There’s no substitute for the pricing skills of a real estate professional, but home sellers often disagree as to the price their agent advises. Recent findings from the Journal of Housing Research, a publication by the American Real Estate Society (ARES), may impart some understanding.
According to the research, the most effective sale price is one that is just below a round number—$199,000, say, as opposed to $200,000. The difference, though negligible to the seller, is generally positively perceived by the buyer.
“We tested the age-old debate concerning the best technique to price a home when listing it for sale,” says Michael J. Seiler of The College of William and Mary, who conducted the research. “We find that using a price just below a round number works best, particularly in connection to the left-most digit in the price—so, $199,000 works better than $200,000.”
“On average, buyers are more attracted to a house priced at $199,000 than to a house priced at $200,000, and it appears that ‘just below’ pricing works out favorably for sellers in terms of their bottom line,” adds Eli Beracha of Florida International University, who also conducted the research. “Based on our research, the ‘just below’ pricing strategy yields a selling price that is, on average, roughly 2.5 to 3 percent higher—$5,000 to $6,000 on a $200,000 house—compared with a rounded pricing listing strategy.
“Our study suggests that by using the ‘just below’ pricing strategy, sellers can price their home slightly higher without driving away potential buyers,” Beracha notes. “As a result, they end up selling their house for more.”
In light of these findings, it’s important to remember that real estate professionals set prices after careful consideration of market data and trends—their recommendation, ultimately, is what will sell the home fastest and for the best price.
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Source: Florida Atlantic University
Published with permission from RISMedia.