Set the price

C - “Price Points and “Price Ranges”: What are these?

Price Point:

There are key prices that will affect your showings, and ultimately, the sale. These key prices or “price points” are round numbers, including $150,000, $200,000, $250,000, $300,000, $400,000, $500,000 and $1,000,000. If you are considering an asking price that is very close to any of these numbers, be advised that these are key prices to be under.

       These Price Points represent mental blocks for many buyers

Buyers simply have a hard time going over these price “thresholds.” In other words, you'll get a lot more showing activity at $249,900 than you do at $250,500, yet the difference is only $600.

Buyers borrow the same retail mentality they have acquired from years as a consumer. Shop for a shirt and the pricing is $29.99, $39.99 and on. You don’t see them priced at $31.95 or $50.99. The same pricing logic holds true for a home price.

        A subtle price difference will influence showings

If a fair asking price for your home is just over one of these price points, be smart and stay below it. For example, if you’re considering asking from the upper $290s to around $310,000, staying just under the $300,000 price point justifies staying close to your asking price when an offer comes in. You’ll have less room to negotiate, but you will get offers from people who would never consider looking at a home over $300,000. 

Price Range:

"Price range" is a term that relates to the low and high parameters of the buyer's' home search. If your house is posted on the internet, most buyers will see your home when they search for housing within their price range and yours is in that range. The computer search will only return houses exactly within this range; it won't say, “Hey, here's a great house that's just a little more than what you've requested!

The computer doesn't know that you'll come down in price. It only displays homes from the price range that was entered.

       How a Price Range can affect a pricing decision

                      For homes priced up to $300,000

People looking below $300,000 typically look at homes in a price range that almost always ends in $10,000 increments. For example, they might look in the $150,000 to $170,000 range, $200,000 to $230,000 range, etc.

Since the buyer is looking in a range of $10,000 increments, this tells you that pricing a home at $233,900 will eliminate buyers looking up to $230,000. Following this logic, sellers pricing their home at $233,900 might as well price their house in the upper 230's, since the buyer looking up to $240,000 will look at it whether it's $233,900 or $239,900.

                      For homes priced from $300,000 and up

Buyers for homes in the higher price ranges typically look at homes in large price ranges that span $50,000, $100,000 and more as the desired price limit increases. For example, these buyers might look at houses from $300,000 to $350,0000 or $700,000 to $800,000. The range of prices increases dramatically when properties exceed a million dollars in asking price.

Since the buyer is looking in a range of large increments, this tells you that pricing a home at $609,000 will eliminate buyers maximizing their limit at $600,000. Following this logic, sellers pricing their home at $485,000 might as well price their house in the upper 400's, since the buyer looking up to $500,000 will look at it whether it's $485,000 or $495,000.