In today's Statesman, dated February 24th, 2008 of the Homes section, my husband pointed out an interesting article about pricing your home.
There was a study by a research team at Cornell University and they found that people will pay more for a house if the listing price didn't end in a bunch of zeroes (ie. 449,893 oppossed to 449,000). So I continued to read on. The researchers state that it is a psychological thing. Because people are used to precise numbers for items that don't cost and tend to round numbers, consumers including home buyers tend to think that a price is smaller when there are digits at the end instead of zero. Come to think of this, when I go to Randalls or H-E-B, when I buy an item, I tend to buy the one that is priced at 11.99 instead of 12.00 even if the 11.99 is a generic brand when for a penny more I could get a name brand; or buying shampoo at 4.39 oppossed to 4.00. I guess my brain gets easily tricked by the digits in the end. The researcher says that it seems rediculous but when a price is seen by a consumer, our response is not always based on deliberate reasoning.
The study was conducted by 134 graduate students by examining 27,000 real estate transactions in Florida and Long Island where most list prices had 3 ending zeroes. The bottom line is the research states that the homes with a more precise list price sells more than that of a home with a list price ending with 3 zeroes. Amazing! I can't wait to try this out on my Austin home listings.
