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