Pricing Psychology & the “Too-Precise” Price
Quick, which home is priced more carefully: the one that’s $425,000, or the competitor down the street that’s $424,975?
You’d certainly guess the latter . . . and you’d be wrong.
It’s simply not possible to price real estate with the exactitude of a pound of hamburger, or a tank of gas; even when the “comp’s” (comparable sold properties) are what I like to call exceptionally “tight” (vs. loose), the allowed range is still 2% – 3%, give or take.
Going back to the hypothetical $425k property discussed above, that’s translates into a swing of $10k – $15k. Where in that range the ultimate selling price falls depends on a host of situation-specific factors: the Buyer’s subjective attachment to the home; how well the home is staged and marketed; the Seller’s patience (or lack thereof); micro-trends affecting nearby supply and demand, etc.
So why use an artificially precise number instead of a round number?
Two reasons: 1) it stands out; and 2) it suggests greater precision, which may make Buyers believe the price is more accurate — and firmer.
Experienced Realtors see the “too-precise price” for what it is — a gimmick — and tend to avoid it (thankfully, I’ve yet to see the $424,974.23 home!).
P.S.: as I’ve also previously blogged, sales gimmicks are like cockroaches: you seldom see just one.