KGCI: Real Estate on Air - Should Your Asking Price Be An Even Number?

Episode Date: June 10, 2024

Welcome to To Toe Toe, a podcast for realtors where you'll witness a battle of opinions about topics affecting your real estate business. There are many ways for realtors to achieve success. The secret is to find which approach will work for you. Now, always in your corner. Here are your hosts, Jen Mertland and Monica Weekly. Welcome to another episode of To To To To, I'm Jen Mertland. and I'm here with my constant opponent, Monica Weekly. Each episode, we choose a different real estate topic to battle about,

and we go toe to toe arguing our differing opinions. As always, though, our number one goal is to help you, the fearless realtor, to find a path that feels authentic to you. Yes. Then you can feel confident as you build your business and ultimately build the life that you want. Get it. So, yeah, during today's throwdown,

Jen and I are going to be duking it out over this. question or this topic. When we're talking about pricing strategies, do you go with the $2999 or do you go with the $300,000 even? Is the $100 difference important in your strategy? All right. Let the throwdown begin. Monica, do you want to start us off? Yes, I feel very strongly about this. Let's hear it. All right. And I have a scientific reason for it. So I'm believe firmly that you want to go with a flat even number. You want to go with the 300 number. You want to go with the 400 number. You want to go with the 500 number. You want to go with the 500 number. Now, here's why. What we know when we study all of the search engines out there, we know that most of them have the searching where you're going with the minimum to 200 to 300 or 300 to 400. And they stop on those even numbers. So when you price your house on that number, on 400 even, you're actually doubling the exposure for the house. And we all know the name of the game is eyes on the house and feet inside the door. That's the secret. So as an agent who's responsible for those two things,

I'm going to price it where scientifically and digitally it makes sense to get the most eyes on it. If you price something at $399,9 and somebody is looking from $4 to $500, they will miss the house. and it could have been perfect for them. Now, there are some exceptions to that, especially if you're in like the, you know, 149 to 150. I don't know that it's that critical, but when you get up in our market

where you're getting up in the 3 and 4 and 500 and over luxury, then I think it's critical. So what do you got to say about that, Lertland? Let's go. I don't know about all your science. I got science. I mean,

search ends up. I've seen. Some of them do like what you said and then the others are at like the 999. But look, McDonald's proves this every day and they are, they sell a lot of hamburgers, right? A billion or trillion or a zillion served or whatever. And what they do is they price it at 99 cents or $1.99 or $2.99. So there must be something there. Well, we're not searching for their burgers on Zillow. Right. So we're not trying to capture the burger price. I'm just saying like, What are you saying? No, what I'm saying is that there is, if you want to talk about science, like, I'm sure that there's science around gas stations do this too.

People thinking that they're getting a deal because it's not the higher number, even though it's only a hundred bucks. The psychology you think. Yeah, it's a psychological move. Yeah, sure. I mean, it's the ever-ending debate among us real estate agents, isn't it? I mean. Well, there has been time. where I price it at the 400 mark and then we go down to 399.9. Well, let's be honest, I'm in Cincinnati.

So it's really like, $1.99. I'm like, dang, that's a nice listening. I mean, I'm trying to do my affirmations while I were on this. Okay, but listen, so we go down 100 and we do actually get more traffic. Now, there have also been times when the traffic decreases. And there's one specific time I can think of where I moved it back up. the round number and we got an offer. See? Thank you for making my point. Well, that's one time out of so many. Whatever. So here is the thing. Ultimately, the underlying issue here is it doesn't matter if you're $499,000 or $500. If you've got the freaking house priced wrong, it doesn't matter. If you've got it priced right and it is a value, the buyer's perceived value is strong, which we know the formula for buyer's perceived value is price plus condition. If you get the price and the condition, right,

you're going to have buyer value. It doesn't matter if you price it at 501, 500 or 4999. Like, if that's the price, that's where you're going to get the action, right? Well, I think, I agree. And I think so, too, like the rule of thumb is if within 10 or 12 showings or something like that, you haven't gotten any offers, you're probably about 10% or so too high, like 10%. That's a lot. Now, if you're not getting any showings and it's been a couple of weeks, depending on your market, like a couple of weeks, all month, you're probably 25% too high. Right, right. So I would use that as a general rule of thumb and then go with something that makes sense.

And I also think the thing that we're saying here is if the price is like 299, 9 or 300, don't price it at 296.5. Right. That's not going to give you an advantage. Right. Right. Yeah. It's more about to me getting the dang price right, actually, right, then you don't have to worry about strategies. Your strategy is you've put a nice value on the house. That's the strategy, right? Yeah. Well, in our market too, and I think each market should be able to pull this data, but I know in our market that if you price in general in most of the areas, if you price a house right, you're going to get around 95 to 97% of the asking price. And if it's priced wrong, you're going to end up. up getting like 88%, which is a huge percentage less, and that's a lot of money. And so if you're dealing with a seller who's like, oh, we can always come down later, be like, yeah, sure, and then do the math and be like, would you rather have? Yes. Yeah, that's a great number amount or

$20,000 more. When we as agents are armed with this information, we can actually really help sellers, when we can help them see why their strategy, which in their mind makes sense, like, hey, I want to ask. Logically, it makes sense. You can always come down. And it is easier to come down when you go up generally, except buying a house is an emotional decision. That's true. That's true. So they're going to have an emotional reaction. Right. So do you have a, so if I'm a seller and we're having this conversation and I say, Jen, I see everything that you've laid out here. I see that you're suggesting the 300 price. I want to get, you know, more than that. And I say, Jen, I see, Jen, I see that. I see that. let's go with 329 and if I'm wrong then we can drop it later what do you say to me I would say something

to the effect of like Monica I understand what you're saying is that we can always come down and it's more difficult to come up is that what you're saying well I just want to make sure that I allow for the negotiations I know that buyers are always going to negotiate they are and if we have no offers to negotiate with then what yeah that's a good one I usually say I want to bring you something to say no to. Like that's the same thing. Like let's get an offer. Right. Exactly. Be like, look, I would rather say no to an offer than not have anybody to work with. So you're saying I wouldn't get any offers if I priced at $3.29. Is that what you're saying, Jen? I'm saying, look, I want you to make more money because when you make more money,

I make more money, right? So we are on the same side here. I know that you want to get the most amount of money and the quickest amount of time so you can right size. Is that right? Yes. Okay, great. So you said that based on the data that we discussed, that you thought the most likely sale price was 300. 300, right. I agree with you. So why don't we do the right thing? Priced at 300. And that way the buyers will feel urgency. Because if they will also see that, right? Mm-hmm. Mm-hmm. And if they see something that's a good value, like when you go see a shirt and it's a great value, do you buy it now or do you wait till later? I buy it now. And when you want to see, say for $5 cheaper and you go and try to negotiate with the lady at the counter and she's like,

no, this is the price. Do you still buy it? Yes. I mean, do you? Yes. I mean, of course you do. Because you like, damn, I love this shirt. It looks good. I mean, it fits right. I finally found one of that I love. Someone else is going to take it. Right. And it's five bucks. Right. So like for them, the buyers, 300,000 is the value that most of the buyers have paid in the past. It is likely the price that they will pay for the future. So let's get you to that beautiful new home that you're building in a reasonable amount of time. I love it. That's awesome. Well, let's say the buyer comes in and they do, because you're right, there are going to be some buyers that just want to feel like they're negotiating, right? And so they may, we know the right, we know based on the data that the price

looks like the market is about $300,000. Let's say we get a buyer that says, I want $275. Okay. Now, is a 275 an acceptable offer for you? No. Great. So what do you think we're going to tell the buyer's agent? We're going to counter. Wrong. We're going to tell them no. We're going to tell them no. Okay. Then what? Did you feel uncomfortable? No. Me neither. No. It doesn't matter. It's not a good offer. We just say no. And they say, you know what? We wish you the best of luck. If your buyer, if your buyer would like to offer again, something a little bit closer, I'm happy to present it again. Good luck. Do you have, I know what it was, do you have evidence of, that you share with them about if you wait too long, if you price it right and it sits, you're going to take less on

average. Yeah. We, I mean, we can pull data that shows like if they price it at the wrong price. And normally it's about like, if they price it right, are in general, the normal realtors can get about 95% of the asking price. we get 98% on average. So like let's say for easy math, like doing a $100,000 house, on average, our team gets $98,000 for them. If we price it wrong and we make a mistake in pricing, they will on average only get 88%, which is $88,000. So that Monica, sell it, Mrs.

Seller, what do you like $10,000? Do you want $10,000 more dollars for your house? I do. I don't blame you. Let's get it. So good. So good. Here's the underlying issue that I see with a lot of agents that I'm coaching. I'm sure you've run into this too with your experiences. Agents don't have the confidence to sit at the kitchen table and have these kind of discussions. And when you believe it and you know that you're actually serving them at a higher level by explaining this to them and you're doing the right thing for the. them instead of bowing down and letting them and fear of losing, it's fear that's keeping you from being honest. And that's not fair to them. So if you think of that, if you flip it up, it's malpractice. It is malpractice. They are hiring you and paying you a lot of money to tell them the truth. Do you think, I mean, they likely argue if they have a, if they have an attorney, like say they're getting sued or something like that, they likely argue with the attorney.

Yeah. The attorney likely is like, okay, yeah, but that's. on what we're doing. Right. Here's the strategy. Believe me, I've been here before. And if you don't like it, fine, go find somebody else that will do it and come back to me when it doesn't work. Right. And now you've just paid double. Right. But agents are coming from scarcity and they don't want to ruffle any feathers and they certainly don't want to lose the listing opportunity. So they take it hard. That's why we're doing this podcast, Monica. Let's help those realtors. That's exactly right. Well, in the end. Do you say it right? I know you always make funny for saying it wrong. We're going to do another podcast on that. You put an extra syllable in the thing.

It's real to. Crazy. I know. No, it's true. I love this discussion. And I wish for all agents listening to this, that this helps give them some confidence to know that when it's not right, walk away. It'll be the best decision you make for your business.

Exactly. Well, I think that was a good discussion, too, but we kind of got down a little bit of a rabbit hole. So let's just, like, go back to our corner, eat a sandwich, or have a snack, drink some water. We're going to take a short break. All right, before we take our final punches, Monica and I took this question to the streets. Is it better to price the house at $399,000 or $400? Monica, what were the results? All right. I'm very proud of our industry today. I'm very proud. By far, the majority, I would say 85% to 15% say go right on the number. They all understand

the search engines. They understand what the advantage is for right on the, on the even number. I know. I know. Do we qualify these people before they answer? They did. In fact, one of my good friends, Sam Livingston up in North Ohio, hi, hi Sam. Sam says, $3.999 is the most insane number. Nines don't belong in the real estate beyond the first digit. It's hurting sellers. And I'm sure what Sam's talking about is what you and I talked about. And then Deb Jolson, who is amazing. Hi, Deb. He's in Illinois. She says, it may make sense in retail, $999 versus $10, and may have made sense long before online searching possible lost opportunity because people naturally search in round numbers and your listing could be missed because you're on the wrong side of that wrong number, which is exactly

what we were talking about. So, Deb, I got you. You're, I like it. I like it. All right. I love it. Thank you. You are a heavyweight champ in real estate. Now let's get back to the show and close out with our final round. All right, Monica, you have one minute to close your argument.

Then I get to go. Okay. I believe in the game of pricing strategy, there is one strategy, and that is to price it right on the number you want. $250, $350, $350, $350, $750, $750, $750, $1,000. Price it right there because you will, give your seller a massive advantage in the number of eyes on the listing because of the way the search engines operate. And the name of the game is more people seeing the listing. The more people

that see the listing, the more people that come see it. The more people that come see it is the likelihood that it'll get sold is better. So do your clients of favor and adopt this new strategy of pricing it right on the number. And I'm going to disagree with you. I think that if say you have a $300,000 house, I think you should price it at $2999 for really the same reasons. So I feel like we need to like really find out what the stats are because there's a psychological response to the $2999 versus like you're getting a deal almost versus the $300. I mean, let's be honest. Most people don't know how to do math. They probably don't even know it's $100 bucks. They might not. But let me ask you this question. Let me ask you this question, Jen.

All right, you go out to a store and you see a widget that you have wanted. It meets your needs. You need that widget at your house, right? I love widgets. And the widget is normally a lot of people sell that widget for $10. Okay. This widget is $5 or it's $4.99. $4.99.

Do you buy it either way? Look, I do. And I also stop and pick up pennies. So I, you know, I think you got to go with what the price set, like what the stats say the likely sale price is and then adjust it quickly if it's wrong. Right. Absolutely. All right. Got a team. I think we're going to have to shut this one down today. All right, Jen. All right, superstars. I hope you enjoyed today. battle and I hope that you heard something today here that helped you get clarity on your path and the standard you're going to self set for yourself and your business. Thanks, Monica. Thanks, Jen. See you next time. Thanks for listening to this episode of the To To To To To podcast. Make sure to hit the subscribe button so you get updates when new episodes are available. And we truly love feedback and would appreciate all likes, reviews, and suggestions for future topics.

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