Decoding the Pricing Pyramid: An Estate Agent’s Strategy or a Seller’s Mirage – Trick No.7

“It is time to call out some ‘Slim Shady’ tactics, as the great Eminem sang about! Yes, the great tricks of estate agency.

Trick No. 7 – Well, you can price your property at three different levels, and it works like a pyramid.

Nice to meet you, John. I’m Mike from Tortoise Property.

Hi, Mike. You’re the second agent I have seen today. My wife made the appointments and then went to work!

Am I talking to the right person, then, John?

Haha, don’t worry, Mike. Everything will go through the wife.

So, John, our three-point valuation model shows that your home should have a marketing price of £260,000. What are your thoughts, having looked at the data and comparisons?

Well, Mike, it is a big difference from the last agent. They said I would choose a price dependent on how many viewers / buyers I want. If I accept only a few people viewing my house, I should start at £290,000. If I want a nice stream of viewers, start at £275,000, and if I want a lot of buyers, I should start at £260,000. I’m confused?

I can see why you’re confused, John!

Tip No. 7 – The pricing pyramid scheme

Pyramid schemes are known for one thing. They get a lot of people involved by promising wealth, to find only a few become truly wealthy.

“Pyramid pricing operates similarly, leveraging the ‘FOMO effect’—the anticipation of achieving the top price for your home, only to discover that the wait to sell includes multiple price reductions, potentially resulting in offers below the initially promised lowest level.

A product in a specific geographical location will typically have a uniform (or similar) price. Houses can be likened to petrol for your car: in Peterborough, it’s around £1.58 per litre, while in Norfolk, where my dad is based, it’s around £1.66 per litre. This analogy extends to house prices in Peterborough and Norfolk.

Also, John, pyramid pricing generally performs poorly in a market where prices are decreasing, as you’re playing catch-up, or rather, reducing your marketing price down from day 1!

So, John, examine the sold / sold subject-to-contract prices of similar houses to yours within a reasonable timeframe in your location. This will reveal the price point at which there is buyer demand.

Demand may increase below this figure, but it will diminish quickly, even instantly, when priced above it!

So John, pick up your Mic and work with me?

I’m Slim Shady, yes, I’m the real Shady
All you other Slim Shadys are just imitating
So won’t the real Slim Shady please stand up
Please stand up, please stand up?

Mike Matthews @TortoiseProperty
Recognised in the Best Agents Guide as one of the best 10% of estate agents in the UK 2019,2020,2021,2022,2023, NEW 2024

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