Why are Homes Priced with the Number 9?
Same reason that just about everything is priced that way! Car prices always end with a lot of 9s. Same with clothing, groceries, gas, appliances, $ .99 cent stores, you name it. It’s called “charm” pricing.
Of course it’s a psychological trick - buyers want to pay less for products and $9.99 sounds like a better deal than $10. There is something called the “left-digit effect” which says that buyers place more importance on the left-most number so that $49.99 feels closer to $40.00 than $50.00.
The experts say that round numbers are better used for luxury items, particularly clothing. High-end retailers know that buyers want quality and thus will price a cashmere sweater at $400. However, when that cashmere sweater goes on sale, a different dynamic starts - it’s priced at say $199 which conveys value over quality.
But does this tactic work for pricing your Winnetka North Shore home for sale? A million dollar North Shore home is usually priced at $999,000 or $995,000. Taking a quick scan of the current North Shore market, the vast majority of homes are priced at some variation of a round number. $750,000 is $749,000 or $875,000 is $874,000 (clearly not always a “9” involved.)
I say that using charm pricing on your home is a double-edged sword. I absolutely believe that using the 9 strategy is a strong emotional trigger for buyers. In that sense, there’s no harm in doing it.
But here’s one issue: buyers will search (either online or with their agent) for homes in certain price ranges. They might decide that $700,000 to $800,000 is their preferred range. What happens when they plug those numbers in? They’re not going to see your house priced at $699,000!
When I work with buyers, I search for homes priced from $675,000 to $825,000 to cover all bases - but do online buyers think of that? How many homes are they missing because you’ve priced slightly under the round number?
Again, I’m not opposed to using 9s, I use them too. For me, the perception of a lower price is an enticement and stimulus that works for certain buyers. In a market like the current North Shore market where sales are sluggish and prices are stagnant, I want to give the listing a little edge.
There's no wrong or right answer regarding pricing with the exception of overpricing!
While you’re here, please see ALL NORTH SHORE HOMES FOR SALE
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Margaret Goss is a full-time real estate broker since 1998 working in the North Shore communities of Winnetka, Wilmette, Kenilworth, Glencoe, Northfield, Glenview, and Evanston.
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