YOUR EBOOK TITLE THE NEW CMA: COMPETITIVE NOT COMPARATIVE
You’ve done the market research, identified trends and market factors. You’ve compared to competition and now you know the right market value price for the home is somewhere around $750,000 - $770,000. We call this the positioning range. But there is one final piece to implement. One last key idea.
Visiblity
Visibility is the king of pricing factors, which is why it’s last. Your listing must be seen to be sold and the more eyes that fall on it the better. Think about this from the perspective of a supermarket, which products are seen more and purchased more? The one on the special display end cap at the front or the bottom shelf on aisle 24? They could both be priced accurately for their value, but the one up front sells more because it’s easier to be seen. The way we implement this in real estate is by yet again, thinking through buyer’s eyes. When a buyer searches on a website for homes or gets prequalified and has their agent set up alerts, what kind of numbers are they searching for? They are always whole numbers that usually fall on major dollar increments. We call these increments “ bridges .”
Bridge Pricing
To maximize the number of buyers eyes on the home we want to price on bridges. The reason why is that many buyers will search for homes in a range from a high to low price. The low price of one buyer may be the high price of another. So if the bridge we choose is a commonly used number for low or high, we can connect two segments of buyers and interest both. This is a major boost for our visibility. In this example, we found the positioning range to be $750,000 to $770,000. Well, the main dollar increments bridges here are at $750,000, $755,000, $760,000, $765,000, and $770,000. What options are going to the be the strongest? Right off the bat, $750,000 is the strongest bridge, because of the way that search engines work. Specifically, by dividing the market into chunks of $100,000 or $50,000 depending on the website. $770,000 is not a great bridge in this case mainly because the bridge of $775,000 is a lot more powerful and common. Buyers and their agents searching will make the jump to $775,000 and skip over $770,000 as a range limit in their search. The others all fall into the decently good bridge category. Many buyers when qualified for a loan at a bank are qualified at the $5,000 increment marks so their agent will search for that pricing. So, the best option for the bridge in this case is clearly $750,000, but the other bridges up to $765,000 are all okay. So how do you choose specifically which one to go with? You don’t. You let the customer decide. You let them tell you which bridge they’d like to price the home on. Remember you’re the guide they’re the decision maker. But, you need to be a great guide and get them to the correct understanding, which is the other factor in this process. So the next step in the competitive positioning process really co- mes down to the question; how do you convey all this information in a way your customers can understand?
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