Irvine Housing Blog

“...summarily crushed when the market fully capitulates.”

“If you don?t find that ?entertaining?, you can go pound sand.”

There must be a law against such economic terrorism. I’m calling the Woodinville cops.

A year or two back, I was listening to a speaker at a marketing conference.  He was an “expert” in negotiation, and I recall vividly one of the points he made.  He was discussing all kinds of psychological tactics people can use during negotiations.  One example he gave was in real estate negotiations and setting an initial sales price for a property.  He claimed round number or near round number prices such as $500,000 or $499,999 were obviously not based on anything more than the sellers dream price and subtley sent the message this this number was crap and could dramatically be negotiated.  He went on to say that pricing a very odd number, such as $512,472 or $493,274 would cause potential buyers to think there was much more rigid thinking behind that number and infer that further negotiations wouldn’t result in as significant of price reductions.  And, he even claimed studies have been done to show sellers get far closer to their initial asking price when it’s a strange number rather than a round number.

A few quick Google searches failed to surface this research, but I did find a good handful of random blogs also discussing and supporting this notion.  Perhaps this was the impetus for $465,425.  Or equally possible is $465,425 is the amount to keep the seller from losing his shirt, but I at least wanted to pass along this other theory.

One of the questions I’d ask the listing agent is how this specific $465,425 was derived.

Still very over priced.

IR, you meant to type “gas prices are very elastic” (not inelastic).  Otherwise the meanings are reversed.

Hi IrvineRenter…we’ve lived in Woodbridge a long time and never had mello roos. How much do the newer areas like Quail Hill, Woodbury, Portola have to pay for mello roos? I’m assuming it’s a percentage of the cost of the condo/house.

Looking at redfin…

“No similar recent sales reported”

I think that’s a first.  If redfin says none of these properties are selling then you know all the prices have to be too high.

http://www.bloomberg.com/apps/news?pid=20601213&sid=a8mdg7z0u7Dw&refer=home

More good news.  Housing won’t bottom for another 5 years?  Really.  I was hoping to buy next year.  Maybe I’ll wait til 2011 or 2012. 

-Jon

This place would actually make a nice starter home for someone but the price needs to come down a bit.  IR, I think you’re close with the pricing…with rates so low, I could see this place going for low 4’s.  It is detached and newer but what’s with that tandem garage?

A realtor once told me that the odd digits at the end of the price was a code used to identify the listing agent.  Another lie?

I agree with you on pricing to a point.  But given that a lot of home searching is by computer now, being at 599,000 or 599,999, is significant because if you say “show me house less than 600K”, you’ll not get the ones that are 600K, even though its functionally no different than a house that is 599,999.

We have a long way to go towards normal pricing—just for an example my last house in the Bay Area—10k sq.ft lot—-3k sq. ft home on a canyon view lot—5 bed 4 bath, 3 car garage cost this much in 97’—-in ten years this price buys you a 2 bedroom townhouse—no lot—no view—

Just for you young people who think OC is close to being affordable—-LOL

More insanity in the paper today OC Business section a lady in Newport bought her house in 2000 for 1.2 million and put it up for sale in 05’ for 3.65 million——didn’t sell now up for 3.29—What in the world is she smoking?

I have often wondered about the whole culture of the 1 cent or 1 dollar discounts.  Of course, I know the psychological purpose, but I didn’t know why it would work.  It never worked on me, as I always visually see $50 instead of $49.99 or $1300 instead of $1299.99.  It’s easier to factor in the tax using nice round numbers anyway.

However, one day it dawned on me that the pricing tactic works when you are verbally telling others about the price.  One would say FORty-nine-ninety-nine or TWELVE-ninety-nine-ninety-nine.  The first word is the most impressionable, and the follow-up repetition is diluted.  So for example, if a wife bought expensive shoes but don’t want the husband to get upset, by saying FOUR-ninety-nine-ninety-nine is a lot better than FIVE-hundred.  They may even say “FOUR-something”.  This allows salespeople to tell people the cost at a seemingly lower number, and helps buyers deal with the guilt (if there is any) when they tell others how much was paid for the items.

Of course, now I just round up the numbers before speaking it.

Yes, there are other reasons, as you and other commenters have mentioned, like the computer search filters.  I just find that the verbalization of the prices is worth a mention, as this is certainly not a modern phenomenon (they didn’t have automated search before the 1980s).

I think the mental price break on real estate is every $5,000, not every $1,000.  So I would price this tiny apartment at $464,900 if I were the seller, or $299,900 if I were being realistic.

And by the way, there’s no competitive advantage in gasoline pricing by making the price end in nine-tenths of a cent, because every other gas station in the world does it too.

“I can assure you, I do not give a sand if you are insulted.”

I can assure you that you’ll find some mouses’ rear ends in the sand

Good one IR.