When I 1st got into the Real Estate business twenty four years ago we used to carry around the big bulky MLS books. Back in those days this was how we knew what properties were on the market in Massachusetts. The internet was in it’s infancy and jumping online to look at properties was not an option for a consumer wanting to purchase a home.
For as long as I can remember Realtors have been pricing homes so that the list price ended with 900. As an example, instead of the home being priced at $350,000 it would be $349,900. The majority of the Massachusetts homes on the market are priced this way. In fact, you see this type of pricing strategy for a lot of different products whether is be for a car, gas, or something on late night television.
The reason for this is psychologically the price looks lower in our minds when it is just under a certain price point. Expert marketers know this is the case when trying to sell product.
As consumers we fall for it all the time. Come on admit it, you know you have at least one of those gadgets from late night TV that are supposedly going to give you rock hard abs somewhere in the back of your closet at home! Besides the fact you want abs the price looked pretty good too.
Going back to the days of the MLS book, Realtors would jockey for position and soon instead of pricing the home to end in “900” it became “899” or some other number. We were all trying to position our listings to be seen by more eyes.
Pricing ending in “900” continues in Real Estate to this day but I can tell you it is not always a good idea.
As I am sure you are aware over 90% of all buyers find their homes from doing an online search. The days of newspapers and magazines being an effective medium for finding homes is over.
When people are looking for homes for sale in Massachusetts more often than not they are searching in either $25,000 or $50,000 increments. So let me show you why pricing your home at $349,900 instead of $350,000 is not a good idea.
Lets say I am a home buyer looking for a property between $300,000 – $350,000. Doing a standard search from either an MLS search portal or visiting a site like Realtor.com is going to show all the homes in the selected range. In this search the home priced at $349,900 is going to be seen with no problem as it falls $100 shy of the end of the search range.
What if a buyer is searching for a home between $350,000 and $400,000? Well guess what the home priced at $349,900 is going to be missed by this buyer because it was just under the range.
By pricing the home at $350,000 a lot more eyes are going to be looking at this property! As a seller, you are going to hit both ends of the range.
Obviously when selling Real Estate this is a good thing. We want as many people looking at our properties as possible. Having proper pricing and a marketing plan that delivers outstanding internet visibility is what sells homes today.
If the price of the home does not fall on a quarter increment then pricing it ending in 900 is perfectly fine. You are going to see no difference in a home priced at $364,900 or $365,000 in terms of traffic generated online.
While we are on the subject of marketing, another pricing strategy that you should be aware of is value range pricing. This way way of pricing is essentially a marketing gimmick used by some Real Estate agents. Do your home work and don’t be mislead by these kind of tactics that do little to sell your home!
About the author: The above Real Estate information on Real Estate pricing strategies was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at email@example.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.
Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service the following towns in Metrowest MA: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Franklin, Framingham, Grafton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, and Douglas.
Bill, great article!! I’ve use this strategy when I meet with my seller clients to list property. It is very sad to think a buyer will miss the opportunity because a property that fits all their criteria falls $100.00 short in the search.
Thanks Vickie! It makes far more sense to price a home on the “quarters” than to end the price with 900 or some other number.
Great article! I had a buyer make an offer on a house listed for $99,900. The seller countered at $99,000 — dropping the $900. The buyer laughed and walked away from that house. If the seller had listed the house at $100,000 and countered by a reduction of $1000 instead of the $900, the buyer may have remained interested. The perception the buyer had of the seller – all based on a measly $900 – was priceless!
As a buyer, I don’t agree at all with what you are saying. If the top of my budget is 350k I look from 0-350k. You never know what diamond in the rough you might stumble upon that is priced significantly lower. As far as a seller countering from 99,900 to 99,000. The point is the seller’s behavior is insulting. I thought the sellers agent is supposed to guide him/her in the transaction. By jacking the price up, I think you are just playing head games. This is what it has come down to. I think one of the biggest problems with this market is that sellers and agents are not interested in buyer feedback in a Buyers Market. I have about half a dozen friends who are qualified buyers who are frustrated to no end with this market especially sellers agents and Banks who are not only controlling inventory but now pricepoints by creating artificial bidding wars.
Good article Bill. I never thought about pricing on the quarters but it makes sense to get more hits on computer searches. Thanks for sharing the tip.
Mary – I am not quite sure I understand your point about my article about pricing on the quarters. In the example I mentioned you would see the home because you were looking from 0 to $350,000. A buyer that was looking from $350k – $400k would not see the home in an MLS search if the home was priced at $349,900. The hundred dollar difference would have caused them to miss it in the search. This is why I said pricing it at $350,000 makes more sense than $349,900.
I disagree with you completely about sellers and banks controlling the market. Buyers control the market. A home is worth only what a buyer is willing to pay. If there are bidding wars going on then the homes are priced aggressively not the other way around?
Al – Thanks for the compliments on pricing on the quarters.
If a buyer is searching for a home in the 300- 350,000. price, I always search from 250,000 to 370,000. especially if they pre-qual for a 350,000 mortgage. You may be viewing a home that the listing realtor could not get the seller to do fair market because of sentimental reasoning. After a while they begin to come back to earth and realize the property value for what it is.
Bill, came here via AR. excellent info in your post, that gets overlooked too often. Especially the “bottom price”. When buyers realize, that properties below certain price point will not be a good match, the bottom price is set. And this price is usually a round number! It’s more common to leave the far end open, or enter a 900 number – if the system lets you, because there are sites where you can’t enter your own numbers. Only predetermined 25 k increments.
So even if you broaden the search, like Liz in above comment, sellers offering their property at 249 900 will miss her search criteria…
Thanks Anna. There are times where ending a home list price at 900 makes sense and other times not so much. If you fall on the quarters it usually does not make sense because of the way home search sites work today.
When I first got into RE 6 years ago I saw an article in the paper that Cornell University did a study that showed people will pay MORE money for things priced with a combination of “7s”! If you go to my website, all of my listings are like that. I bring this up in all of my listing appointments & even show the sellers the MLS search results with mine in there standing out! Good blog, wished it wasn’t so “Mass” heavy in the verbiage but I understand!