Today I’m in King West Village to talk to you about pricing Toronto real estate.
Now, you know when you walk into a store and you see a product listed at $3.99, you know it’s really a $4 product but they listed it at $3.99 to try to trick your brain into thinking that it’s cheaper than it really is. Now, that’s a technique that marketers have been using for generations and it’s worked fairly well for them. They call this a heuristic tendency. That’s a shortcut your brain uses to determine value.
I’m going to tell you about a study that Cornell University just did and they published it in their journal Marketing Science. They looked at buyer attitudes towards precise numbers. They took these subjects and they showed the strings of numbers and they asked them to rate them in terms of value; which one looked highest, which one looked lowest. Surprisingly enough when they showed them this number ($511,534) it consistently rated as appearing lower than this number ($510,000). Why? Because it’s a precision number. Even though it’s higher, it appeared to their brain as lower. This number over here ($401, 298) consistently appeared lower than this number ($400,000). Same reason, because it’s been rounded off.
They call this the precision heuristic. A heuristic is a shortcut your brain uses to make a snap decision about something. In this case, value. When your brain looks at a number, it has to make a decision quickly as to what it’s worth. When the number’s rounded off, it’s easier to figure out. When it’s a precise number, it takes your brain a moment to juggle it around and figure out what it’s worth.
In the marketplace they looked at about a thousand listings in both Florida and New York City. All these listings sold under asking, so there’s some negotiation involved. Consistently, the listings with the precision number sold for 0.75% higher than those with a rounded off number. On a $500,000 house that’s over $3700. Does it matter to you? You tell me. It should, because it’s going to make you more money.
Their number one tip: don’t use zeroes. Their number two tip: don’t use nines.
Listen, if you need help pricing your property, give me a call. My name’s Chris Borkowski. I’m a broker with Re/Max Hallmark here in the city of Toronto.
If you have any questions, or you’re looking for a great Toronto condo, Toronto real estate investment, or office space, call me at 416-486-5588 or email firstname.lastname@example.org.