Why Range Pricing Of Homes Is A Suckers Bet For Sellers
Range Pricing is a pretty simple concept. Instead of listing the home for $399,990 you put the price as $395,000 to $425,000 to bring in a broader range of buyers. That is theory at least for proponents of range pricing.
In my humble opinion, range pricing is a suckers bet for those listing their home. The odds of someone walking up and making an offer near the top end of the range is slim to none.
Instead what you have announced is the floor pricing of what you are offering and that allows buyers to start negotiating off of that. I mean seriously, especially in a down market would you offer anything near the top of a deal.
One would be better off pricing the home below market and hoping that a bidding war starts. And since the market is saturated that is a very risky strategy unto itself.
My best bet is to price the home fairly and honestly and invest in getting the home in great shape. That is your best chance to sell in todays marketplace. Forget the gimmicks…
But Ron Sparks, managing vice president of Coldwell Banker Bain, said value range pricing could confuse buyers and give sellers false hope of a better price.
“Truth is, there are agents who aren’t particularly effective at pricing homes, or convincing sellers of true market value,” he said. “Using (value range marketing) allows them to set the ‘floor’ at something close to market value, while it helps address the common suggestion from sellers to ‘just try it at a higher price.’ ” via Seattle PI
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Comment by Tina on 19 August 2008:
Couldn’t agree with you more! We don’t see range pricing in the Phoenix, AZ area. At least not yet. And I sure hope we don’t. It’s confusing, misleading and just plain stupid! When I saw some listings in CA pulling this one, all I could do was shake my head…
Comment by Darren Kittleson on 20 August 2008:
I have to respectfully disagree with your post. I too, was not a fan of range pricing in it’s early days in our market (mid 1990’s) but have come to appreciate it as a tool and strategy for getting offers in an upside down market. Many of my top agents are utilizing this to get seller’s into a realistic price range in which to draw an offer. You are right, I’ve never seen the offer come in at the top of the range, however, I’ve seen agreement being reached between buyer and seller at a price higher than I would have imagined the house selling. I think it goes to show that when a buyer “goes to paper” there’s a certain level of commitment they’ve made toward acquiring the property and one that can many times be negotiated to a price with terms and conditions acceptable to both buyer and seller.
Just my 2 cents this morning. Love the blog!
Comment by Tom Royce on 20 August 2008:
Darren
I can see how it could lead to a negotiating table, but overall range pricing feels icky (real professional terminology) to me. Sort of like when my wife comes out of the closet with a less than flattering outfit and I tell her she looks great. Gets me out of hot water initially but if she figures it out later she is less than pleased that I was not honest with her.
Comment by Santa Barbara Real Estate Voice on 20 August 2008:
I agree as well that this strategy does not seem to appealing. This pricing strategy apparently is all the rage in Australia and a few other countries, but I have never seen the light. We have seen a few pop up here in the Santa Barbara area and I endulged myself in listening for 20 minutes about the theory from the listing agent…but I still do not feel this benefits the seller in anyway. Just my thoughts.
Comment by VirtualToursWow@Twitter on 21 August 2008:
I’ve seen very few homes have range pricing, but when I did see it I immediately thought “bad idea”. I can see where this would have advantage in the relationship between agent and seller where they could not agree on how to price the home on the market and the range was done to get it on the market, but as a buyer, this is not so appealing. It does give buyers an idea of the playing field they are actually in, but it can also backfire and immediately put them off when they see how high they might have to go. It’s a 50/50 shot at best in marketing efforts. There are better marketing strategies to employ than this.
Comment by Jared Redland on 23 August 2008:
I have seen a few sites that offer land for sale like auctionparcels.com and sigmaprop.com. Are these sites for real? They have low prices and they don’t check credit. I want to buy a parcel in Washington but don’t know if it is legit?
Comment by Washington land for sale on 25 October 2008:
Thanks for your comment Jared. I assure you that the properties we offer are “for real”. We provide owner financing on Washington land and we will not even check your credit. We want to provide everyone an opportunity to own quality property without the hassle of banks or Realtors. If there is anything we can do to help please let us know.