What?! Since when do folks think range pricing is a good thing for real estate? What buyer in their right mind would actually offer anything over the bottom end of the range? What am I missing here?
Sorry, I’m ahead of myself. The Detroit News this weekend had this article on range pricing coming to SE Michigan. Range pricing is simply a range of prices within which a home seller will consider offers.
My original question stands; can anyone imagine a situation where the potential buyers offer more than the low end of the price range? Secondly, since many folks who are unsuccessful in selling their homes place the blame squarely on their Realtor(R), why are folks now thinking of allowing us off the hook?
While the first question is rhetorical, the second truly is the issue I’ve got with this ‘craze.’ Agents worth their salt, will do the necessary research on the market and present this to their sellers. As an agent, it can be very difficult explaining why a seller’s home will sell for $30,000 less than they believe the home is worth or even what they owe on the mortgage. When the home is listed at what the owner believes is the correct price, not the market price, and the home fails to sell, the Realtor(R) ultimately takes it on the chin. Sellers can become angry, upset and even hostile towards agents that ceded to their client’s wishes regarding the list price.
Letting Realtors(R) Off the Hook
With range pricing, the Realtor(R) is allowed to be sloppy in their analysis and pricing. If the market value of a home is $200,000 and the Realtor(R) is unable to convince the sellers of that sales price, why would the Realtor(R) be able to convince them to use a range of $200,000 – $225,000? Specifically because no buyer in their right mind would offer more than the bottom end of the range, this allows the Realtor(R) to shift the responsibility of a failed listing onto the shoulders of the seller.
It is the fiduciary responsibility of a Realtor(R) to advise and consult towards the goals of their client. Allowing a client to knowingly over-price their home is a lack of fiduciary responsibility. Range pricing removes part of the fiduciary responsibility the Realtor(R) is required to exercise.
Which bring us back to the rhetorical question; why would any buyer offer more than the low end of the range? If, in fact, this gives buyer’s a warm fuzzy that these particular sellers will negotiate, what is to stop them from throwing in low ball offers? Regardless of range pricing, the current buyer’s market that we are experiencing, and its corresponding media coverage, has shown that buyer’s are disregarding the list price or value and throwing in low ball offers anyway.
From the article: “I think range pricing is a marketing strategy that may generate some interest for various realty companies that are looking for ways to be different than another company,” said Marcus Allen, Florida Atlantic University real estate professor and a coauthor of the study. “It’s just another marketing tool.”
I concur. Range pricing is simply a marketing tool with the added benefit of letting the agent off the hook when the property doesn’t sell.
Comments are open, feedback is welcomed!