Study: The Word ‘Bargain’ Isn’t Such a Bargain

January 11, 2016 | Comments Off on Study: The Word ‘Bargain’ Isn’t Such a Bargain

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 the real estate website Trulia found that in 45 of the markets, listings that contained the word “bargain” – or similar word like “deal” or “value” – didn’t show 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., the study showed.

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 could 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 shows that labels that signal the home owner 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, but the home does tend to spend more 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 amenities in the home that may increase buyers’ perceived value of a home. The 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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