Pricing a home is one of the most critical decisions in the selling process. Yet, many agents rely on charm pricing—a technique that is more appropriate at the gas pump. Charm pricing, also known as psychological pricing, involves setting a price a little below a round number, such as $299,000 instead of $300,000, to make the price appear lower. While it’s a common strategy in retail, does it really work for real estate?

Increasingly, research and real-world experience suggest that charm pricing may be misleading, outdated, and even counterproductive for sellers.

What Is Charm Pricing?

Charm pricing is based on the idea that buyers perceive prices just below a round number as significantly lower than that next rounded number. A home priced at $249,000 might seem cheaper than one at $250,000, even though the difference is just $1,000.

But does this really hold up in a home-buying context? Unlike a quick retail purchase, a home is a major financial investment where buyers scrutinize pricing more carefully. Relying on psychological tricks rather than market-driven pricing may backfire.

Why Do Agents Use Charm Pricing?

Many real estate agents use charm pricing because they believe it attracts more buyers. Some argue that homes just under a major pricing threshold (e.g., $399,000 instead of $400,000) will appear in more online searches, giving the property more exposure. However, the opposite is often true, as I’ll explain in a later section.

Does charm pricing work for real estate?

While charm pricing might seem like a clever tactic, it has some downsides:

1. Buyers Are More Rational Than Retail Shoppers

A home purchase is not an impulsive decision. Unlike picking up a $19.99 gadget at a store, buying a home involves months of research, comparisons, and financial considerations. According to research from Brigham Young University, homebuyers don’t behave like retail shoppers: “The research showed that when it comes to buying real estate or other durable goods, you might want to consider paying more if it will push you over a threshold number because its perceived value will be greater in the future, resulting in more money from your investment in the long term if you resell.”

(BYU Research)

2. Charm Pricing Can Reduce Perceived Value

For mid-to-high-priced homes, charm pricing can create the impression of a bargain property rather than a quality investment. A home listed at $499,000 might attract budget-conscious buyers who expect a deal—while buyers looking for a premium home may skip it altogether.

3. It May Hurt Negotiations

Sellers who use charm pricing often think they are attracting more offers. In reality, they may be backing themselves into a corner:

• If a home is priced at $299,900, buyers might assume there is little room for negotiation and skip making an offer.
• A home listed at $300,000 or above gives sellers more flexibility to offer a price reduction or cover closing costs while still making a profit.

What Does the Data Say?

While charm pricing may create short-term appeal, research suggests it does not necessarily lead to higher offers or faster sales. Studies indicate that:

• Buyers view homes priced at round numbers as more valuable and are more likely to offer competitive bids.
• In some markets, homes priced just below round numbers sell for less overall than those priced at solid, whole numbers.

(BYU Research)

Now, let’s take a closer look at some East Tennessee data. The histogram below represents single-family homes sold in Northeast TN via the MLS between January 1, 2020, and March 11, 2025, with an original list price between $395,000 and $400,000. (For reference, the current median home price in the U.S. is just over $400,000.)

Homes that were originally listed at exactly $400,000 are shown in blue, while those priced just under $400,000 appear in orange. You can click on the graph below to zoom in and explore more details.

See how the orange line is slightly to the left of the blue line? That’s because homes originally priced at $400,000 sold faster. In fact, the mean days on market for the $400,000 group was 64.6 days, compared to 83.1 days for the charm-priced group. The median days on market were 44 days and 57 days, respectively. A Mann-Whitney U test (used since the data is not normally distributed) confirms that this difference is statistically significant.

Want your $400K home to sell faster? Avoid charm pricing.

Here’s my theory: Homes priced at round numbers are included in searches at both ends, while charm-priced homes aren’t. Buyers typically search in price brackets, like $400,000 – $450,000.

Take a look—if I go to Zillow and set the minimum price to $400,000 and the maximum to $500,000, here’s what happens:

There are $400,000 properties:

but also $500,000 properties:

Pricing at a nice round number like $500,000 ensures that your property appears in searches where $500,000 is the minimum as well as those where $500,000 is the maximum—effectively doubling its visibility.

What’s wild is that the myth that pricing just below a round number increases search visibility continues to spread across the internet—despite the data saying otherwise.

(HomeLight)

Want to appear in more searches? Use round numbers.

The Bottom Line: Avoid Charm Pricing

In today’s market, buyers are savvy, price-conscious, and focused on real value—not psychological tricks. If you’re selling a home, consider:

• Pricing based on market data.
• Using whole, rounded numbers to project confidence and value.
• Leaving room for negotiation rather than trying to make the price seem lower than it is.

Ultimately, the best pricing strategy is one grounded in data, not psychology.