How to Price a Property so it Sells
How to Price a Property so it Sells
BY BRIVITY PLATFORM
Services for Real Estate Pros with Brivity
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Share: March 31, 2017 12:44 PM
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, the 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:
Step Two: Bracket the price
Find comps that match the lower price
Find comps that match the higher price
Pick a range inside which you’re willing to list the home
Pick a goal price you feel is appropriate
Pick a price that you wouldn’t go above
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.