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Ruthless, Other/Just Looking in 60558

$999,999 or $1,000,000?

Asked by Ruthless, 60558 Fri Aug 10, 2007

Everyone thinks it stupid, but the studies proved that a price of $9.99 was more effective than $10.00. However, those studies are out of date now. When searching for a home, you put in your search price range. Am I better off having a price of $1,000,000 so that I am found by people with a top limit of $1mil as well as a people with a bottom limit of $1mil? Does the rule differ if the asking price is around $100,000 verses $1,000,000?

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I've heard both sides of the argument. Many agents will argue until they are blue in the face about pricing on the round number to take advantage of two price ranges, while others hold fast to the psychological impact of being just under $1 million (or whatever range is being targeted). You would think that in this day and age buyers would be too sophisticated for such a ruse, but I still have better success pricing just under a major break. In addition to the lower price just looking more inviting, I think it has the dual effect of showing willingness to negotiate. A buyer might think that the guy priced right at a million is married to that price, unwilling to budge. A guy at 995 or 999 appears to be willing to talk. I also have typically found that people will buy up to the top end of their price range, not down. The person looking to spend up to 1.1 or 1.2 million will seldom opt for the home listed at 1 million. For these reasons, I don't find it particularly advantageous to try to bridge both price ranges. Find your appropriate range and price accordingly rather than concerning yourself too much with spanning two ranges. Like politicians must be careful not to alienate their base when attempting to appeal to a broader group of voters, a seller should focus specifically on the buyer that most likely holds the purchaser for his/her home. Be very cognizant of how any pricing strategies affects this group. Unless your home is worth 1 million, don't price it at 1 million.

I'll add that this is just one agent's humble opinion based solely on my experience, not study. Obviously some people have had success going the other direction or there would be no debate.
0 votes Thank Flag Link Fri Aug 10, 2007
I agree with the brokers from New Jersey because here in NY we also have a "mansion tax" of 1% of everything over $1million. There is a psychological threshold of $1million dollar properties. However, I find lower pricing usually gets a seller a higher price in the end. Every market is different but I find people tend to buy at the top limit not the bottom. It will most likely be purchased by some one looking up to $1million. Someone looking above $1M will probably end up buying something around $1.1 -$1.2million.
2 votes Thank Flag Link Sat Aug 11, 2007
Mitchell Hall, Real Estate Pro in New York, NY
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If you look at the literature in marketing, you will see that there are different aspects to psychological pricing. The old .99 instead of $1.00, also called odd pricing, was supposedly designed to force retail clerks to open the cash register and give change instead of pocketing the dollar bill. This might be a rumor. But there definitely is evidence that when you see a car price that says $18,999, you usual don't think of $19,000 even though the taxes, fees and whatever will often take you over the $20,000 mark.

I would not price a million dollar property at $999,999 because buyers in that range often look at whatever is above the million dollar mark. I also believe that in this price range, it does add a lot of prestige to the property to be associated with properties in the 6 digits.

I do agree with the point that was made that the rule will differ at other price points. If I had to list a $100,000 property, I would definitely list it at $99,999 or $99,900 or $99,888.

The last point I would like to make, is that the odd pricing strategy is good in industries where there is no bargaining. Look at your supermarket or gas station and you will see that almost all prices end in 9.
2 votes Thank Flag Link Fri Aug 10, 2007
Ruth: I would suggest a price of $999.999 for one simple reason.

When someone searches online for a home in your area under $1 million, a price of $999,999 meets the criteria. With that price you will have broadened your range of potential buyers.

And with 80 percent of the buyers starting their search for homes online....
1 vote Thank Flag Link Sat Aug 11, 2007
Roberta Murp…, Real Estate Pro in Carlsbad, CA
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A strategy that I use is to end a price in “800”, instead of “900” or “999”. When search results are given, the listings appear numerically, so this pushes it way up the ladder as everyone ends in “900”.

Melissa Mancini, Realtor, CBR, GRI
Web Reference: http://MelissaBMancini.com
1 vote Thank Flag Link Fri Aug 10, 2007
I have been listing at 000,000 prices for a long time. Unless my client insists otherwise. We have to look at the way people search for homes now. If you price something at 99,900 you will miss everyone looking from 100K and up, all because of $100.
1 vote Thank Flag Link Fri Aug 10, 2007
Maureen Fran…, Real Estate Pro in Birmingham, MI
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I wont' repeat a lot of thing others said already.

In San Francisco Bay area, we price houses at the thousands, ususally have a 9 or 5 at the end, such as 799,000. or 795,000.

I think with the buyers market, we should all look for properties over our client's upper limit, as there might be negotiation room. A.lso, with the automatic email sign ups for notificaiton of new listings, Realtors should advise their clients to set up searches the same way so as not to miss out on a good property.

Sylvia
1 vote Thank Flag Link Fri Aug 10, 2007
Sylvia Barry,…, Real Estate Pro in Marin, CA
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Hi,

Totally in agreement with Diane's answer. And, yes, in NJ, we have an additional tax on properties sold at 1M or above. For that reason, some sellers will price a home at 999, when, if not for the luxury tax, might have priced at 1.075, or 1.1. The tax hurts property values in that range just over 1M.

Diane's answer is also excellent about pointing out that by pricing at exactly an even number, be it 1,000,000 or 250,000 versuses the "999"

Here's my addendum to an excellent answer already provided....

The value of the a property being captured in more searches far outweighs any psychological benefit of the "999" strategy. Any general studies on the "999" category would be faulty. A study on real estate pricing could only be valid if it specifically addressed buyers search habits.
1 vote Thank Flag Link Fri Aug 10, 2007
Not sure where you are located, but in NJ we have the "millionaires" tax. Any property sold over $1 million incurs a tax of 1% of the purchase price. We, therefore, try to keep our listing prices at 999, rather than $1 million.
As far as a basic search goes, you would do better at the $1 million price to pick up buyers in both ranges you quoted, IF people were searching that parameter--up to $1 million and from $1 million to ??. I have found that around $1 million, people will range from a looking price range of 700,000 to $1.3 million.
Don't know if there is a science, but there have been many stories written on the psychological effects of pricing and it seems that people still like the bargain price of $9.99 vs. $10.
Web Reference: http://www.dianeglander.com
1 vote Thank Flag Link Fri Aug 10, 2007
Price at $1,000,000. Your home will show up in searches up to $1,000,000 and in searches $1,000,000 and over.
0 votes Thank Flag Link Mon Nov 12, 2007
I thnk using a price point under 1 mill is better. In our area we use a lot of $999,888 to encourage interest from a diverse background as the 8's represent prosperity. Many or our buyers today or looking over their target mark due to the negotiating of prices.
0 votes Thank Flag Link Fri Aug 10, 2007
Pam Winterba…, Real Estate Pro in Danville, VA
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i would agree with all that is said. Also I would consider pricing it at $999,888 as this may inclusive of many of the cultural buyers that look toward the prosperity symbol. Just another spin on things for marketing.
Web Reference: http://pamwinterbauer.com
0 votes Thank Flag Link Fri Aug 10, 2007
Pam Winterba…, Real Estate Pro in Danville, VA
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Good question! I usually like to price my property at $XX9,900 rather than $XX0,000. But when the property is as high or higher than $1,000,000, I like to use round numbers. I just think it sounds good to price a property at $1,300,000 rather than $1,299,900. I think that looks silly. Anyway, good question. It may seem mudane, but I think it's important. Take care, Jon
Web Reference: http://www.bowenboston.com
0 votes Thank Flag Link Fri Aug 10, 2007
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