Extreme Bargain or Extreme Stupidity? How Did We Become Hooked On Pretend Pricing?

And just how do you think that mindset has permeated the RE market?

Sport shopping can be really fun, especially if you live in the bay area and have lots of options.

Thank you for this post!

It'sexactly what my mother and I were thinking and commenting on when we ventured to the Mall a few weeks ago.  I'm not much of a shopper and the only way we dealt with the "what does this cost anyway?" question was to place it at the scanner.  Way too much work for something I don't need anyway. 

It's sad though that it has infected the way people think about homes.  They say "let us know if you see a 'deal'" when the real deal could be a home that was just listed at the right price, not the pretend price!  Or, how about finding a home that is right for them and then negotiating to the "right price"?  After all, a sweater can be put aside or even regifted if its purchase was one of "it's such a good deal I have to buy it!" but a house is a home and everyone has to have somewhere to live.  The purchase of a home involves a bit more than the right price.

Janet...so true!  I recently got a 30% off coupon from a major retailer for their catalog, for anything FULL PRICE.  Since I hadn't shopped that catalog in some time, I decided to take a look for items to add to my staging inventory.  I couldn't find anything that wasn't already ON SALE, so to speak. 

But they accomplished the task of getting me to look at their catalog.  I generally avoid the retailers that do this type of pricing and some of them could be my favorite stores for sport shopping but I think it's just terribly misleading. 

Thanks for putting fact to my thoughts. 

The 'DEAL' is all in the eyes of the beholder.  Everyone is looking for the deal.  Or so they think.  Some will jump at the overpriced listing when they get it at half price, but it's no deal.  Some will balk at the listing priced 50% below market value, thinking it's not a deal.  Conditioned by television and newspaper ads I think.

Hi Janet, The "bargain" that my husband and shake our heads at is the furniture store that is "going out of business."  We know some people who own furniture stores and they tell us that it is often just a marketing ploy, often pricing their bargains at more than what an established store charges all the time.  They go out of business and reopen a few weeks later under a different name.  We know this too from a store that was a few blocks from where we used to live.  In the 15 or so years we lived there, that store went out of business 7 or 8 times, but was never closed for more than a month or so and amazingly had the same employees each time! 

You are so right Janet.  I can't stand to go into a store where everything is half off.  It looks so cheesy. That just tells me things were too expensive to begin with.  This is the old way of doing retail, the way people in the business were taught in school.  Put something on sale and your sales increase. The problem is, consumers know this and wait until prices are marked down to the rock bottom before they buy.  That is why most retailers are doomed (see the article in last weeks Financial Times) and stores that have consistent pricing like Wal-Mart and dollar stores are thriving. We can definitely learn from this in real estate. For years people just expected they can get a house lower than the listing price, so they offer lower. If we simply priced houses correctly from the start, and told people that IS the price, maybe buyers wouldn't keep waiting for the bottom to fall out now before making an offer. 

This does apply to buyer's thinking about real estate.  One client recently said he wouldn't offer full price on a house that he had to admit was listed well below market price, because he should be able to get it for less than asking.  I asked him if he'd feel better if we pretended it was listed for the same price as the identical one down the block but  he wouldn't bite.  He made a lower offer and it sold to one of the five other offerers for more than asking price.

Janet, it is sad to see how most people do expect "the bargain" on everything now. They do not realize that for their "taking" here something else has to "give". Congratulations on trying to shop. And, in the process, you were playing your part to help jump start the economy.

If all consumers were a tad more savvy, perhaps retailers wouldn't play as many games?  It is maddening, and I also think consumer dislike how real estate companies are not transparent regarding commsision as well, which is why our company puts our commission (along with a calculator) right on our website -- WYSIWYG!

I totally agree Chris, the lack of transparency often makes consumers feel there is more room for negotiation than there actually is. I do believe most, not all of course, but most consumers are very savvy.  They go online to check out prices, they shop many different stores, and wait until the prices are at rock bottom before throwing the switch.  Look at the proliferation of shop bots and consumer report type organizations where people can compare prices. The problem as you mention about real estate is that there is no transparency. Most real estate sales are not publicized so it is harder for people to compare.  This cuts both ways as in good times people tend to overpay, but in lean times, they don't think the prices on offer are truly the best available. I agree, we need to become more transparent.