ‘9’ ‘common sense’ still trumps logical reasoning.

2. Over $100 of perceived value, they are missing a massive portion of the prospective market.

This principle is applicable in all pricing brackets & strategies.

If you would be satisfied with a sales price of $375k and the current conditions of your market would seem to justify it, ‘conventional wisdom’ would have you price it ‘firm’ (I will only price a property ‘firm’ if it is my ‘Make Me Move’ price, & I am already established at a price that is likely well over what it would appraise.) or add 2-4% ‘buffer’ for negotiations sake at something like $384,900 or $385k. It’s up to you, but may I suggest an alternative and effective ‘unconventional wisdom’?

I will provide you with a general strategic example:

If it is my house, I am opening my marketing and pricing strategy at $400k to at least give the folks that are looking at higher priced properties a chance to see mine for a predetermined period of time before I initiate a ‘drip-reduction’ campaign.

Have you actively shopped for real property in the past decade, or so?

The way that most folks engage in the hunt is to set up a search on their favorite platform, & when something comes up that may fit their palate they ‘Save’ or ‘Favorite’ it. And then, it’s like they just placed a lil microchip on their pet, but even better. They get an email or notification every time it moves, either in price, photos added, or status change. So what do I do? I place my property on the market at $400k. After all, as a real estate seller, it is ALWAYS easier to come down than to go up, right? After the initial time frame is exhausted, which is dependent on the sales cycle or season that I am in, I will drop the price ($1k/day, $5k/day, $1k/every 3rd day…have fun!) $1k/day for 15 days to arrive at the final offering price of $385k.

A couple of things will happen very shortly after initiating this campaign, & it is unlikely that you will end up arriving at your final offering price. The folks that have been considering looking at your property will get much more motivated to schedule a showing. Everyone is motivated by ‘Price Improvements’! And while ‘he’ has been looking at the property thinking that it may be overpriced and not quite the ‘deal’ that he was looking for, ‘she’ is still looking at it as a very real option that they need to look at or risk missing out on her next best nest.

Side note: It is ALMOST ALWAYS “Her house & his yard”. If Mama ain’t happy, ain’t nobody happy!

Another thing that happens is that you will be more likely to get offers on the property well before you reach your final offering price, as you will have likely generated enough activity to compel one or more parties to action. I have used a strategy similar to this 100’s of times, & more often than not, it plays out very similar to what I’ve described.

In the event that you end up at your final offering price and begin to stagnate on the market, it will be time to revisit your timing or your objective. There is a very fine, hard line between ‘want’ & ‘need’. You either need $X or you need to sell your property. If it is going to take more time, remember that each specific real estate sales cycle (Reference my prior blog: How to Sell Your Home BEFORE You Need To, Big Kahuna!) will last no more than around 45 days. If it looks like it is going to take you more than 45 days to succeed in getting a contract for sale, you will want to be prepared to develop an alternative marketing and exit strategy.

There is another principle that I will be expanding on in a future blog known as ‘It’s time or money’. If you take more time, you’ll make more money… (hint: read some Freakonomics on how real estate agents market their own properties differently than they do their clients)

Getting professional pricing counsel:

While this content is being provided primarily to educate & empower HomeOwners of the Information Age to successfully sell their own home ‘For Sale By Owner’ while reducing, or completely eliminating, real estate agent & agency fees from their sales process, I would like to encourage taking advantage of the tools & resources that your local real estate professionals are willing & able to provide. Call 2-3 real estate agents that offer a ‘free’ CMA (Comparable Market Analysis)((they ALL do)) . Real estate agents are precluded from charging you for anything outside of a contracted service. It will be entirely educational, entertaining, & enlightening to see what value they come up with, & hear their particular ‘spin’ of justification. Just be prepared to accept their analysis graciously, request an abbreviated ‘pitch’, & let them know that if you should consider contracting a real estate professional for the purpose of representing your property for sale that you would ask that they respect your decision to represent yourself & “don’t call us. We’ll call you.”.

Or, when in doubt, call a truly independent, certified, licensed appraiser. It’s usually <$500. (Reference my prior blog: 3 Best Investments)

I have helped 100’s of For Sale By Owners make MILLIONS of dollars for the past 15 years by teaching them the basic principles of real estate representation that are universal and widely accepted as some of the best ways to generate Goodwill, Trust and the confident assurance that Buyers need to make a well-informed purchasing decision.

I’m on a mission. Real Estate WITHOUT Agents!

I’m here to inspire, educate & empower the HomeOwner of the Information Age to more profit & less stress in their real estate transactions.

It’s not rocket science. If I can do it, ANYBODY can do it.

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