Don’t Price it like Walmart
Have you ever walked into a store like Walmart and wondered why just about everything is priced ending in .99 instead of rounding up to the nearest dollar? Of course, you have. It’s a strategy known as psychological pricing.
To most consumers, an item priced at $2.99 is more appealing than an item priced at $3.00. Even though there’s just a one cent difference, the brain processes them as much different values, and perceives $2.99 as the better deal.
A similar strategy has been used in the real estate industry for decades.
Why price a home at $500,000 when you can price it at a more attractive number like $499,900, or even $499,999, and potentially generate more interest from buyers?
While this Walmart pricing strategy was once considered effective, today it can be a costly mistake.
Why it’s a bad idea
Sure, it’s just a $1 – or $100 – difference in price, but it can ultimately mean the difference between a home selling quickly and languishing on the market – and it all comes down to how today’s brokers and buyers search for properties online.
Take Zillow, for example. When you go to search for a home and set your price parameters, it defaults to $50,000+, $75,000+ 100,000+, $150,000+…and so on.
If you’re a buyer, you’re most likely going to click on these numbers to set your price range rather than entering a specific price.
For the seller of the $299,999 home, this means their home won’t appear in the search results when a buyer selects $300,000+.
While they initially thought they would capture more buyers by lowering the price by just $1 or $100, the reality is that they’re probably reducing the number of buyers who will see their property.
A Better Way To Price Your Home
With all of this in mind, the most effective way to generate maximum exposure for a listing is to price “on the bridge”.
Using the same example as above, a home priced at $300,000 (instead of $299,999) will appear regardless of whether your potential buyer searches for homes between $250,000 and $300,000, or $300,000+.
Instead of pricing below the range, now the home is priced in the most attractive (lowest) part of the $300,000+ range.
Think about how many people search for homes online, on sites like Zillow, Realtor.com and here on LauraLakeRealEstate.com. For your home to reach the highest number of buyers searching online, the price of your home must align with how those buyers search.
Pricing on the bridge could effectively double, or more, the pool of buyers that see your home in their search results. The more eyes that see your property, the more likely you’ll garner an offer.
There are many examples of where a home has lingered on the market, but once priced on the bridge (sometimes an increase), buyer traffic increases.
Exposure is Everything
As we always say, exposure is everything. And pricing correctly is the backbone of creating exposure. That’s why it’s so important for buyers and sellers alike to work with a broker on setting the right price – or finding the best deal for you!