| Study Proves That Weird Asking Prices Work Better Than Normal Ones | January 18th, 2008 |
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An article in this month’s Atlantic Monthly suggests that because we tend to use precise numbers for small amounts and round numbers (lots of zeros) for large ones, sellers can make buyers perceive a price as smaller by replacing zeros with other digits. A study from Cornell University has concluded that precise prices like $391,534 were seen as cheaper than round ones like $390,000 even though the round prices were actually lower. The authors examined more than 27,000 real estate transactions in South Florida. At its conclusion they found that having three zeros at the end of the list price lowered the final sales price by about .73 percent compared with houses listed at a similar price [without zeros]. Each additional zero lowered it by another .39 percent. While seemingly small, this effect can add up to thousands of dollars. In the SF neighborhoods we work in, with median prices averaging $1m or more, the effect can add up to $7,000 – $10,000 and up. |
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