Psychological pricing, also known as “charm pricing,” is a price-setting technique that involves lowering the price just BELOW the nearest round number, in order to make it seem lower at first sight. For instance, $299,999 is perceived a better value than $300,000, even though it’s only one dollar less. And $449,000 is perceived as a lot cheaper than $450,000. When pricing your home, consider whether charm pricing makes sense.
By contrast, avoid putting your price OVER the nearby cap-point. If you think your home is worth $395,000, don’t price it at $405,000 just to see what happens. You’ll lose everyone looking up to $400,000. Buyers tend to cap their searches in $10,000 increments ($120,000, $230,000, etc), and more commonly in $50,000 increments ($150,000, $200,000, $350,000).
A technique to avoid when pricing a home is using too many numbers other than zero. For instance, at first glance, $348,932 is perceived as higher in price than $349,000, even though it’s actually lower.
As a home-buyer, it’s useful to be aware of these pricing strategies, so you’re not tempted to stretch unnecessarily to reach a price you don’t need to pay. All real estate pricing is a negotiation.