Just‐below pricing in real estate: Impact by price segment and market conditions

Abstract

AbstractMost prior studies of just‐below pricing have primarily focused on low‐stakes inconsequential consumer purchases, such as everyday household items. Using data from the Multiple Listing Service for the city of Savannah, Georgia, from 2006 through 2021, this study extends the more limited research on just‐below pricing for more consequential purchases, specifically housing. Beyond an examination into the general effectiveness of just‐below pricing in real estate, this study also explores the heterogeneous effects of its usage on sale price during different market conditions and in different market segments. The study shows that just‐below pricing is common in the real estate market, and it does have an impact on final sale price, working most effectively within cold real estate markets. Furthermore, it is found that just‐below pricing works best (though it is utilized least often) within low‐end price segments, while just‐below pricing can work against the seller in high‐end home price segments (though it is used most often in these segments).