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Published April 16, 2010 
By the Numbers by Jack Hough
If you're selling a house now, there's reason enough to want to seal a deal quickly. House prices have bounced a smidgen since last summer, but the latest numbers suggest the momentum is fading. Meanwhile, a government program awarding cash bonuses to house buyers expires after this month. The number of house foreclosures hit a record in the first three months of this year, RealtyTrac reported Thursday. And the Urban Land Institute recently issued a gloomy report on the demographics of housing in America.
 
Don't panic. Houses are nowhere near as overpriced as they once were. Prices have fallen close to 30% nominally (and several percentage points more after adjusting for inflation) since April 2007, when I argued that renting had become a much better financial deal than homeownership. A reworking of the numbers last July convinced me that affordability was nearly restored and that houses in some markets were cheap.
 
If you're a seller, then, don't rush to cut your asking price. In fact, if you're looking for a slight advantage over the competition, you might try raising your price just a little -- from a rounded number to a precise-looking one.
 
Most of us think of numbers as describing quantities, and nothing more. Four is more than three; case closed. However, numbers have aesthetic qualities, too. There's a reason an estimated two-thirds of items on retail shelves have prices ending in nine. It's good for sales. Researchers have known about this nine-ending effect for nearly 80 years. Many theorize that such numbers simply look smaller to buyers, especially in cases where the far-left digit is reduced ($2.99). Of course, the appearance of cheapness can backfire. Upscale restaurants should sell the wild boar ravioli for $18, never $17.99. (Ideally, they should banish dollar signs from the menu, too.)
 

Wal-Mart (WMT: 53.64, -0.06, -0.11%) seems not to play by these rules. For example, a recent look at personal care products listed on its web site showed a razor for $6.47, a hairbrush for $5.88 and a nose hair trimmer for $11.86. Why do the prices at America's largest company by revenue look so precise?

Perhaps because precise prices look low -- even lower than those ending in nine.
 
A Cornell University study published recently in the academic journal Marketing Science looks at buyer attitudes toward precise numbers, both in the laboratory and the marketplace. Subjects sorted into groups and asked to make flash decisions on where a string of large numbers ranked on a magnitude scale of 1 to 9 consistently assigned higher magnitudes to round numbers than to precise, slightly higher ones.
 
For example, they judged $510,000 to be slightly higher on the scale than $511,534, and they saw $400,000 as considerably higher than $401,298. The researchers theorize that people aren't used to discussing large numbers with precision, so they tend to associate precision with smallness. They call this tendency the precision heuristic (a heuristic is a type of mental shortcut that humans use to make decisions quickly, but not always wisely). The habit seems to be learned, not hard-wired; the researchers found that they could retrain subjects through additional demonstrations in which the obviously large numbers were precise and the obviously small ones were rounded.
 
That's all well and good in the lab, but would the precision heuristic work in real life? It already has, apparently. The researchers studied thousands of real estate transactions in South Florida and Long Island where houses sold for less than the asking price. All else held equal, houses that were originally listed at precise amounts sold for about three-quarters of one percent more than those that started with rounded prices. On a $500,000 house, that's $3,750.
 
 

Jack Hough is an associate editor at SmartMoney.com and author of "Your Next Great Stock."



Read more: Selling a House? Try to Avoid Zeros - Personal Finance - Real Estate - SmartMoney.com http://www.smartmoney.com/personal-finance/real-estate/selling-a-house-try-to-avoid-zeros/#ixzz0mcRpoEta
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The National Association of Realtors reported Thursday that U.S. existing-home sales rose 6.8 percent in March for the first time in three months.
 
Even though buyers seeking to take advantage of the Homebuyer Tax Credit have until April 30 to go under contract, closed transactions in March increased to an annualized rate of 5.35 million. 
 
"Sales have been higher than year-ago levels for nine straight months, and inventory has trended down from year-ago levels for 20 months running," said Lawrence Yun, NAR's Chief Economist.
 
All 54 metro areas included in the AP-RE/MAX Monthly Housing Report showed positive growth in sales for March. Year-over-year, inventory was down 13.15 percent while prices increased by 7.76 percent.

 

March 2010 Existing Home Sales            
  Annualized Sales 1 Mo Diff  1 Year Diff Median Price 1 Mo Diff 1 Yr Diff
National 5.35M +6.8% +16.1% $170,700 +3.4% +0.4%
             
Northeast 890k +5.9% +25.4% $254,700 -1.9% +8.9%
Midwest 1.19M +7.2% +15.5% $139,300 +8.8% +5.2%
South 1.97M +7.1% +13.9% $154,800 +10.9% +5.2%
West 1.30M +6.6% +14% $207,900 +0.7% -7.9%

National Inventory:
1. March Inventory: 3.58M, +1.5% from February and -1.8% from March 2009
2. Months Supply: 8 months, down from 8.5 months in February.
 

March Practitioner Survey:
1. Distressed properties made up 35% of all sales. (unchanged)
2.
First-time buyers purchased 44%  of all homes sold. (up from 42% in Feb)
3.
Investors accounted for 19% of all transactions. (unchanged)

Mortgage Interest Rates:
1.
March 2010 = 4.97%
2.
February 2010 = 4.99%
3.
March 2009 = 5.00%
(National average commitment rate from Freddie Mac)

Posted 4/22/10 on Remax.net

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Whether seeking solace, activity, schools, churches, or green space, every homebuyer looks for a different combination of attributes in a new community.  Choosing a neighbourhood that suits your needs and wants is one of the most important decisions you’ll make in the home-buying process; your choice of environment will affect the way you experience your new home.  This is a very personal decision, influenced by countless unique factors colouring your own lives, but you should always keep the following in mind:

 

  1. If you’re considering buying a home in a community that is unfamiliar to you, get to know its lay-out, offerings, and ambiance.  Take some time to walk or drive through the neighbourhood, both during the day and at night, familiarizing yourself with the sights, sounds, and smells.

 

  1. What amenities does the neighbourhood have to offer?  Is public transportation readily accessible?  Are there schools, churches, parks, or grocery stores within reach?  Consider visiting schools in the area if you have children.

 

  1. What is the nature of the job market in the area?  Keep in mind that if area employers are producing more jobs, you can expect property values to increase, especially if the jobs offered fall within a higher salary bracket.

 

  1. Speak with the neighbours.  Ask questions.  They can offer you a wealth of information, from an inside perspective.

 

  1. How will you be affected by a new commute to work?  Drive the route between the new neighbourhood and your office during the appropriate times to gauge the volume of traffic you could expect to encounter, and the amount of time you’d need to put aside for daily travel.

 

  1. Contact local land-use and zoning officials to determine existing development plans or potential for development in the area.  A strong agenda for neighbourhood planning and local zoning will increase the value and draw of a neighbourhood.  Keep in mind that any large, tree-covered area may be a target for future development in popular communities.

 

  1. Determine whether financial resources have been put in place to support infrastructure projects in the area.  These construction projects might include building, replacing, or improving anything from schools to roads, and are usually part of a city or town’s long-term plan.  While disruptive, construction could also be a benefit to your experience of a community, influencing the long-term value of the area. 
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Jeff Cairncross

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