It's a retail strategy. You know the one...
Let's price the potato chips at $3.99 because psychologically 3 dollars sounds better than 4 dollars (even though it is really being sold for 4 dollars). That works fine for potato chips. However, is that .99 strategy equally as good for selling a house too?
"It's not $600K it is only $599,999" (psychologically in the fives and not in the sixes). Psychologically that may be true but mathematically, and computer technologically speaking, that may be a bad plan.
I have often wondered, but only just now put this kind of thing to the test in the search algorithms.
Do the real estate search sites know this pricing happens and as such do they adjust the search results for buyers?
In other words, if somebody is searching for houses from $600K to $700K, does the search results show the 99 results also (e.g. $599K in the 6 to 7 search).
My test today on realtor.com shows that
it does NOT include the 99er houses in the results.
So if you as seller agent are thinking you are doing your client a service, you may want to rethink that strategy. Why would you want to reduce the eyeballs to your listing? Why not put your price on the EVEN dollar so that it shows for both the higher and lower bracket searches.
I realize we are living in times where sellers market exists (aka buyer frenzy). But still this practice would exclude half the eyeballs and these are the eyeballs that have more money in their pockets. Wouldn't these be the ones able to bid higher? Just saying...
I have not tested all the search sites so I don't know how this works across the board. However, it is something that you should be aware of.
Because we don't buy potato chips after searching between ranges of min and max prices, it's okay to keep pricing them the way we do. But houses, perhaps this kind of pricing strategy is not a great idea!
Let me know in the comments what your practice is and what you've seen in this regard.