Pricing Strategies for Maximizing Revenue within a Time Goal: Why Expected Value is Key

Expected Value: The Best Pricing Point

As a seller or seller’s agent, you don't want to try for too high a price, as your chance of getting that price may be very low (an analogy is a high-reward but unlikely scenario such as winning the lottery). However you also don't want to try for too low a price, because while your chance of getting that sales price is quite high, the price itself is low. You want the best tradeoff, a middle value between these two extremes: the pricing point where you are expected to make the most money. This is the point where Expected Value (the target sales price, weighted by the probability of actually getting that sales price) is highest. Thus maximizing Expected Value shows you how to price the property to attain the most revenue.

 This is particularly important in today’s market, since, as discussed in the San Francisco Chronicle (Zito, March 13, 2003), some sellers’ homes have languished on the market for months, due to too-high pricing, leading to a glut of inventory. Showing your sellers the best Expected Value pricing point, based on RealNegotiate’s statistical analysis of real market data, can be an important tool in assisting sellers to price it right.

Maximizing Revenue with RealNegotiate

RealNegotiate can help you determine this point, based on your constraints, goals and preferences. For example, you may wish to maximize Expected Value, within the time constraint of needing to sell the property within the next 30 days, at a price of at least $300,000, and/or with probability of successful sale of at least 75%. RealNegotiate also allows you to perform and track Expected Value maximization over multiple properties. The demo shows how using the maximized expected value pricing strategy can dramatically improve your sales revenue for each property. RealNegotiate provides a flexible, user-friendly statistical tool for finding the Expected Value maximum that meets your goals.

About RealNegotiate

RealNegotiate is the leading data mining software for real estate negotiation and decision-making. The unique software uses real market data for property sales to help real estate professionals, buyers and sellers gain the most from their real estate transactions, within the least time. The RealNegotiate team includes licensed real estate professionals and computer scientists, who are available to assist customers as needed. You can learn more about RealNegotiate, view demos, and purchase the software at www.realnegotiate.com

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