According to a recent study by Cornell University, consumers think "precise" numbers are smaller than ones that end in zeros!  People in the study consistently judged $510,000 to be higher than $511,534, and they saw $400,000 as "considerably" higher than $401,298. 

Many prices of products on shelves and in the MLS have prices that end in 99.  (Instead of a product being priced at $3.00, retailers price it at $2.99 because it is perceived as in the $2 range instead of the $3 range.  Many houses are priced at $499,000, instead of $500,000, for the same reason.)  Researchers have known about this "nine" effect for more than 80 years.

But you may want to advise your sellers to stop pricing homes ending in "000" and start pricing them with "precise" numbers like "$452,768."  The researchers studied thousands of real estate transactions in Florida and New York where houses sold for less than the asking price.  The houses originally priced with "precise" amounts sold for almost 1% more than those priced ending in "000."

This was also recently reported in SmartMoney by Jack Hough.

 

 
Posted by Richard Rector on 05/10/2010 08:23 PM   Comments (2)   Pricing It Right! in the ActiveRain Channel   pricing  
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2 Comments on Buyers think $401,298 is LESS than $400,000!

MAY
10
2010

Hmm. If most buyers search for homes on the internet and identify a specific price range then slightly higher prices may not be sorted in the range. But if a price point of $398,423 is much more desirable than $399,000 then let the consumer have what makes them happy. The precise price certainly looks less open to negotiation.  
janey bishop
11:16pm • #1
MAY
11
2010

 It has been said for years that to consumers " Perception is Reality". Pricing this way gives the perception that you are closer to the price that you actually have to have.....it is very true in Internet Pricing.
Rick Russell
10:32am • #2


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Richard Rector

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