$499,000, $499,900, $500,000…what’s the difference? Or, how about when you have a home listed at $329,000 and you know you need a price reduction, but, can’t seem to find the right way to convey it to a client? What’s the right way to go about getting a price reduction? First, I presume that you aren’t getting a price reduction “just to make a commission” as many sellers may think….the reason you should be asking for that reduction is because you have reworked a market analysis, you have held caravans and you have received feedback that all indicate that you can’t get an offer at your current list price.
A useful technique is to think of home prices in terms of “brackets”. $150,000 to $200,000 might be a bracket in your market. For others, this may only be a $25,000 change instead of $50,000. Either way, buyers will typically be looking in their bracket. They may browse outside of the bracket, but, they will look in their bracket. This is something that should be easily conveyed to a seller. Here are some good examples of bracketing:
No matter which of these sites you would use or even if a buyer was to use a site like realtor.com where you actually enter exact numbers, it’s still going to be a bracketed number. Okay, so what’s the point of going through the idea of bracketing? Well, if you have that listing I talked about above for $329,000, do you really think a price reduction of $10,000 is going to get you more showings? How many more buyers are going to see that home at $319,000 than saw it at $329,000? Few if any. If you are going to get more or even just new buyers to view that home, you are going to need to get the price at or below $300,000 (think buyers looking from $250,000 – $300,000 vs. $300,000 – $350,000).
As for whether or not $499,000, $499,900 or $500,000 is a better price, I don’t think there is any difference between the first two numbers, but, I do think there is a benefit to $500,000 over the other two numbers. Again, think about bracketing again here. If you are searching homes for sale in Atlanta on my website, the brackets go to the even numbers. That means two different brackets will get to view that listing at $500,000 instead of one bracket if you list at $499,000 or $499,900. If that’s not reason enough, if you have enhanced listings on realtor.com (and yes, they are valuable – but that is for another post), the listings are typically displayed from highest to lowest so my $500,000 listing will be viewed more frequently than your listing at $499,900 listing.
To summarize, it’s always better to price at even numbers, but, if you can’t price at even numbers, at least price at something different. If you are in an area with competing listings and there are several homes at $499,000 then list yours at $495,000. t least it will stand out from all of the others at $499,000. While a pricing strategy like these will not by itself sell a home, it can get you the needed traffic that leads to an offer.
