DAYTON, Ohio – Jan. 14, 2016 – Real estate listings marketed as “bargains” aren’t always the big deals they claim to be. A new review of listings in the 100 largest housing markets by Trulia found that in 45 of the markets, listings that contained the word “bargain” – or a similar word like “deal” or “value” – didn’t have any discount when compared to other homes for sale in the market.
Of the 55 other markets using the word “bargain” as a descriptor in listings, the study found the discount could be as little as 2.1 percent.
The word “bargain” tended to mean the most in Dayton, Ohio. Listing ads containing the word “bargain” offered on average a 19.6 percent discount. Additional markets where the word “bargain” tended to carry the most weight: Toledo, Ohio; Knoxville, Tenn.; Buffalo, N.Y.; Omaha, Neb.; Baltimore; New Haven, Conn.; Camden, N.J.; Madison, Wis.; and Fairfield County, Conn.
Bennie Waller, professor of finance and real estate at Longwood University in Farmville, Va., says that the word “bargain” is used as an embellishment to try to get the attention of buyers – but it can backfire. Descriptors like “price reduced” also may be used on listings, even when the price has dropped just a couple hundred dollars.
Yet, Waller’s research finds labels that signal the homeowner is ready to make a deal – such as “motivated seller” or “bring offer” – often don’t mean that the home’s selling price will be less than the listing price. However, those descriptions do sometimes lead to a home that spends less time on the market.
Waller’s research, which he co-authored in the Journal of Housing Research, showed that homes could sell for higher when they had more “factually verifiable” property characteristics in the listing – like an extensive list of details or home amenities that may increase a buyers’ perceived value of a home. Waller’s study culled data from a south central Virginia multiple-listing service between March 2000 and February 2009.
Source: “Don’t Let the Listing Fool You: That House Isn’t a Bargain,” MarketWatch (Jan. 7, 2016)
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