The other day I was talking with another Realtor about one of the most important factors for marketing a property in the age of the internet; how to price a home to sell in today’s real estate market that will ensure the most online exposure possible; to consumers and to Realtors. This is a question which Realtors hear almost every day when meeting with potential sellers. Back to the conversation I had with my fellow Realtor. Our discussion took a totally different route than I expected. Let me explain.
The other Realtor suggested something that I had never really thought about, but seemed totally obvious after he explained his concept. He gave me an example of a hypothetical listing that had a comparable value of around $500,000. He then asked me, “what would you price this home for if you wanted to get the most online exposure?” My first reaction was simple and probably a common one for most real estate agents and sellers. Price the home at $499,900. He asked me, “why?” Again, feeling like I had the “right” response I said, “the basic principles of retail marketing dictates that people feel like they are getting a better deal when you have a list price of .99 cents compared to a list price of a $1“. I finished that sentence like I just slammed dunked the ball in a game of hoops. But hold on, the other Realtor didn’t see it that way. He asked, “Kyle, what if I said to you, I was working with a client that was looking for a home in a price range of $500,000 to $700,000. My client wouldn’t even know about your listing at $499,900 since you decided you would be happy to market your listing to consumers looking for homes under $500,000.”
At first, I couldn’t get my head around that statement. Suddenly a light bulb appeared over my head. I said, “Oh, I understand your point. My listing wouldn’t show up in a search for homes using your clients criteria, even though my home was priced at market value. It may have been the perfect house for his clients. They may have never known my listing was available just because I wanted someone to have a sense of getting a better deal by pricing the home $100 less than an even number like $500,000. I totally get it. Those even number increments are how people search for homes. People do online searches for homes in increments of $25,000, $50,000, $100,000, and so forth.”
All I could think about, was how many homes that I had priced incorrectly? How many times I let clients/sellers tell me to price their home just under a round number so people think “it’s a better deal”? How many opportunities have I missed? Just think about how, if you were a consumer or a Realtor looking on a real estate website or a MLS website, you select all your basic criteria for a home: 3-4 bedrooms, 2-3 bathrooms, $150,000 – $250,000, 2 car garage, etc. They use round number increments in their searches. Even increments. Those ranges are important. If I want to catch prospective buyers, I need to price homes at even numbers to ensure I get my listings seen by buyers and Realtors doing searches on both sides of the incremental ranges. If I have a home listed at $149,000 I totally miss the above search starting at $150,000. If I have a home listed at $150,000 my listing shows up on the above search starting at $150,000 as well as someone searching below $150,000.
So remember this lesson next time you are pricing a home. When a seller asks why you think he should list his home at let’s say $399,000 compared to $400,000, you now have the knowledge and information how to price a home correctly to sell in today’s real estate market.
Kyle Hogan of Keller Williams Realty of Brevard just sold this luxury riverfront estate home on Riverside Drive in Indialantic Florida. The final sales price was $1,375,000.00. This palatial residence features 4 bedrooms, 5 bathrooms, 2 half baths, 4 car garage, under 5857 square feet of living area. The 1 acre property with direct access to the Indian River and intracoastal waterway, sits among many other luxury homes on Riverside Drive, but one of the unique features of this home is its private tennis court and gated entry way that leads down a long paver driveway to the main entrance.
The list price of the home was $1,499,000.00, but Kyle Hogan helped his client negotiate a contract price of $1,400,000.00. At the advice of Kyle Hogan, the buyer used an entirely different inspection process. Not only did the client hire a home inspector, but he enlisted the services of a local general contractor to coordinate subcontractors to inspect each of the major, important, and costly to repair items like the roof, A/C systems, plumbing, dock, seawall, pool, irrigation and septic systems. This was a crucial and money saving decision since the sellers had limited the repairs to $5,000.00 on the contract. With estimates in hand from each subcontractor for items in need of repair, the buyer request an adjustment of the contract price of $25,000.00 to the final sales price of $1,375,000.00.
Typically a home inspection from a licensed inspector on a home of this size runs about $500.00. This home inspection cost the buyer $2,500.00, but ended up saving the buyer $25,0000.00. That is a pretty good return on the investment for the more thorough home inspections. These types of inspections are a great resource for people purchasing luxury properties.
This is another high priced sale in the Brevard County Florida real estate market which seems to be doing much better than the rest of the state of Florida and even most parts of the United States. Inventory is low and properties are moving quickly. This home was listed for 7 days before it went under contract.