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
323,416
Jeff R. Geoghan
Marketing VP & Coach
Coldwell Banker Select Professionals

Nestor & Katerina Gasset, Realtors® Wellington Florida Luxury Homes

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

February 26, 2008 05:15 PM
Rainer
274,084
Adam Waldman
Realtor - Long Island
Westcott Group Real Estate Company
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.
February 27, 2008 09:50 PM
Rainmaker
323,416
Jeff R. Geoghan
Marketing VP & Coach
Coldwell Banker Select Professionals

Adam Waldman - Long Island Real Estate

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

February 28, 2008 01:14 PM
Ambassador
2,030,434
Todd Clark
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494
Keller Williams Realty

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...

March 04, 2008 12:59 AM
Rainmaker
323,416
Jeff R. Geoghan
Marketing VP & Coach
Coldwell Banker Select Professionals

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

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

March 04, 2008 01:56 PM
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Rainmaker
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Jeff R. Geoghan

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