You see it everywhere. Something is advertised at $9.99 rather than $10 or $97.50 rather than $100. When sellers back off the rounded number by a few cents or few dollars to make something look less expensive, it’s referred to as “charm” pricing.

Such pricing make sense for items sold at retail for a set price. But what about house prices? Does a seller gain anything by setting the listing price to seem lower than it actually is, such as $129,900 instead of $130,000? The January issue of the Real Estate Center’s quarterly magazine, Tierra Grande, tells what researchers discovered about giving real estate a “charming” price.

Marcus Allen of Florida Atlantic University and William Dare of Oklahoma State University did the research. Looking into previous work in the field, they discovered that charm pricing was found to have both positive and negative effects on the eventual sales price. So they focused on how charm pricing affected the difference between sales price and listing price.

They studied a large sample of home sales in the Fort Lauderdale metro area. They discovered that when charm pricing was used, homes tended to sell closer to the listing price than those offered at a rounded price.

Allen and Dare concluded that sellers who use charm pricing are indicating that the listing price is close to their reservation price (the lowest amount they will accept). Sellers appear to indicate the price is fixed, and they expect a minimum amount of bargaining.

“On the other hand, sellers who list homes with a rounded price seem to be indicating there is room for bargaining,” says Jack Harris, Ph.D., who monitors national real estate research for the Real Estate Center at Texas A&M. “They expect this price to be a mere starting point for negotiation. They need a round figure only to position the property in the range of comparable properties.

“A buyer knowing this might approach sellers differently depending on how the listing price is expressed.”