Negotiations are often settled near the mid-point between a seller’s asking price and buyer’s counteroffer. Precise, rather than round asking prices are stronger anchors, resulting in agreements closer to the asking price. Because setting precise asking prices tends to favor sellers, real-estate agents frequently advise doing so. While the advice is beneficial in a buyer’s market where supply exceeds demand, in a seller’s market where demand exceeds supply, it can backfire. Three pre-registered studies demonstrate the backfiring precision effect. Study 1 reveals that a substantial amount of Dutch real-estate agents advise sellers to set precise asking prices, regardless of the market they operate in. Studies 2 and 3 show that in a seller’s market, setting precise prices is suboptimal as it leads to lower counteroffers. The estimated negative impact of precise asking prices in a heated housing markets such as Amsterdam, is estimated at thousands of Euros per deal.
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