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Pricing your home just below a round number, like $599,000 instead of $600,000, can lead to a higher final sale price—but this strategy only works in specific U.S. metro areas. An analysis of recent home sales found that while the tactic yields a premium in markets like San Jose and Los Angeles, it can result in a lower sale price in other cities. The key is understanding local market psychology and buyer search behavior.
How Does 'Just-Below' Pricing Influence Buyers?
This pricing strategy leverages a common psychological tendency. Buyers often set round-number budgets, such as $600,000. When a home is listed at $599,000, it falls just below that mental threshold, making the price feel like a better deal. As one chief economist noted, "When a home is priced just below a buyer’s round-number budget, buyers may feel like the asking price is a good deal." This perceived value can increase interest and potentially lead to competitive offers that push the final sale price higher than the list price.
However, for this to be a financially sound tactic, the resulting premium must be significant enough to offset the lower listing price. Based on our experience assessment, the strategy only tends to pay off in a handful of metropolitan areas.
In Which Metros Does a 'Just-Below' Strategy Pay Off?
The premium for pricing just below a round number is most pronounced in competitive, high-cost markets. The following metros showed a statistically significant correlation between this strategy and a higher final sale price:
In these areas, the psychological appeal of being just under a major price point appears to resonate strongly with buyers. The strategy is less about discounting the home and more about positioning it effectively within buyer search parameters and budgetary comfort zones.
What About Pricing 'Just Above' a Round Number?
Conversely, pricing a home at $501,000 instead of $500,000 is generally not advisable. Nationwide, homes priced just above a round number typically sold for nearly $1,900 less relative to their asking price. This is because the listing may be excluded from the online saved searches of serious buyers who have set their maximum filter at $500,000.
There is an exception. In a few metros, including Minneapolis, Phoenix, and several warm-weather climates, pricing just above has been correlated with a premium. The reasons are less clear but may involve different buyer demographics or price-adjustment patterns before a sale.
| Pricing Strategy | Typical National Outcome | Key Consideration |
|---|---|---|
| Just Below (e.g., $599k) | Small average premium | Highly dependent on local market conditions. |
| Just Above (e.g., $501k) | Lower sale price relative to list | Limits buyer pool by exceeding common search filters. |
Practical Advice for Setting Your List Price
The most important factor in pricing your home is a comparative market analysis (CMA) based on recent sales of similar properties in your neighborhood. While psychological pricing can be a tool, it should not replace data-driven valuation.
Ultimately, the decision to use a 'just-below' price point should be a secondary consideration after establishing an accurate, competitively priced listing based on a thorough CMA.
