Buyer Feedback Ranging has been around now for some years. It is considered by many to be the fairest way for both seller and buyer to begin negotiations.
Rather than the seller placing an unreasonably high asking price on the property that does little more than discourage buyers from inspecting, a wider “expectation” range is used. This Buyer Feedback Range is usually based around the average market prices in the area and it allows the purchaser to make an offer, within the range, at a price that he or she thinks is reasonable. This price may either be accepted immediately or will become the basis for negotiations to begin.
Rather than buyers missing out on properties because the seller is asking too much, Buyer Feedback Ranging opens up the market place. It allows the buyer to not only see properties that would normally be missed, but also to start negotiations based on where they think the property compares rather than at the sellers price. Ultimately, this is good for the seller because buyer inquiry is increased with market demand depicting the price and for the buyer because they get to see more properties and negotiate from a level playing field.
With Buyer Feedback Ranging, the general guide is to compare the property to others you have seen and make an offer based on what you think it is worth rather than just starting at the bottom of the range.
The buyer feedback range is a method of marketing that removes the risk of over-pricing and of under-pricing a property.
It is a method of marketing that – when understood and used correctly by salespeople with the correct documentation – appeals to a much larger pool of buyers than one fixed price and increases the chance of multiple offers.
An agency’s range starts about eight per cent below and eight per cent above the vendor’s expectations.
The beauty in this method is that when a buyer asks how low the owner will go, we simply say, ‘They’re looking for offers within the asking range – what would you pay for the home?’
If a listing is comparable to others in the market and is priced accordingly, it just adds more stock to the market and therefore weakens the vendor’s position.
Another problem with setting a price based on past sales is that the agent has no way of knowing what the vendors’ motivation was when they sold or how emotionally attached the buyers were when they agreed the purchase.
[The vendor] didn’t want a wide range, so it was listed at $260,000 to $285,000 and didn’t attract a single buyer. We changed the price to $245,000 to $285,000, despite his vehement fears of under-selling, and within a week attracted three buyers which yielded two offers.
“The successful buyer offered in excess of $20,000 above the bottom range as his first offer, which was accepted by the seller.” Source REB Online