Does "Exact Pricing" Really Help Get More Money?

By
Real Estate Agent with Coldwell Banker Select Professionals

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.

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Rainmaker
244,208
April Hayden-Munson
Brookfield, WI
Brookfield Wisconsin Real Estate

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.... ??

Feb 25, 2008 02:29 PM #1
Rainmaker
326,047
Jeff R. Geoghan
Coldwell Banker Select Professionals - Lancaster, PA
REALTOR, Marketing VP & Real Estate Agent Coach

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... 

Feb 25, 2008 02:32 PM #2
Rainer
44,657
Ginger Wilcox
Trulia - Larkspur, CA

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!

Feb 25, 2008 08:39 PM #3
Rainer
200,847
Mana Tulberg
805 County Real Estate - Camarillo, CA
Real Estate Agent - Camarillo CA
It's amazing how our mind works. I have seen this at work many times and yes it works.
Feb 25, 2008 11:34 PM #4
Ambassador
1,928,102
Nestor & Katerina Gasset
International Properties and Investments LLC - Wellington, FL
Realtors, Wellington Florida Homes For Sale
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.
Feb 26, 2008 01:46 AM #5
Rainmaker
326,047
Jeff R. Geoghan
Coldwell Banker Select Professionals - Lancaster, PA
REALTOR, Marketing VP & Real Estate Agent Coach

Ginger Wilcox, Marin County Realtor

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

Feb 26, 2008 05:13 PM #6
Rainmaker
326,047
Jeff R. Geoghan
Coldwell Banker Select Professionals - Lancaster, PA
REALTOR, Marketing VP & Real Estate Agent Coach

Camarillo CA Real Estate Agent/ Mana Tulberg

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

Feb 26, 2008 05:14 PM #7
Rainmaker
326,047
Jeff R. Geoghan
Coldwell Banker Select Professionals - Lancaster, PA
REALTOR, Marketing VP & Real Estate Agent Coach

Nestor & Katerina Gasset, Realtors® Wellington Florida Luxury Homes

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

Feb 26, 2008 05:15 PM #8
Rainer
274,098
Adam Waldman
Westcott Group Real Estate Company - Hauppauge, NY
Realtor - Long Island
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.
Feb 27, 2008 09:50 PM #9
Rainmaker
326,047
Jeff R. Geoghan
Coldwell Banker Select Professionals - Lancaster, PA
REALTOR, Marketing VP & Real Estate Agent Coach

Adam Waldman - Long Island Real Estate

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

Feb 28, 2008 01:14 PM #10
Ambassador
2,035,496
Todd Clark
Keller Williams Realty - Beaverton, OR
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494

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...

Mar 04, 2008 12:59 AM #11
Rainmaker
326,047
Jeff R. Geoghan
Coldwell Banker Select Professionals - Lancaster, PA
REALTOR, Marketing VP & Real Estate Agent Coach

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

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

Mar 04, 2008 01:56 PM #12
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Rainmaker
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Jeff R. Geoghan

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