List price: What's your lucky number?
In Las Vegas, home sellers love listings with 7s — but in Asian neighborhoods, beware of 4s.
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Joe DeVito, a real-estate broker in Brooklyn, N.Y., has 18 active listings in 11219 ZIP code. Half of them have an eight in the asking price. Only one has a four.
"They are priced for the luck and sold for the luck," DeVito says of homes in the Sunset Park neighborhood, where many of the residents are Asian. In Chinese culture, eight is considered to be a lucky number, while four is believed to bring bad luck. (Bing: What other numbers are lucky in Chinese culture? )
Just like the lottery, real estate can be a numbers game in which superstition plays a role. According to research by real-estate website Trulia, "luck" is frequently linked to the last nonzero digit of homes for sale — the eight in $528,000, for example. In Asian neighborhoods, 20% of listings end with a lucky eight, compared with 4% of listings in areas where Asians are a minority.
8 is enough
But the listings superstition appears to be strongest in neighborhoods where Asians comprise more than 50% of the population, according to Trulia data of all homes listed for sale, excluding foreclosures, from October 2011 to the end of 2012. The affinity for eight is most frequent in luxury homes listed for more than $1 million, with 37% of listings ending in an eight before the zeros.
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The Chinese pronunciation of eight is similar to the word that means "prosperity" or "wealth," says Zili Yang, professor of economics at Binghamton University. Four sounds similar to the Chinese word for "death," making it an unlucky number in Chinese culture, Yang says.
"All businesses try to avoid it in all occasions. We don't even want to put it onto our car plates," he says.
Brent Chang, a real-estate agent with Coldwell Banker San Marino in California, says his clients stay away from fours in nearly all circumstances. He says about 85% of his Asian clients use numerology when buying or selling.
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"If we suggest $2 million for a property, they will want to price it at $2,188,888," he says. "They'll put as many eights in there as possible."
Manoj Thomas, a marketing professor at Cornell University in Ithaca, N.Y., says lucky numbers are a subconscious strategy that sellers use. If a person believes one number brings him luck and uses it more frequently, it will seem intuitive to him, and he will feel more comfortable using it.
But numbers — and their placement — have a subconscious effect on buyers, too. People tend to look at digits on the left, says Thomas, who studies the psychology of pricing. Prices with lower left-side numbers make buyers think that they're getting a better deal.
That's why prices are often listed with multiple nines, like $19.99, says Alan Cooke, a marketing professor at the University of Florida.
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"People mentally round down, dropping the cents off of $19.99 and seeing it as $19 and not $20," he says.
The same strategy is evident in homes priced at less than $1 million; 54% of those homes have prices ending in a nine, Trulia says. But the picture changes for homes at the higher end: Only 25% of homes that cost more than $1 million end in a nine. One theory: Nines are associated with mass consumer goods, making them less appealing to high-end buyers, says Jed Kolko, chief economist and head of analytics at Trulia.
And pricing psychology may be a tougher game as prices go up.
"It's harder to make a $3 million home sound inexpensive," Kolko says.
Instead, high-end home sellers gravitate toward the number five. With homes listed at more than $1 million, 55% have a final nonzero digit of five, such as $2.5 million. Less than $1 million, only 26% of listings have the five. Five is a common default number when people end their price listing, Kolko says.
"Five does have a special status in our minds," Thomas says. "We see it as the midpoint on the one to 10 scale, and we tend to spontaneously compare any single digit as higher or lower than five."
After homeowners arrive at an approximate value of their house, they can fine-tune the price by changing the numerical pattern, Thomas says.
Using precise numbers can give the sense of a bargain, he says, because precise numbers are usually used for lower-cost purchases, such as a grapefruit, while round numbers are reserved for bigger purchases.
"You can list a house for $500,000, or you can list it for $505,550," he says. "The second one seems like a better deal."
But the strategy can backfire if the number is too precise. A sale price of $1,328,972, for example, can turn potential buyers away, Cooke says. Because that kind of "bizarre" number isn't used often in daily life, it seems harder to work with, and people may subconsciously reject using it.
For some, lucky numbers are purely a way to stand out in the real-estate scene. Triple sevens are three times more common in Nevada than in the rest of the country. But Tina Ott, who works with her family at the Coldwell Banker Woodbury office in Minnesota, has been listing homes with the lucky trio since 1995.
"Instead of $319,900, we'll do $319,777," she says.
The strategy works in two ways: It places the 777 listings before the 999s, when listed by increasing price, and it also puts clients at ease in what can be a stressful process.
"When we're getting ready to get to the pricing part, which can be a tense subject, it helps soften the process," Ott says. "We try to make it a little lighter by asking, 'Shall we try our luck?'"
Address also matters
The impact of numbers goes beyond pricing. The street address matters, too.
Fortin says buyers paid a premium of 2% to 3% for homes prices that ended with an eight, while sellers had to accept a 2% discount if they were selling a house that ended with a four. The trend was most pronounced among luxury homes.
"It's a luxury to get that number. It's considered to be prestigious," she says.
Chang explains the thinking: "If you have a listing, and the address is 180, you know Asian buyers will be very interested in the house because it's so hard to change the address."
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