Date Published 11 June 2018
When selling a home, it is important to set a realistic price to achieve a sale. However, there is quite a bit of psychology that goes behind setting a price and this month's news story looks at how that psychology can be used to help achieve the best price for you and maybe teach you some tricks of the trade!
1: Processing fluency. A number's pronunciation and ease of computing helps make a price more attractive. I'm always embarrassed when I see an agent advertise something at say £399,999 instead of £400,000 as the brain can process four hundred thousand much easier than three hundred and ninety nine thousand, nine hundred and ninety nine pounds. I've written the numbers in full to illustrate a point.
Selling small ticket items, the brain can process £3.99, or three ninety nine, quite easily and has the psychological effect of being cheaper, but we're not selling small ticket items so this trick is reversed. Research has shown the greater the syllabic length of a price, the larger we perceive it to be due to the greater mental effort to process phonetically longer numbers.
2: Bargain pricing. Why do we see some agents use a price range? What we find is that if someone can see what looks to be a bargain price, they will be more likely to come and view the property. We then use the next trick of psychology…
3: Anchoring. In the price range we put an upper end of worth on the property and so this is helping the buyer to automatically see a number in between and anchor toward that figure.
If you are thinking of selling, ask your agent what their pricing strategy is and why. If they suggest a difficult to process number or don't have a strategy then they may be hurting your chances of selling at the best price so look to find a different agent.
Paul Davies BSc Hons, Cert Cii, Cert SMP
Director and mortgage advisor of @Home Estate Agents