Setting the right asking price has always involved balancing vendor expectations against market conditions, but new research suggests the consequences of getting that balance wrong extend well beyond the number of buyers through the door.
The initial asking price can influence how buyers assess value, determine where negotiations begin and shape perceptions of a property throughout the campaign, while even experienced property professionals are not immune to the psychological biases that influence these decisions.
Four separate pieces of research published in 2026, including an economic study examining bidding behaviour, an investigation into price anchoring among property professionals, Australian transaction data and an analysis from Savills, offer fresh insight into the relationship between pricing strategy and sales outcomes.
Together, they raise an important question for agents: does attracting more buyers necessarily create a better result for the vendor, or can the price used to generate that interest ultimately work against the campaign?
More competition doesn’t always mean a higher price
One of the most significant findings comes from a 2026 study published in the European Economic Review, which challenges the assumption that deliberately positioning a property below its estimated market value will necessarily produce a stronger sale result.
The research examined bidding records and transaction-level data to understand how asking prices influence buyer participation and final outcomes.
The four researchers defined a price markdown as an asking price below a publicly observed estimate of the property’s market value, allowing them to investigate what happens when a property enters the market at a lower price than that benchmark.
Their findings showed that lower asking prices attracted more bidders, supporting the familiar argument that competitive pricing can increase buyer participation.
However, those additional bidders also submitted lower opening offers, and the net result was a smaller difference between the final sale price and the property’s estimated market value.
As the researchers explained, “a mark-down implies more bidders, but lower opening bids.”
The findings suggest that the direct influence of the asking price on the expected selling price may be more significant than the indirect benefit of attracting additional buyers.
This creates an important distinction between generating competition and generating value, particularly when a campaign strategy relies on a lower asking price to encourage greater enquiry.
While attracting additional buyers may increase activity, the research indicates that those buyers can also enter negotiations with lower expectations about what the property is worth.
The study also considered the potential conflict between the interests of sellers and agents when balancing the prospect of a higher selling price against a longer marketing period, adding another dimension to discussions about how pricing recommendations are developed.
Importantly, the research does not establish that pricing below market value will produce a worse outcome in every campaign, but it challenges the idea that additional buyer competition automatically translates into a higher selling price.
Why the first number matters
The influence of the initial asking price becomes even more significant when considered alongside another 2026 study examining the psychological phenomenon known as anchoring.
Published in Real Estate Management and Valuation, the research examined whether property professionals could avoid being influenced by an initial reference price when assessing a property’s value.
Those researchers surveyed 170 property professionals, including valuers, brokers, property managers and academics, using a simplified apartment valuation exercise.
The study found evidence of anchoring across every professional group, regardless of educational background, years of experience or the type of property services they provided.
Researchers reported an anchoring index of 46 per cent, demonstrating a substantial influence from the reference values used in the study.
They concluded that “expertise in real estate market does not guarantee unbiased assessment”.
Anchoring occurs when people place disproportionate weight on an initial piece of information when making subsequent judgements, even when other relevant evidence is available.
In real estate, that initial reference point might be an advertised asking price, a vendor’s preferred figure, a previous appraisal or the price of a comparable property.
For buyers, the asking price can become a starting point for assessing whether a property represents value, while for agents, an owner’s expectations or an earlier price assessment may influence subsequent recommendations.
The findings are particularly relevant because the participants were property professionals rather than inexperienced consumers, suggesting that familiarity with the market does not necessarily eliminate cognitive bias.
Although the study involved a simplified valuation exercise in Poland and should not be treated as a direct measure of Australian agent behaviour, it reinforces the importance of independent market evidence when preparing appraisals and reviewing pricing decisions.
It also raises questions about how agents manage vendor expectations when an owner’s preferred price becomes the reference point around which the entire campaign is built.
What more than 427,000 Australian sales reveal
While the international studies examine the psychological and economic mechanisms behind pricing decisions, Australian research from property data company Microburbs provides a local perspective on the relationship between advertised prices and final sale results.
Its 2026 analysis, authored by Luke Metcalfe, examined 427,447 Australian property transactions recorded between June 2024 and February 2026, tracking 31,208 agents with at least three recorded sales.
The research found that 77.4 per cent of tracked agents had a median advertised price below their final sale prices, with the typical agent-level gap reported at 3.5 per cent.
On a property selling for approximately $1 million, a 3.5 per cent difference represents around $35,000, illustrating the potential gap between the initial price signal received by buyers and the eventual transaction result.
The difference was more pronounced in some markets, with Sydney’s Inner West recording a median gap of 7.9 per cent, followed by Adelaide South at 7.7 per cent.
Microburbs also found that auction properties sold 8.4 per cent above their guide prices at the median, compared with 2 per cent for properties marketed with a listed price.
The research identified larger discrepancies at higher price points, with properties selling between $2 million and $3 million recording a median gap of 5.1 per cent.
These findings illustrate how the relationship between advertised prices and eventual sale prices can vary considerably depending on location, property value and method of sale.
However, the distinction between a price guide and a final sale price is important.
A property selling above its advertised guide does not, by itself, establish unlawful underquoting, particularly where competition, changing market conditions or new information influence the final result.
The Microburbs analysis measured differences between initial advertised prices and completed transactions, rather than establishing what agents reasonably expected properties to achieve when those prices were communicated.
Its methodology also did not capture price-guide revisions made during campaigns, while auction guides and private treaty asking prices were included in the same broader analysis.
Nevertheless, the findings highlight the importance of the initial asking price as a signal to prospective buyers, particularly in markets where the eventual sale price can differ significantly from the figure used to attract initial interest.
The danger of pricing too high
While lower asking prices can influence where negotiations begin, setting the price too high creates a different psychological challenge, particularly when properties remain on the market longer than buyers expect.
In an October 2026 analysis, Savills examined the pricing decisions facing vendors in the UK’s prime residential market and the consequences of asking prices that fail to generate sufficient buyer interest.
The research considered how market conditions influence the risks associated with ambitious asking prices, particularly when buyers have greater negotiating power and less urgency to make a decision.
In a rising market, an optimistic asking price may eventually be supported by improving conditions, but in a weaker market, the same strategy can result in limited early interest and a prolonged marketing campaign.
Savills also highlighted the risk that properties remaining unsold for extended periods can develop a negative perception among prospective buyers, who may begin questioning why the property has failed to attract an acceptable offer.
The analysis observed that “logic and seller psychology do not always go hand in hand”.
This creates a psychological problem for vendors and agents because the property’s time on market can itself become part of the buyer’s assessment of value.
A home that initially appeared desirable may begin attracting greater scrutiny as its campaign continues, particularly if price reductions follow an extended period without a transaction.
The challenge is not simply convincing a vendor to accept a lower asking price, but explaining how the relationship between price, buyer attention and market timing can change throughout the campaign.
Savills’ analysis focused on the UK prime residential market and properties that successfully sold, rather than withdrawn listings, so its findings should not be generalised to every Australian property market. However, the broader issue is relevant to Australian agents navigating more selective buyers and greater sensitivity around price expectations.
Why pricing strategy matters more in a changing market
The significance of these findings becomes clearer when considered together, particularly as Australian agents respond to changing buyer sentiment and more challenging negotiations in parts of the market.
A lower asking price may attract additional enquiry and encourage more people to participate, but the economic research suggests it can also influence the level at which buyers begin bidding.
An ambitious asking price may protect a vendor’s preferred figure initially, but Savills’ analysis highlights the risk of reduced early interest and a campaign that becomes increasingly difficult to reposition.
Meanwhile, the anchoring research suggests property professionals can be influenced by the first price they encounter, even when subsequent evidence indicates that a different assessment may be appropriate.
These findings do not establish a single ideal pricing strategy, nor do they suggest that every property should be marketed at its estimated market value.
Rather, they demonstrate why pricing decisions need to account for the interaction between market evidence, buyer expectations, vendor motivation and the way a property is presented throughout its campaign.
For agents, that may mean placing greater emphasis on explaining the reasoning behind a recommended asking price, testing assumptions against comparable sales and reviewing buyer feedback without allowing an initial figure to dominate subsequent decisions.
It also reinforces the distinction between a campaign that generates substantial activity and one that produces the strongest achievable outcome for the seller.
Buyer numbers, inspection attendance and enquiry levels remain useful measures of market engagement, but they do not necessarily provide a complete picture of whether the initial pricing strategy is delivering the best result.
Ultimately, the latest research suggests that asking prices do more than communicate what a vendor hopes to achieve.
They can influence how buyers interpret value, establish the starting point for negotiations and affect the way a property is perceived as the campaign progresses.
For real estate professionals, understanding those psychological influences may be just as important as understanding the comparable sales, because the challenge is not simply finding a price that attracts attention, but identifying a strategy that turns genuine buyer interest into the best possible outcome for the vendor.