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Survive & Thrive!Survive & Thrive!
Larry KendallLarry Kendall
Strategy 12: Strategy 12: Statistical Pricing SystemStatistical Pricing System
(Page 22)(Page 22)
Pricing StrategyPricing Strategy
• You & seller against marketYou & seller against market
• Turn data into knowledgeTurn data into knowledge
• ““Big picture to small picture”Big picture to small picture”
• Keep it simple & visualKeep it simple & visual
• Differentiate – “Odds of Selling”Differentiate – “Odds of Selling”
David Knox David Knox Pricing VideoPricing Video
www.davidknox.comwww.davidknox.com
Repeat Sale IndexRepeat Sale Index
www.ofheo.gov
Office of Federal Housing Enterprise Oversight
Oregon Real Estate MarketsOregon Real Estate Markets(Home Appreciation Rate 1st Qtr. ‘07)(Home Appreciation Rate 1st Qtr. ‘07)
1-Yr. Qtr.
9) Corvallis 13.87% 1.46%
10) Bend 13.67% 0.37%
13) Salem 13.44% 1.85%
14) Portland-Vancouver 11.00% 1.33%
38) Eugene-Springfield 9.00% 0.75%
United States Average 4.25% 0.45%Source: Office of Federal Housing Oversight
Greater Portland MarketGreater Portland Market(Detached home supply/demand )(Detached home supply/demand )
April May June Total
Sales 2nd Q 2007 2,405 2,572 2,496 7,473
For Sale 6/30/07 12,899
Odds of Selling 2nd Q 2007 (7,473 ÷ 12,899 = 57.9%)
Windermere Odds of Selling (983 ÷ 1,561 = 63%)
Sales 2nd Q 2006 2,606 3,057 3,390 9,053
For Sale 6/30/06 9,340
Odds of Selling 2nd Q 2006 (9,053 ÷ 9,304 = 97.30%)Source: Facts and Trends/RLS
““Would you like to see Would you like to see your odds?your odds?
Colorado Real Estate MarketsColorado Real Estate Markets(Home Appreciation Rate 1st Qtr. ‘07)(Home Appreciation Rate 1st Qtr. ‘07)
1-Yr. Qtr. 5-Yr.
State of Colorado 3.30% 0.40% 21.15%
Colorado Springs 4.17% 0.84% 27.25%
Boulder 1.55% -0.28% 13.90%
Denver 1.09% -0.34% 14.78%
Fort Collins/Loveland 0.61% 1.38% 16.73%
Greeley -1.56% -1.17% 11.52%Source: Office of Federal Housing Oversight
*Homes Listed and Sold on Northern Colorado’s Multiple List Service Copyright © 2007 The Group, Inc. Real Estate
Fort Collins Housing MarketResidential Listing Inventory
5,806
7,1427,593
6,3596,661
6,325
5,7465,717
7,499
6,593
6,017
4,008
3,109 3,165
4,0593,6743,8553,834
4,1753,821
4,0873,701
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06
Homes Listed
Homes Sold
$320,000 - $339,999$320,000 - $339,999(Detached home supply/demand )(Detached home supply/demand )
The Market The Group,
Inc.
Sales 1st Q ’07 9 12
Homes Listed 1st Q ’07 33 13
Homes for sale 3/31/07 46 17
Odds of Selling in 3 months 27% 92%
Odds of Selling after 3 months 20% 71% Source: IRES
© www.JoanneDeLeon.com
© www.JoanneDeLeon.com
Property “B” Pricing Study
Properties SOLD in Brittany Knolls SubdivisionApril 2004 to October 2004
$220,000
$230,000
$240,000
$250,000
$260,000
$270,000
$280,000
$290,000
$300,000
$310,000
1,800 2,000 2,200 2,400 2,600 2,800 3,000 3,200
Pro
per
ty P
rice
Finished Square Feet Linear (Finished Square Feet)
Properties located near this areaprovide LESS space for the dollar.
Properties located near this areaprovide MORE space for the dollar.
Actual Target areabased on signifcantadditional features
Sold 1/5/04 - See MLS 404125Area can support higher pricedHome with lots of features.
ScatterGrams ScatterGrams & &
Price LinesPrice Lineswww.scattergrampricing.comwww.scattergrampricing.com
The Pricing ParadoxThe Pricing Paradox((Dr. Barry Schwartz, Professor of Psychology Dr. Barry Schwartz, Professor of Psychology Swarthmore College, “The Paradox of Choice”)Swarthmore College, “The Paradox of Choice”)
The Pricing Paradox The Pricing Paradox (Research study of sellers)(Research study of sellers)
Group A Group B
Original List Price $600,000 $600,000
Price Reduced $575,000 $575,000
Price Reduced $550,000 $550,000
First Offer $520,000 $520,000
100% rejected 100% accept/counter*
* Pointed out - purchased 10 years ago for $250,000
Source: Swarthmore College Research, Dr. Barry Schwartz