Why are Homes Priced with the Number 9?

By
Real Estate Agent with Baird & Warner Real Estate

 

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 Home pricingdollar NorthHome pricing 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.

She can be reached at:

Phone:  847-977-6024

Email:  margaret.goss@bairdwarner.com

See her full BIOGRAPHY

 

 

 

Posted by

Margaret Goss - Winnetka and North Shore Real Estate Broker
Specializing in homes for sale in Winnetka, Wilmette, Kenilworth, Northfield, Glencoe, Glenview, Northbrook, and Evanston.

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Rainmaker
3,474,614
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hi Margaret - a discussion of pricing and the use of the number nine is a good thing.  It means there is communication.  Hopefully that leads to connections.  Eventually, that leads to consensus.  That sounds good to me.  

Dec 14, 2019 07:13 AM #6
Ambassador
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Anna Banana Kruchten Broker/Owner, CRB, CRS
Phoenix Property Shoppe - Phoenix, AZ
602-380-4886

Hi Margaret - you can miss some buyers by pricing just below their price range say 699K instead of 700K. Many agents still price and search for homes with the 9 concept. Good idea to consider re-thinking their strategy. I typically will search for say 675 to 750  to pick up those homes that just miss the mark.

Dec 14, 2019 11:38 AM #7
Rainmaker
1,401,620
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Hi Margaret,
I agree with your thinking.  If you use say $750,000 you're going to get buyers in the$700 - 750 price range AND the 750 - 800 price range. To me, this is a nice advantage. 

Dec 14, 2019 02:02 PM #8
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Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Margaret- I'm so glad that this was featured!!! In all my years here I can't remember reading a post about this topic. Well done. 

Dec 14, 2019 03:03 PM #9
Rainmaker
690,226
Laura Filip
Laura Filip Broker , Opening doors for All Seasons of Life - Whitesboro, TX
What can we do for you today?

Good evening to all, number 9 is a psychological factor in my thoughts.  As you mentioned.99 cents vs a 1.00 How about the 5 Below idea. Something to think about. Have a blessed day and Merry Christmas 

 

Dec 14, 2019 03:08 PM #10
Rainmaker
536,658
Francine Viola
Coldwell Banker Evergreen Olympic Realty, Olympia WA - Olympia, WA
REALTOR®, In Tune with your Real Estate Needs

This is a great post for both consumers and realtors when trying to finalize the price.  I agree with you -  If the home is at an internet search point like a  price of $699,000, then I would recommend to my sellers to list at $700,000 so both the buyers looking up to $700,000 will see the listing as well as the buyers looking at $700,000 and higher.  

Dec 14, 2019 08:26 PM #11
Rainmaker
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Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

It’s not something you always notice right away but seems significant.

Dec 14, 2019 09:38 PM #12
Rainmaker
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Eva B. Liland Century 21 Doug Anderson
Century 21 Doug Anderson - Lancaster, CA
Glad to be of Service 661-714-1643

I have used 9, 7 and 5's but 9's seems to attract more interest to certain buyers, lol. Whatever works!

Dec 15, 2019 04:15 AM #13
Rainmaker
652,093
Carla Freund
Keller Williams Preferred Realty - Raleigh, NC
Carolina Life RealEstate & Relocation 919-602-8489

In today's world using round numbers seem to make more sense to me. I still see some agents use the 9s. It seems to be a generational thing. If it works then why change?

Dec 15, 2019 06:26 AM #14
Rainmaker
2,632,084
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

I had always thought the use of nines in pricing had to do with keeping homes below the next highest range of prices, like you point out.  

Dec 15, 2019 06:46 AM #15
Rainer
10,436
Michelle Enciso
Pikes Peak Dream Homes Realty - Colorado Springs, CO
Exceptional Service for Exceptional People

Great post! This has left me with a lot to think about. I do think there is something to be said about how you price a home. I do believe that if the numbers give the perception of a "discount" or lower price it can be more appealing. Thanks for sharing. 

Dec 15, 2019 02:42 PM #16
Rainmaker
3,872,999
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good morning Margaret Goss ,

You are right there is no right or wrong answer regarding pricing with the exception of over pricing. I use 9's when its $519,900, $529,900, $539,900 but always price at $500,000 or $550,000 rather than $499,900 or $549,900 because of the search criteria.

Dec 16, 2019 06:13 AM #17
Rainmaker
1,857,012
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

In the beginning of Real Estate time , Brokers recruited a lot of Gas Station attendants ???

Dec 16, 2019 12:24 PM #18
Rainer
486,284
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

It doesn't matter what numbers are used as long as it's attractive and slightly under market value for its location. It's the closing numbers that are important, isn't it? 

Dec 18, 2019 08:37 PM #19
Rainmaker
544,857
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

I knew there was a psycology around that type of pricing but didn't know the official name for it--thanks for sharing!  And I also explain to clients that online searches are not set up with numbers ending in 9!

Dec 19, 2019 09:58 AM #20
Ambassador
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Hi Margaret:

This was an intriguing post with some interesting follow-up discussion. I tend to like the round numbers as far as searches are concerned.

Jeff

Dec 21, 2019 02:58 PM #21
Rainmaker
5,576,026
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Congratulations on your feature recognition.

The majority of internet searches use round numbers. A slightly lower price may not be included in the search.

Dec 22, 2019 11:38 AM #22
Rainmaker
3,261,365
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Margaret having lived and grown up in Europe, the Europeans used to laugh at the American 9's...I look at is the "throw way number":) Endre

Dec 23, 2019 09:39 PM #23
Rainmaker
388,556
M.C. Dwyer
Century 21 Showcase REALTORs - Felton, CA
MC Dwyer-Santa Cruz Mountains Property Specialist

What a fun discussion!     Seems like most of my buyers set their search WAY below their comfort range so they don't miss any "bargains."     I can't count the number of times one of my buyers approved for $500,000 asks me about a $299,999 priced property, which is usually so horrible they'd never live there.    But they don't want to "miss any deals!"     Happy Holidays Margaret Goss !

Dec 24, 2019 10:57 AM #24
Rainmaker
2,098,911
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Flower Mound, TX
Selling Homes Changing Lives

Margaret!

I really enjoyed this post of yours followed by discussions and comments. What a great topic, entertaining, and very educational too! There really is a psychological effect, isn't there!

Jan 01, 2020 10:30 AM #25
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