If you’re selling a house, ask your realtor to list it as a range

Says Psychology Today.

One advantage is obvious: Buyers scanning listings online usually set a minimum and maximum price. These are round numbers (often chosen from a menu on the listing site). In the example above, a buyer whose maximum price was $1 million would see a house listed at “$999,000 to $1,194,876,” but not a house listed at a single price higher than a million. (Of course, this depends on listing sites being able to handle price ranges.)

Another advantage of this trick is simple confusion. Just about everyone knows that a listing price of $X typically signals that the seller is willing to accept a good deal less than $X. In this market, few sane buyers are going to offer list price. Having two prices upsets this comfortable strategy. Do you offer the low price of the range? Less than the low price? Or do you make an offer somewhere in the range? Maybe you really, really want the house and want to make a preemptive offer. Do you offer the high price?

This suggestion still doesn’t get around the problem inherent in the behavioral economics diagnosis of the current housing market. Loss averse sellers don’t want to sell a property for less than they paid for it, or less than what they think it’s worth based on peak bubble prices. Whether she picks a range or a single price, the seller has to overcome the psychological hurdle or realizing that the value today isn’t the value yesterday.

Assorted links

1) Should perspective home buyers be required to watch a video about the pain of foreclosure before they qualify for a mortgage? Draft a budget? Pass an exam about loans?

2) Stefan Wobben reports on deceptive marketing defaults online; one for RyanAir and another for the Wifi at the Amsterdamn airport.

3) NIH is looking to give two $7.5 million grants to investigate health care nudges. Application here. Hat tip: Dan Goldstein.

4) Extremeness aversion and Starbucks coffee.

5) Before credit cards were accepted in cabs, New York riders averaged a 10 percent tip. Now that cabs allow cards, tips have jumped to an average of 22 percent. Hat tip: Steven Shechter.

A nudge forum on housing and credit

Jim Heskett of Harvard Business School asks two questions over at HBS Working Knowledge.

1) Can housing and credit be “nudged” back to health?

2) Did human frailty cause this crisis (as Sunstein and Thaler have suggested)?

Readers weigh in here.

Hat tip: Mostly Economics.