Round Numbers - not the Best Option

by : Sapan Behar

Avoid the zeros!

According to a research team at Cornell University, people will pay more for a house if the listing price does not end in a bunch of zeros. According to their research, buyers will pay more for a house if it is listed at $675,425 rather than $676,000. This mere $575 difference in listing prices can net you thousands more when the property sells.

According to Manoj Thomas, an assistant professor of marketing at the university, this is a psychological thing. The study found that because people are used to precise numbers for cheaper items and round numbers for pricier ones, consumers generally and home buyers specifically tend to perceive that a price is greater if there are zeros at the end.

This study was conducted using real estate transaction in South Florida where most list prices had three zeros at the end. Research showed that having at least one zero at the end of the list price lowered the final selling price by about 0.72 per cent when compared with houses that had a similar list price. The research further showed that having three zeros at the end of the list price lowered the price by 0.73 per cent.

What does this mean in terms of cash

According to the authors, if one house has a list price of $484,700 and another $485,000, "the house with the more precise list price (i.e. less zeros at the end) will sell for about $1,380 more."

Being creative with the list price and listing at a price that is truly reflective of the value of the property, not only can you achieve a higher selling price, but you can also generate more interest and competing offers.