To end on the 9 or to round up to 0: how best to price a home for sale.
Charm pricing, i.e. just below a round number (think: $9.99 or $399,900), is a common way to price anything, real estate included. And some research confirms that this can work.
Researchers have found that lower-priced houses (below $300,000) sold for significantly more when using charm pricing than similar houses listed with a round-number price. Higher-priced homes ($300,000 to $1 million) benefited from listing prices ending in $5,000 or $9,000, rather than a number that has been rounded to the nearest $10,000.
“Charm” pricing works because of something known as “the left-digit effect”: prices ending in “9” are seen as significantly smaller numbers than their rounded counterparts, as long as the number on the far left is smaller than the rounded number. (For example, $2.99 is perceived as close to $2, even though it’s only one cent from $3.)
By contrast, other studies have shown that “prestige pricing” can also work because rounded numbers are more easily processed in the brain, and therefore they may feel right.
But more often pricing has to do with how to maximize internet searches.
Pricing at $399,900 can lose the searchers beginning at $400,000. Attracting attention with an odd ending number won’t matter to internet searchers, but might in print ads.
And “charm pricing” is most likely to bring a higher sale price in the lowest end of the market. In the $300,000 and up range, common in Summit County, “prestige” pricing – round numbers – is the better way to go.
Adapted from Residential Specialist Magazine Sept/Oct 2017 by Megan Craig