Naturally Occurring Shapes ” and Numbers

Supposedly, there’s no such thing as a naturally-occurring perfect square or rectangle (vs., say, a sphere).

Similarly, I’d venture that there’s no such thing as a house that’s worth exactly $500,000 or $1 million (on the coasts, add a zero).

The Lure of Round Numbers

So, why does it seem that an inordinate number of homes are priced at $500,000 instead of $519,900 ” or, more realistically, $479,900?

I attribute it mainly to the lure of round numbers.

Sort of like gravity, century marks ” and particularly big ones like $500k and $1M ” exert a strong psychological pull on home Buyers and Sellers.

As a result, homes that are in the general vicinity of those numbers sometimes stretch for the “marquee” number.

Overlapping Searches

Reason #2 Sellers often pick round numbers:  they know that Buyers frequently search in increments of $50k to $100k.

So, common price ranges are “$450k — $500k”; “$500k — $600k”; and “$500k — $550k.”

Listing at exactly $500k captures all of those Buyers.

P.S.:  I recall a story that, when Edmund Hillary and his team calculated Mount Everest’s height, they came up with exactly 29,000 feet.

However, they assumed that if they reported that number, everyone would assume that they rounded.

So, they changed the official height to 29,007 feet.

For a different phenomenon in residential real estate, see, “The Too-Precise Price:  Exhibit A”; $425,000 vs. $424,975“; and “The $394,727.89 House (Huh!?!).”

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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