Chicago, IL. Researchers at Cornell University have found that people will pay more for a home if it does not end in a bunch of zeroes.
In other words, the researchers say, you might make more money if you price your house at $325,425 rather than $326,000.
"It's a psychological bias," said Manoj Thomas, an assistant professor of marketing at Cornell's Samuel Curtis Johnson Graduate School of Management. "A bias in judgment."
The study concluded that because people are used to precise numbers for items that don't cost much and to round numbers for large amounts, consumers generally and home buyers specifically tend to perceive that a price is smaller if there are digits at the end instead of zeros.
"It does seem ridiculous," Thomas said. "But when you see a price, your response is not always based on deliberative reasoning."
Thomas said the results were confirmed in lab tests with 134 graduate students and by examining 27,000 real estate transactions in two markets -- South Florida and Long Island , N.Y. -- where most list prices had three ending zeros.
