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Old 04-13-2011, 08:07 AM
 
648 posts, read 1,045,240 times
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I know the psychology of pricing an item for $9.99 rather than $10.00; $9.99 "seems" more attractive and "much" lower than $10.00. Based on what I've seen for years in real estate listings the price seems to ALWAYS be first listed as $349,900 or $339,900, etc., instead of, for example, $344,900, a number halfway in between $350,000 and $340,000.

Is it just conventional wisdom to always start a listing price just under an increment of 10, rather than 5? Any proof that a new listing priced at, say, $344,900 is a loser rather than $349,000 or $339,900?
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Old 04-13-2011, 09:04 AM
 
Location: Lakewood Ranch, FL
5,117 posts, read 7,644,459 times
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I've not read or heard anything about this so I'll be interested in seeing what people say about this myself. Personally, I try to price things so they'll likely fall within typical search terms. For example, someone might look for houses between $250,000 and $300,000 so I wouldn't suggest pricing it at, say, $302,000 or something like that. Better to go to the $300,000 in that case. The listing price is really not much more than a search term, IMHO. Of course, it needs to be consistent with the findings of a quality CMA but that's about it because rarely will a buyer offer the full listing price. Regarding the xxx,900 thing, I think most people tend to think in what I like to think of as the "significant digits". In other words, If you talk about $434,900 or $434,000...most people only see the $434,xxx. Same with the expensive stuff, oddly enough. We tend to talk about $1.2M vs $1.1M like there's only a difference of "1" and that "1" is a minor difference. That is until you realize that the "1" is $100,000!
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Old 04-13-2011, 09:30 AM
 
Location: Blue Ridge Mntns., NC
10,231 posts, read 14,087,635 times
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The first priority is pricing it within fair market value according to the comparable sales in the area, with the criteria being age, condition, location, upgrades, amenities and so forth. Square footage should not be an important criteria when giving a CMA, because two homes on the same street with 1500 sq. ft. of living area, can be drastically different.

That being said, I personally like the "soft" numbers, which are the even numbers. Rather than price it at $335,500 or $335,900 ... I would go with $332,000 even or $334,000 even .... keeping it just under that midrange.
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Old 04-13-2011, 10:04 AM
 
28,384 posts, read 67,936,355 times
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I do recall seeing actual college research into the literal price of things like homes and expensive cars. From what I remember most of this research pre-dated the inter webs and tended to show that, just as grocery stores and discount stores end things is .97 or .98 or .99 the mental effect is that these things are a wee bit more affordable than something priced 3 or 4 cents higher and consumers buy MORE of what they do not need. In contrast the stuff sold as "luxury goods / one of a kind" like at a high end department store or specialty shop will be pricesd at $300 or $1600 or whatever to make buyers feel like it is more "special" and worth the splurge.

The vast majority of home builders follow a similar mindset. Modest new homes start at "$119,900" or something. Midrange homes are "from the low $300s". Luxury homes say "starting at $750,000". (vary by local trends for the number but the idea of have the "nine heavy" stuff for 'value pricing' and a nice big round number spelled out for the upper tier stuff is pretty consistent).

With folks that are a little supersistious it can help to toss in some numerals that helps you stand out in a crowd, though with so many buyers using the "sort high to low" or low to high functions on web sites that is not as easy as back in the days of MLS listing catalogs that were like old fashioned phone books...

I suspect that sites like Zillow and Redfin have stats on the effect of price and clicks, maybe when they figure out how to use that info to make money we will hear more about it.
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Old 04-13-2011, 12:09 PM
 
Location: Columbia, SC
8,848 posts, read 17,443,646 times
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Quote:
Originally Posted by bbronston View Post
I've not read or heard anything about this so I'll be interested in seeing what people say about this myself. Personally, I try to price things so they'll likely fall within typical search terms. For example, someone might look for houses between $250,000 and $300,000 so I wouldn't suggest pricing it at, say, $302,000 or something like that. Better to go to the $300,000 in that case. The listing price is really not much more than a search term, IMHO. Of course, it needs to be consistent with the findings of a quality CMA but that's about it because rarely will a buyer offer the full listing price. Regarding the xxx,900 thing, I think most people tend to think in what I like to think of as the "significant digits". In other words, If you talk about $434,900 or $434,000...most people only see the $434,xxx. Same with the expensive stuff, oddly enough. We tend to talk about $1.2M vs $1.1M like there's only a difference of "1" and that "1" is a minor difference. That is until you realize that the "1" is $100,000!
Good answer.
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Old 04-14-2011, 11:23 AM
 
Location: New York
158 posts, read 448,690 times
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Sometimes it also has to do with the competing properties. Say the nearest competing property is price at $299,000.... It would be silly to price my listing at $300,000.
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Old 04-14-2011, 04:32 PM
 
Location: El Dorado Hills, CA
3,670 posts, read 7,976,512 times
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Listing at an even number (like $300,000) will increase your chances of showing up on a search. Most people choose price categories that start and stop on even numbers - $275,000 to $300,000 or $300,000 to $325,000. Having a nice round number can get your home to pop up in both searches. Of course, a good realtor representing the buyer will look at the homes just above and just below the range to see what else is out there.

I have also seen a lot of "price drops" to get the home to pop up in as a reduced price on the hot pages. Sometimes they drop the price $100 or $150 so now the house is $324,900 rather than $325,000 just to get more lookers. Of course, that much money is not going to make a difference to someone buying a house, but if you go click on it because it says reduced price, the house gets yet one more exposure.

And there are those people who want to pretend they are complete experts at pricing a house and will say it's worth exactly 376,445 based on their very thorough evaluation. As if!
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Old 04-14-2011, 08:33 PM
 
Location: Baltimore
1,759 posts, read 4,262,499 times
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We priced our place so it fell under Redfin's (public MLS access) search criteria. As said above, a few thousand really doesn't make a tremendous difference but can get you much more traffic to your listing.
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