What’s The Best Strategy For Pricing A Home?
It’s a long held belief that pricing a home at $249,999 is superior to simply rounding to the nearest ten or hundredth thousand (preferably a factor of 10k, 25k or 50k). Ending a price in .99 is based on the firmly held belief that, since we read from left to right, the first few digits in the price will resonate with us the most. This is absolutely true…but the modern repercussions are often unexpected. We need to consider how buyers come to find the homes we have for sale, after all, they aren’t sitting on a clearance shelf like a $49 pair of shoes.
How Do Home Buyer’s Search?
According to most estimates when consumers decide to buy a house, they begin online about 80% of the time. When those buyers reach out to an agent, frequently they are set up for MLS notifications…but here is the rub; consumers and agents typically run their home search criteria using whole numbers. If an buyer is looking for homes in the $250,000 to $300,000 range then your very relevant listing at $249,999 is not showing up. In fact, it’s only showing up for searches that go up to $250,000 (or more)…which means it’s likely at the absolute top of the prospective buyer’s budget.
Why Haven’t Agents Adapted?
This week I was in Las Vegas meeting with two of the biggest agents in the US. When I brought this up they both appeared flummoxed, but intrigued. Is it possible that among 1.3 million active Realtors® that nobody had really given this consideration? Sometimes, firmly held beliefs override rationale…the .99 pricing strategy has been around for over 100 years.
Is It Time To Consider A Change?
It’s not 1900 anymore. Everyone is searching online, setting budget parameters using whole blocks of round numbers. This .99 pricing strategy affects every price point. Your $1,999,000 listing isn’t being seen by the CEO looking for waterfront homes $2,000,000 and up and investors are missing out on your $49,000 house because they typically buy in the range of $50k-100k. We think it’s time for a change. We believe that it’s important to spread this insight, please share this with your colleagues.