Milpitas North San Jose Berryessa Real Estate News

Is a $499 iPad a bargain compared to one that cost $500?  Not exactly.  But retailers have long priced products just below a round number because, psychologically, $499 feels more like a deal than $500, even if the difference is only $1.

In real estate, the "99" strategy is nearly always employed.  For instance, if a seller prices their home at $499k instead of $500k, the $1k they lose will cover some of the buyer's closing costs, but in the buyer's mind, they are paying $500k.  In most cases, though, knocking off $1k to bring the price below a rounded figure doesn't make that much difference to a buyer or seller.

Nonetheless, there's a fair amount of pshychology - and strategy - that goes into determining a home's asking price.

If you're a seller, you and your real estate agent should identify (and agree on) the approximate value of the property.  Let's say you determine your home is worth around $500k, based on comparable of similar properties sold in your neighborhood and other market considerations.  The next step is to understand the price range for the list price - in this case, somewhere between $480k and $520k, depending on the market conditions, competing properties, time of year or inventory.  The price range typically goes a bit higher with more expensive properties; a home worth about $1 million might have a range of $950k to $1.05 million.

Once you know your home's value and have a price range in mind, it's time nail down the final list price.

I will put the five pricing strategies for sellers in the later series.  Stay tuned.