Researchers at Cornell University say they've discovered something strange about the way consumers absorb price information. They say when the price of an item is in a round number, people perceive it as higher than an odd number. In other words, people think a $3,000 car is more expensive than one priced at $3,129.50. The finding has implications for people trying to sell their homes
Therefore, as a homeowner you want to make certain that you price your home accordingly. The phenomenon documented by the researchers is called the "precision heuristic". Using data from 27,000 real estate transactions in two US markets, the researchers found that buyers paid higher prices when asking prices were more exact.
"People learn to associatee precision with smaller magnitudes," wrote the researchers and therefore tend to negotiate price less when presented with a precise cost.
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