of soup, 99¢ looks better than $1.00. Unfortunately, instead of encouraging a sale, that type of “grocery store pricing” is actually detrimental. Today, nearly every buyer starts their search for a home online. When a buyer searches for a property on a real estate website, the buyer is usually required to enter parameters for the type of property for which he or she is looking (i.e. location, square footage, price, etc.). Regarding price ranges, most people think in whole numbers. Therefore, it is extremely unlikely a buyer will enter a search range such as $508,150 to $523,788. Rather, they will enter (manually or in a drop-down menu) rounded whole numbers, for example $500,000 to $525,000. What the internet and this natural human tendency do is to divide the real estate market into layer-cake like segments that I call “price categories” (e.g. $525,000 to $550,000 / $550,000 to $575,000 / $575,000 to $600,000, etc.). Consequently, if a buyer is qualified up to $575,000, that buyer will probably search for homes listed between $550,000 and $575,000. Now, assume your home is worth approximately $550,000. If you list it for $549,000, you will only reach buyers who entered $525,000 to $550,000, and not someone who entered $550,000 to $575,000. Consequently, by grocery store pricing your home you are effectively cutting your buyer pool in half! On the other hand, many sellers like to build a “negotiation cushion” into their listing price. If their house is worth $550,000, they will list it, for example, at $552,500 or $555,000 in order to give themselves some wiggle room. However, by doing so, they are likewise limiting their buyer pool, in this case not reaching buyers searching between $525,000 and $550,000.
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