Grocery Aisles

Communism gets a bad rap. A few years back I went on a diet.  I had a foreign to me shopping list of all these organic foods and brands that my nutritionist had me on.  Publix at that time had a Green Wise section that was just organic items.  It was only 3-4 aisles within the Publix. Kind of like those small glass rooms at the Vegas airport or a Boynton Beach Bingo Hall that must supersize the 2^nd hand smoke intake by 20-fold.

Anyhow, it turned out I loved shopping like a communist. There were only a few choices and sometimes only one at all.  The 3-4 aisles also made my shopping experience zip by.  5 minutes and I was done! The problem with regular shopping at a pro-democracy grocery store is that it’s overwhelming.  Which of 113 cereals do you want, or the 42 mustard brands? And if you are looking for something specific, odds are 50-50 that you’ll end up with a befuddled grocery store clerk who has no idea where Carroll Shelby’s Texas Chili is (hint: it’s in Aisle 6).  (note for new readers of Jeff’s Journal – this is a bit of satire and I’m not actually advocating for communist grocery stores in the United States of America)

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Since we are at the beginning of the listing season, unfamiliarity with the communist, Buyer way of shopping system, is a determinant that we must always go through with each client when they list their home.

The importance for Sellers is that they think the Buyer is shopping at the physical store and wandering through unlimited aisles with freedom. But in fact, the Buyers are actually shopping in a Commie grocery store. But even then the Leninist way of shopping isn’t in a physical grocery store at all. The store is online, and the market has some serious limitations.

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Shopping for a home is no different to shopping online for a pillow. Let’s say you were looking for a chenille paisley pillow. In Google Shopping you get a series of questions. Do you want Cotton, Poly, Flannel or Silk for material?  Then you get to price.  And the price category has aisles.  No different than the communist grocery store. Under $25. $25-45. $45-70. $70 and above.  Folks, the Buyer is just going to click on one of these (aisles) rather than using a separate box (even if available) to fill some random price.  So, if the pillow manufacturer prices a pillow at $46.50, then it’s not going to pop up in the $25-$45 price category. Therefore, a savvy pillow manufacturer needs to understand the “aisles” of how the consumer shops. Otherwise, they are going to have a stiff neck from lack of sleep because nobody is buying their pillows.

Shopping for a home works the same way. Since many of you missed my rule of 25-50-100 on pricing from last week’s Quiz, it’s time for a refresher.

The Seller should always price to the highest number within the category. If you have a home that with proper marketing is valued at $525-$550,000, then go to the highest number which is $550,000 or $549,000. However, price it just one penny over that at $500,001 and you would have drastically limited the number of showings.

Every buyer who was searching for up to $550,000 would have seen it. But the next stop is $600,000 using the $50,000 rule and now the $500,001 price is in competition with Buyers who can afford up to $600,000. And that product is most likely better than your home valued at $525,000-$550,000.

In this situation, your high price is just helping sell someone else’s home. It was better to price it at $550,000 and capture every buyer stopping their search at exactly $550,000.

Try Searching the MLS. Maximum prices are in rhythms of $25,000/$50,000 or $100,000. So, remember to price at the highest price within each parameter. Avoid oddball prices as you don’t need the negotiation room. You just always want to be at the top of each pricing rhythm.

In real estate it works the following way for almost everyone.
• Rhythms of $25,000 for homes up to $350,000
Think $275,000 or $300,000 or $325,000 or $350,000

• Rhythms of $50,000 for homes from $350,000- $750,000
• Rhythms of $100,000 for homes from $800,000 to $1,500,000
• Rhythms of $250,000 for homes from $1,500,000 up to $3,000,000
• Rhythms of $500,000 for homes from $3,000,000 to $7,000,000
• And then it continues to expand. From $7m it will jump to $8m

If you are a Seller the reason understanding this is so critical is that if you price too high, your buyer will end up in the wrong parking lot. Since most every Buyer uses this formula to search for product, if you price too high, you will find you have the wrong buyers looking at your home.

In retail settings a good show salesperson can flip a buyer into a more expensive shoe if appropriate. Not so with maximum searches on the computer. Your home is literally invisible if you price it one cent over the threshold.

So, the Seller should always price to the highest number within the category. To recap: If you have a home that with proper marketing is valued at $525-$550,000, then go to the highest number which is $550,000. However, the price it once penny over that at $500,001 and you would have drastically limited the number of showings. A home that its priced at $2,045,000 will miss all the Buyers looking only up to $2,000,000.  Got it?

If you don’t price it right, expect to only get a few Rubles for your home!

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Jeff Lichtenstein, originally from Chicago, got his start in the home furnishings textile business where he traveled over 35 weeks a year selling fabrics. After the family business was sold, Jeff moved to Florida and became a real estate agent. Today he is the owner and broker of Echo Fine Properties, a luxury residential brokerage voted best brokerage of the year. Jeff manages a non-traditional model of real estate that mimics a traditional business model. Echo has 80 agents, an average of one million dollars per transaction and over 500 million in annual sales. Between traveling for work and annual family trips to national parks with his wife and 2 now adult children, Jeff has visited 49 states. He is also one of the few Chicago White Sox fans you’ll ever meet.  Some publications he has been quoted in.

Author of business & leadership book How Making a Sandwich Can Change Your World –  The Amazing Success of the PB&J Strategy – Available to Buy Now!

Feel free to ask him a question directly at [email protected] including a complementary  valuation of your home.