A Perspective on Pricing: Bye-Bye-Bye to 9-9-9?
May 1, 2019
Listing a home for sale at a 999 price point has been a favored pricing strategy among Realtors since the dawn of the profession. The thought is that, psychologically, seeing the lower number at the front gives the buyer a better first impression of the price, even if it’s only $1,000, $100, or $1 away from bumping up another digit on the front end. It’s supposed to lessen the “sticker shock”. For example, $999,000 might better to a buyer at first glance than $1,000,000. Whether or not there’s anything to this theory is up for debate, but regardless, the strategy has stood the test of time.
The way consumers search for homes has changed dramatically over the last several years, with the advent of online listing portals like Zillow and Redfin. When searching for homes on these websites, you have the option to enter a minimum and maximum price range, and usually these options are provided in set intervals. So a buyer might enter a price range of $1 million to $1.2 million. In this scenario, the buyer completely misses out on our $999,000 listing, even though we, as sellers, intended to be in their price range. However, if we had priced out home right at $1 million, not only would we have found our way into their search results, but we would have also shown up in any search results with a max of $1 million as well. So it would seem the beloved $999 pricing strategy has the potential to significantly limit a listing’s exposure in online search results.
Of course, this theory assumes most buyers set minimum prices in their search for homes online. Unfortunately, Zillow and Redfin don’t have data on consumer search behavior readily available, so it’s impossible to know just how much the 999 pricing strategy could hurt your exposure. Still, it’s something to keep in mind as more and more buyers rely on these listing portals to find their homes.