The Pitfalls of Walmart Pricing

Pricing a home correctly can make or break a real estate transaction. One common mistake sellers make is using what I like to call "Walmart pricing"—that is, setting a price that ends in "99" to make it seem more attractive, such as $999,000 instead of $1,000,000. While this tactic may work in retail, it can backfire in the housing market. In this article, I’ll explain how Walmart pricing limits your home's exposure and why strategic pricing is key to attracting the right buyers.

What is Walmart Pricing?

In retail, we often see prices like $4.99 or $5.99 instead of whole numbers like $5 or $6. This technique is designed to make a product seem less expensive. However, when applied to real estate, this approach has unintended consequences.

For example, many sellers price their homes at $999,000 rather than $1,000,000 to appeal to buyers looking for a deal. But in real estate, this small difference can drastically limit your home's visibility to potential buyers.

How Buyer Searches Work

When buyers search for homes online, they often set up automated searches with price ranges. For example, a buyer might set a search for homes between $1,000,000 and $1,200,000. If your home is priced at $999,000, it won’t even show up in that buyer’s search, even though they can afford to pay more.

Now, let’s consider another group of buyers who have set their price range from $900,000 to $1,000,000. These buyers will see your home priced at $999,000, but they may be on the lower end of that price range and may not be willing or able to offer what you want.

Both of these examples show how Walmart pricing limits your potential buyer pool.

A Real-World Example

We see the effects of Walmart pricing all the time in the real estate market. Take this real-life example:

• A home came on the market for $998,000. Buyers who set their searches from $1,000,000 to $1,200,000 didn’t see the home at all because it was priced just below their range.
• Another home in a similar situation was listed for $1,199,999. Buyers who set their search from $1,200,000 to $1,400,000 missed out on this listing entirely, even though it was just a few dollars below their search range.

This pricing strategy often results in a home sitting on the market longer than necessary, ultimately going stale. In these cases, the homes remained unsold because they weren’t visible to the right buyers. Later, price reductions were made, but by then, the homes had been on the market too long, losing their appeal.

The Importance of Exposure

The goal of pricing a home is to expose it to as many qualified buyers as possible. When you price a home strategically—using round numbers like $1,000,000 instead of $999,000—you ensure that buyers who set their searches both below and above that price point will see your home. This increases competition and can lead to multiple offers, driving up the final sale price.

Examples Across Price Ranges

This isn’t just an issue at lower price points; it happens across all price ranges. We saw a higher-priced home that came on the market at $2,199,000. Buyers who had set their search for homes between $2,200,000 and $2,600,000 didn’t even know the home was available. After price reductions, the home was eventually relisted at $1,950,000, but by then it had been on the market for 64 days and had become stale.

This home ultimately sold for $1,960,000, much less than what it could have achieved had it been priced correctly from the start.

How to Price Strategically

What you should take away here is understanding how buyers search for homes. By pricing at round numbers, you ensure that your listing is seen by as many buyers as possible. This leads to higher exposure, more showings, and often competing offers, which can push the final sale price above the asking price.

Conclusion

Walmart pricing might seem like a clever tactic, but in real estate, it limits your home’s exposure to the right buyers. Always price your home at whole numbers. 

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If you’re preparing to sell your home and want to discuss the best pricing strategy, I’m happy to help. Feel free to reach out, and let’s talk about how to get the most value for your property.

Josh E. Santana

Licensed Real Estate Broker

📲: (978) 939-9147

📧: josh@joshEsantana.com