Price Range Selling
Are you considering selling property using Price Ranges, Buyer Enquiry Ranges, Offers Over Considered, Price Guide, Offers From? Not 100% sure how to go about it? Not sure which way to go? Maybe you have seen some agents already and are receiving conflicting and confusing advice about it all. Looking for some straight answers? RECNZ is an independent body set up to provide independent and impartial real estate advice to home sellers. The team at RECNZ have over 30 years hands on experience in real estate and have assisted people with thousands of property sales and purchases.
Price range selling is where homes are not offered at a set price but rather in a range.
For example, if a home that has a market value of around $350,000 was for sale using a price range, the agent would suggest that it be advertised for a range of say $325,000 to $375,000.
The theory behind this method of marketing is that lots of buyers will be attracted by the lower price, and once they inspect the home and fall in love with the home, they will happily pay the higher price! How smart is that!
But hang on... of course they love it at $25,000 below its market value, who wouldn't?
The reality of this system is now you have a buyer who wants to buy it for $25,000 below market value. Not only do they want to buy it $25,000 below market value, remember we suggested it, in most cases they only have the capacity to pay this $25,000 under.
How can the agent get the the buyer to pay more if the buyer does not have the capacity to do so? They might be able to squeeze another $5000 out of the buyer, but they are still $20,000 short.
This a problem created by the price range suggesting that the lower price would be considered.
The fundamental difference between the seller and the buyer is the seller wants the higher price and the buyer wants the lower price. Quite often most of the buyers are only able to afford the lower end of the range and that can result in a significantly lower selling price.
So why do agents suggest this method?
One reason can be to create activity, which gives the appearance they are doing a great job. From this activity you will almost certainly get some offers, of course they will be too low!
But, after hearing these low figures for a while you start to believe that perhaps this is really what your home is worth. This can be a false perception. But now that you are thinking that your home may be worth less because that is what the 'market' is telling you, it is now easier for the agent to talk you down and get you to accept a lower offer.
One thing to keep in mind when selling anything, never ask for less than you wish to receive!
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