For the most part, thanks largely to low-interest mortgage rates and intense demand, sellers aren't having much trouble offloading their properties these days. In fact, inventory levels have diminished, particularly among houses that sell for less than $200,000. But when it comes to deciding on a price point that will be attractive to would-be buyers, odd numbers are best, a new study suggests.
According to newly released analysis from Florida Atlantic University, the first digit is the one that carries the most weight with people who are house hunting. Ideally, list values should be "just below a round number," the researchers concluded, publishing their findings in the journal maintained by the American Real Estate Society.
In order to arrive at their conclusions, the analysts examined approximately a thousand people in Virginia who were interested in buying a new home. They had an impressive 370,000 possibilities to choose from. Routinely, aspiring homeowners selected those that were close to a round number.
"On average, buyers are more attracted to a house priced at $199,000 than to a house priced at $200,000," said Eli Beracha, the study's principal investigator and assistant professor from Florida International University. "It appears that 'just below' pricing works out favorably for sellers in terms of their bottom line."
He added that when using this strategy, it resulted in a selling price that was $5,000 to $6,000 more versus a rounded number pricing methodology.
This may explain why merchandise is often sold at values that are just below round numbers, such as $1.99 for knick-knacks or $39,999 among new-car manufacturer suggested retail prices.
Values, which is to say digits, that more borrowers are taking advantage of are mortgages rates. For the entirety of 2016, 30-year fixed-rate mortgages have stayed well below 4 percent, which has enabled creditworthy borrowers to pay off their loans in a more timely manner.
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