Which listing price is better – $200,000 or $199,000?
For real estate agents, it’s an age old question : Is it more effective to list a home for a round number, such as $200,000? Or is it more effective to list a home for $199,000?
According to a study down by Florida Atlantic University, the $199,000 price tends to be better for a seller. These findings will help real estate brokers and sellers of homes develop more informed listing and marketing strategies to better suit the seller’s needs.
The study looked at 1,000 buyers in Virginia and a pool of more than 370,000 listings. The researchers were able to determine the impact of rounded pricing listing strategies versus just below pricing strategies by looking at the results following a sale. The study suggests that by using the just below pricing strategy sellers can price their home slightly higher without driving away potential buyers.
Part of the key rests on how sellers price the home in the first place. The study found that just below sellers tend to look at actual value and raise the asking price higher, but only to a point below a round number. Sellers who chose a round number in the first place tend to price their home closer to actual value.
On average, buyers are more attracted to a house priced at $199,000 than to a house price at $200,000. It appears that just below pricing works out favorably for sellers in terms of their bottom line.
While residential real estate agents widely disagree on the appropriate pricing strategy to use when listing residential real estate for sale, the researchers found that homebuyers more often prefer homes priced using a just below pricing strategy. This preference allows sellers to list their home for a higher initial price.
On the other hand, rounded priced homes typically spend less time on the market. Their selling price is closer to the listing price that just under priced homes.
Overall, the just below pricing strategy outweighs the lower discount and shorter time on the market associated with similar rounded price strategy homes.
