Pricing Strategies In The Digital Age: How To Price Your Home Right?
Technology has immensely influenced the real estate industry, pretty much just like everything else. It has transformed the way people advertise their homes, the way people search for homes and how agents approach their job. Pricing strategies have also significantly changed in the new digital era, and what has worked 10-15 years ago may not work today anymore. Sellers and agents need to be aware of the new rules and changes that have a massive impact on how buyers search for listings. Here is what sellers should pay attention to when pricing their home.
Old Pricing Strategies Don’t Work Anymore
Many agents still rely on old pricing approaches instead of acquiring a strategy that fits today’s day and age. Take for example the oldest psychology trick in the book, pricing the property $1 or $100 under the next price point to appeal to potential buyers. Decades ago, this was a great way to attract buyers as we can all agree that a home priced at $499,900 sounds more affordable than a $500,000 home, right?
Nonetheless, charm pricing may work in retail but not in real estate anymore, and here is why. Predominantly, home searches take place online, and algorithms are far more important to get the deserved attention from potential homebuyers. Sellers need to take into account the way buyers search for a home before they decide on a price, which brings us to our next point.
Search Tool Criteria Can Determine The Exposure You Get
When a buyer looks for a home, they browse websites and apps that give them options to filter and narrow down their search. Relator.ca, for example, offers price points at a 25-digit benchmark, so you will be able to choose options starting from $325,000, $400,000, $425,000, etc. It is clear that the system relies on round numbers. This means that a home priced at $424,900 or $499,999 eliminates potential buyers who are searching in the $325,000 or $500,000- onwards price range, roughly about 50% of potential buyers. Those will never get to see your listing just because of the $1/$100 mistake. The MLS may let you enter specific prices, but sellers need to be aware of other popular home browsing sources that attract as much traffic. Home selling is about exposure, and the more people have the opportunity to view your listing, the bigger your chances to find a homebuyer.
In-Between Price Thresholds
It may get tricky when the home’s value is slightly above or slightly below a certain threshold. Let’s say your home’s value is $535,000. If you decide to drop the price to include potential buyers looking for a home maxed at $525,000, you may not be able to negotiate a higher price later (leaving you $10,000 short). On the other hand, if your home is for example valued at $590,000, should you increase the price to $600,000 to get more exposure in the $600,000 - onwards target group? Would such an increase be justified, especially if similar listings in your neighborhood are sold at a lower price? Such dilemmas should certainly be discussed with a real estate agent who will probably know if the move is worth your while based on a number of factors, e.g., market conditions, what your home offers, etc.
Location, home features, size, number of rooms, popularity of the neighborhood, etc., are still the determining factors in setting the asking price, but with more than 50% of people looking online for a home, it certainly helps to know the little tricks to online marketing and how online searches work, and sellers should definitely take that into account when deciding on the price.