High, Low and In Between

There’s an old retailer’s trick whereby the merchant marks a product at just a tick below a round number to bring in more consumers. It’s the tactic that sold countless Ginsu knives and Time-Life book sets and music collections, and it has long been applied to real estate. However, the search format of many online real estate sites may be closing the door on this tactic.

Florian still likes to keep prices below a psychological threshold for high-end homes, but otherwise believes in using round numbers based on the fact people who look online often use a range of round numbers, searching for properties priced from $600,000 to $800,000, for example. “If we’re talking about a $1 million home, I ask my client if they would like to do $998,000 or $999,000 just to be under that $1 million mark. If we’re able to stay below that cap, it’s still more visible.”

Florian also likes to funnel people in to see properties at certain times, and carries through with a full-press marketing effort to generate excitement over a home. “A good idea is always to try to funnel the buyers into certain days or times,” he said. “You just want as many people as possible and as much exposure as possible. The more people who are coming through at times when other people are going to see it and are coming through, the more times they’re going to be excited to purchase or rent in that certain location.”

Messenger has seen less of the old retailer’s trick, but she also believes there is value in setting a price that’s slightly above the round figure. “When people are looking, most will look for $50,000 less than they want to pay, and then they’ll look $50,000 more than they want to pay to see what they can get for $50,000 more,” she said. “Everybody wants the house that cost $50,000 more, no matter what price range they’re in. People are always looking to see what the houses that are going for more look like and whether they can get it for less. Sometimes you can get it for less.”

Educating the Seller

The growth of real estate data sites such as Zillow and Trulia introduces a new wrinkle into the pricing matrix. Zillow’s “Zestimates” tool was designed to give homeowners an idea of what their property may be worth, while Trulia purports to offer a glimpse at sales trends. Other sites provide everything from the school rankings found on Niche to the financial analysis available on WalletHub. Granted, this sort of data was always available to the consumer, though it couldn’t be accessed via smart phone while standing in line at the supermarket.

Florian finds flaws with the information presented on such sites, particularly when it comes to estimated values. “It gives a false sense of security as to how the house can be accurately priced,” he said. “The best thing is to actually get a person that can accurately distinguish condition, location, size and all those factors. Many times, even in public records, things will be incorrect. That data is pulled by online companies, and it can be very inaccurate.”

Florian’s appraiser’s license gives his word added weight when he’s discussing a seller’s price. He tries to price the home in question as close to market rate as possible, balancing his desire to get the best price for his client while helping them keep their expectations realistic. He sometimes takes them to open houses so that they can see similar properties and get an idea of what they are selling for while explaining his reasoning. Online tools don’t have that ability to make distinctions and read nuances in the market.