The Psychology of the Homebuyer-it never ceases to amaze!
-apparently a research study at Cornell University found that buyers incorrectly perceive precise prices such as $325,425 to be lower than $325,000 and were then willing to pay more-strange but true. The article summarized the research noting that, based on data collected from 27,000 real estate transactions in two U.S. markets, buyers paid higher prices when asking prices were more exact/not rounded off. "People learn to associate precision with smaller magnitudes," wrote the research team led by Manoj Thomas of Cornell's Johnson Graduate School of Management in Ithaca, N.Y. "Using sharp numbers rather than round numbers could be an important pricing strategy for sellers," suggests Jason Zweig.
-people tend to be more upset with decrease in the value of their homes than they are to losses in stocks and will perceive their home values to continue to be whatever they were at the peak price the home attained. The researcher commented that logically, people should not be as upset with drops in their home prices since they live in the home; it is not simply a vehicle to make money whereas stocks are and therefore drops in value should be more troubling.
The article also pointed out that even though prices may have dropped, most people have not "lost money" but still stand to make an excellent profit if they are selling their principal residence. This is likely important information for sellers....I am currently selling one of my own properties-I should have sold it earlier but was too busy to deal with my own sales. Now, while I know I would have sold for more had I sold when I originally thought about it, I do realize that sale prices are still very high so it still makes sense to sell.....