Why Pricing Your Home at $199,900 Could Cost You Buyers

Here's a question I ask agents in the continuing education classes I teach. If a home is worth about $200,000, what's the best list price: $198,888, $199,900, $200,000, or $210,000?

Most agents pick $199,900. It feels like the smart retail move, the same reason a TV costs $499.99. For a home, it's usually the wrong answer.

Getting the value right is only part of pricing. The exact number you pick decides whether buyers see your home at all. Here's why, and how to use it.

Buyers search in round numbers

Think about how buyers shop. They go to Zillow or another site and set a price range. Those sites use drop-down menus and sliders that move in round steps like $25,000, $50,000, or $100,000. So a buyer ends up searching $200,000 to $300,000, not $199,900 to $300,000.

Agents do the same thing. A buyer says they're pre-approved for $350,000, and the agent sets up a search from $300,000 to $400,000.

Now look at what that does to a home priced at $199,900. It shows up for buyers searching up to $200,000. But it disappears for every buyer searching from $200,000 up. Price it at $200,000 even, and it shows up in both searches.

The same thing happens at every price point. A home at $299,900 misses everyone searching from $300,000. It matters most at the big round numbers like $200,000, $300,000, and $500,000, but it applies at smaller steps too, like $475,000 versus $474,900.

"Clever" prices don't help either

What about something eye-catching like $198,888? It might stand out on a page of listings. But buyers have to find your home before they can notice the price, and odd numbers don't fix the search problem. A home at $198,888 still drops out of every search that starts at $200,000.

The problem with "wiggle room"

The other common instinct is to price a little high to leave room to negotiate. "It's worth about $200,000, so let's list at $210,000. We're not going to give it away."

I understand the feeling. But if the home is worth about $200,000, pricing at $210,000 puts it in front of buyers who can find better homes for that money, and hides it from some buyers who would have loved it at the right price. Overpricing usually leads to one thing: more time on the market.

I've priced my own properties at an even, fair number and gotten multiple offers, even in slower markets. Competition is what pushes the price up, and competition comes from exposure.

A real example from Twinsburg

We recently listed a home in Twinsburg at $412,500. After 20 days on the market, we had almost no activity.

We lowered the price to $400,000. That put it in front of every buyer searching from $400,000 up. We got multiple offers, and the home sold for $420,000, more than the original list price.

Your first few days matter most

A new listing gets the most views it will ever get in its first couple of days. After that, views taper off, showings slow down, and competition among buyers fades.

That's why starting at the right price matters so much. If you miss in that window, you've spent the listing's most valuable days in front of fewer buyers than you could have had.

How to tell if your price is working

Zillow gives listing agents a traffic report showing views and saves over time. I include it in the weekly updates I send my sellers, the same day and about the same time every week.

One number I watch closely is how many views turn into saves. I like to see roughly 8 to 10 percent of views become saves. On one listing we had almost 1,800 views and 117 saves. That's good, but not great, and it told me we probably had a price issue.

The graph told the same story. Views were high the first few days, then dropped into a trough. Around day 25, we adjusted the price, and views spiked again. A price change can bring a listing back to life, but it's always better to be right from the start.

Every buyer values a home differently

When a home gets multiple offers, they almost never come in at the same price. Each buyer values the home a little differently depending on how well it fits their needs.

Your goal is to get the home in front of as many buyers as possible so you can find the one who values it most. The right list price isn't a ceiling. It's how you reach the most buyers and let competition do the rest.

The bottom line

For a home worth about $200,000, my answer to that poll question is $200,000 even. Price at or near a round number, not just below it, and don't pad the price for wiggle room. You'll show up in more searches, attract more buyers early, and give yourself the best chance at multiple offers.

If you're thinking about selling in Northeast or central Ohio and want to talk through a pricing strategy for your home, schedule a time with me or someone on our team at 21mike.com.

Want to see the full class? Watch my CE class on top listing secrets.

Mike Ferrante
The Mike Team at LPT Realty
www.21mike.com
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