Realtor Pricing Strategies: How Realtors Can Price Their Services

As realtors transition to a new model of pricing their valuable services, they may be wise to take a page out of other professional service-based businesses. No longer tied to a standard commission fee, realtors will be able to optimize revenue by customizing their services to fit the need of an individual consumer. And great realtors will be able to price according to their expertise and proven results.

Changing a realtor pricing strategy can be daunting, but taking a deliberate approach can yield significant results. Key steps to a successful pricing strategy include:

  • Inventory the products and services you provide.
  • Price individual products and services.
  • Package and bundle products and services to provide the most value.
  • Effectively market and sell your realtor pricing strategy.

Let’s take a look at how real estate professionals can optimize pricing of their services.

Inventory products and services you provide

Realtors have traditionally provided a wealth of services, all wrapped into a real estate agent commission. Realtors can develop an initial inventory simply by "unbundling" those services. For example:

For potential buyers…

  • Finding and showing homes
  • Negotiating price and closing costs
  • Assisting with finding and securing lenders
  • Arranging and managing inspections
  • Contracting

For home sellers…

  • Providing consultation on making a home ready to sale
  • Staging a home
  • Researching past sales to determine the best sales price
  • Photography and videoing to prepare for advertising
  • Advertising and sourcing prospective buyers
  • Conducting an open house
  • Contracting and closing the sale

All these services offer value to the customer, but not all are necessary. Giving customers choice is a good first step in a successful strategy.

Pricing individual products and services

Determining appropriate pricing for each product and service is difficult, but past data will give you insight. You should also examine the amount of time it takes to provide the service and what external resources are required.

In the past, real estate agents used a tiered pricing strategy based on commission. The more expensive the home, the more money the agent would make. The commission percentage remained the same regardless of the home's price. But not all services lend themselves to variable pricing. Your strategy is likely to be a combination of a few pricing approaches:

Realtor Article Graphics

Fixed Fee: You can charge a flat fee for services like consultation, researching past sales, hosting an open house, or preparing contracts.

Good Better Best Dial

Good, better, best pricing: Offering levels of quality in photography, video, and staging to accommodate both those on a fixed budget as well as those wanting to stand out from the rest.

Money Sign On Scale

Variable pricing: Staging a home, photography, or video service may vary based on the size of the home or number of rooms.

Realtor Article Graphics (1)

Tiered pricing: Selling an expensive home with a limited number of eligible buyers will often take more effort and resources than a more moderately priced home, including advertising, sourcing buyers, and time spent showing the home. Tiers of pricing for homes within given price ranges could be more effective than a straight percent of the sales price, but a percent of the asking price may be a great starting point.

Regardless of what methods you use, transparency is key. Customers want to know what they are getting for the price paid, and in this new world, what they are not getting. Also consider the intrinsic value you provide which may or may not be on par with your competitors. A successful, in demand realtor will be able to charge more, provided the value they bring is readily apparent.

Packaging and bundling products and services

After determining prices for individual services, you can group products that customers often buy together to improve increase the average transaction value and encourage repeat business. Consider the following when bundling services:

  • Manage the number of bundled products: Consumers can quickly become overwhelmed with choices. Package services customers are most likely to want or need, versus every combination possible. You can also offer complete customization, but many will not want to take the time to study the options, particularly with a transaction they do infrequently.
  • Focus on value: Introduce economy bundles for more frugal consumers who may just want to try and sell on their own, but need help with the basics (consultation and contracting for example). Building the relationship can lead to a larger contract if their “go it alone” approach does not result in a sale. Save steeper discounts for stronger bundles of services such as one-stop shopping for all their home sale needs.
  • Make it intuitive: Allow consumers to easily see the value in moving up to a higher priced bundle. A good, better, best strategy can work as well with bundled product as it does with individually priced services.

The key to strong packaging and bundling is providing what consumers want, at a good value. Making it easy to do business with you is important when consumers have options.

Market and sell your pricing strategy

Discussing pricing will be new to most realtors. Effectively marketing and selling your pricing model will make the discussion easier. Keep in mind that it may be new to you, but consumers are accustomed to buying services through many types of pricing plans.

To effectively market your pricing:

  • First sell yourself: You can be the highest priced realtor in the market (someone will be!), but if the value you provide warrants the price, do not be shy. Make sure your website touts your experience, specialties, and success rate. Use testimonials from past clients to convey what you do well. For such an important undertaking, people want to know more about you.
  • Focus on value, not price: Someone may be able to find and hire a photographer for slightly less than you, but they bear the burden of scheduling, meeting the photographer, conveying what they want, and hoping the quality is good. You take the risk out of the equation and that has value. The same goes for bundled products and services. Convey the value or savings from purchasing more services – ultimately, everything you provide – by making the steps up the pricing curve easy to take, not steep.
  • Visually display bundled services for a quick read: Consumers have little patience when it comes to figuring out how much something costs. The longer it takes, the more skeptical they become. Be transparent. Be bold. Be clear and concise.
  • Avoid any notion of nickel and diming, hidden fees, or surprise charges. Trust is paramount. Earn it and keep it.

While the new normal may be jarring at first, embracing the change on pricing services will eventually pay dividends. Now is the time to get control of your own destiny versus letting consumers make you an offer. Your expertise is worth the price.

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About Integrated Insight

Integrated Insight is an analytics consulting firm formed in 2009 by a team of past Walt Disney Parks & Resorts executives. With decades of experience at Disney in research, data analytics, pricing, revenue management, labor management and operational efficiency, Integrated Insight helps for-profit businesses and not-for-profit agencies reach their full potential. We marry our real-world experience with robust analysis of your business to find viable solutions to complex situations, and identify untapped opportunities for topline and bottom-line growth.

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