According to a Washingon Post article, homes priced at an "exact" amount tend to sell for more that homes priced with lots of zeros.

Researchers at Cornell (spending those grant dollars well, I see) conducted lab tests last year on graduate students (?) and examined sale prices in a couple of busy locations in the US.  How they accessed MLS data is anyone's guess...

Anyway, the results were that people tended to view the exact price more favorably than the "big number" price. 

"The study concluded that because people are used to precise numbers for items that don't cost much and to round numbers for large amounts, consumers generally and home buyers specifically tend to perceive that a price is smaller if there are digits at the end instead of zeros."

Even the researchers thought this was a bit "ridiculous" but asserted that our response to a price was more than just "deliberative reasoning".  So, a home priced at $435,500 looks more reasonable to us than $436,000.  Even better, $498,750 would look better than $500,000 (that's a lot of zeros!).  Their study concluded that a favorably-priced home sold for about $1,400 more.

The Washington Post article also referenced some research done by Redfin where they found that a home priced in an increment of $500 tended to be the most favorable. 

While this is nothing new to any of us, I suppose it's an interesting note to remember when discussing price with a seller.

 

12 Comments on Does "Exact Pricing" Really Help Get More Money?

Interesting article....

Now I need to rethink a marketing strategy - what to do when you want to allow more searches to include your price. IE - Price at $350,000 even to include searches of $300 to $350 AND $350 or more..... If you price at $349,500 you miss out on $350K and above searches.... ??

02/25/2008 02:29 PM by April Hayden-Munson Realtor, Southeastern Wisconsin (RE/MAX Realty 100)

April Hayden-Munson Realtor, SE Wisconsin

April, you're giving me a headache!

The study didn't take the search range issue into account, I think... 

02/25/2008 02:32 PM by Jeff Geoghan MBA - Lancaster PA Real Estate Expert (Coldwell Banker Select Professionals)

Great timing.  I was thinking about this today- pricing something at 899,999 or 899,000.  Does the extra 999 look more favorable?  Or what about 889,999?  Thanks for the tip!

02/25/2008 08:39 PM by Ginger Wilcox, Marin County Realtor (Pacific Union, Marin Real Estate)

It's amazing how our mind works. I have seen this at work many times and yes it works.

02/25/2008 11:34 PM by Camarillo CA Real Estate Agent/ Mana Tulberg (Beach View Real Estate)

Jeff- We do exact pricing to stand out in the crowd of our thousands of listings on our MLS! We use 997,777, and so forth. It catches the agent's eye as they scroll down the oneliners on the MLS. It is also sort of like a trademark for us. All the agents know that if it ends in 777 it is Nestor and Katerina's listing. That is a good thing.

02/26/2008 01:46 AM by Nestor & Katerina Gasset, Realtors® Wellington Florida Luxury Homes (International Properties and Investments, Inc.)

Ginger Wilcox, Marin County Realtor

Ginger - thanks for your comment!  You could try 777...oops, that's been taken. 

02/26/2008 05:13 PM by Jeff Geoghan MBA - Lancaster PA Real Estate Expert (Coldwell Banker Select Professionals)

Camarillo CA Real Estate Agent/ Mana Tulberg

Mana - have you seen many real estate properties listed in this manner?  Just curious. 

02/26/2008 05:14 PM by Jeff Geoghan MBA - Lancaster PA Real Estate Expert (Coldwell Banker Select Professionals)

Nestor & Katerina Gasset, Realtors® Wellington Florida Luxury Homes

Very interesting idea, Katerina.  You would definitely notice such a price when scanning the hotsheet... 

02/26/2008 05:15 PM by Jeff Geoghan MBA - Lancaster PA Real Estate Expert (Coldwell Banker Select Professionals)

JEFF - There are some people around here that price the homes at numbers that have no zeroes at all (ex. $545,786).  It always seemed a bit silly to me, but I guess there is a method to their madness.  Thanks for sharing this.

02/27/2008 09:50 PM by Adam Waldman - Long Island REALTOR® (RE/MAX Best)

Adam Waldman - Long Island Real Estate

I thought I would try it on the next opportunity.  A test, perhaps! 

02/28/2008 01:14 PM by Jeff Geoghan MBA - Lancaster PA Real Estate Expert (Coldwell Banker Select Professionals)

You are the second person to report on this that I've seen and when I started in the business I was told this by my mentor and it seems to work when I use it. The logic I was told was the fact that people thought it looked more like the number came from an appraisal versus a number pulled out of our...

03/04/2008 12:59 AM by Todd Clark (Realtor), GRI (Washington Co, Beaverton Oregon) (Kastings & Associates, Beaverton Oregon Real Estate)

Todd Clark (Realtor), GRI (Washington Co, Beaverton, Oregon)

Todd, that's a good observation about the perception of an appraised value.  Something to remember. 

03/04/2008 01:56 PM by Jeff Geoghan MBA - Lancaster PA Real Estate Expert (Coldwell Banker Select Professionals)

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Real Estate Agent: Jeff Geoghan MBA - Lancaster PA Real Estate Expert (Coldwell Banker Select Professionals)
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