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Agent Pricing logic?

Discussion in 'General Property Chat' started by Mr Dabolina, 21st Jan, 2016.

  1. Mr Dabolina

    Mr Dabolina Well-Known Member

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    So I was looking through properties in SA and came across a lot of price range pricing for example: $200-$220K.

    I don't quite understand the logic behind this and wasn't sure if I have missed something..I mean as if anyone would actually offer the higher price. Is there some psychological reason behind this price range i.e. they have found that offers are not low ball when this type of pricing strategy is used..?

    Curious to get everyone's thoughts esp. @D.T. being from SA himself :)
     
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  2. thatbum

    thatbum Well-Known Member

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    Yes I suspect its to subconsciously influence buyers by inferring its more 'okay' to offer more than $200k.

    Whereas it might be more of a psychological barrier for a buyer to offer more than $200k if "$200k" was just the sole listing price.

    I reckon it would work too.

    The other possibility is that its to please the owner.
     
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  3. D.T.

    D.T. Adelaide Property Manager Business Member

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    SA legislation specifies a 10% max on the price ranges.

    It probably works, the vendor wants the top end and the buyer wants the bottom end so they prob end up in the middle.

    For my own purchases I've offered under the range, using my own assessment of value ignoring theirs.
     
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  4. HUGH72

    HUGH72 Well-Known Member

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    Total mystery to me, I have assumed that the range is to condition the purchaser to make an offer in the range rather than under which is what you might expect with a single figure listed.
    The market will determine fair value and if there are no takers the range moves lower, there's so many factors at play regarding the vendors motivations. The previous purchase price is also important if they purchased in the last 5 years as no one likes to sell at a loss.
     
  5. joel

    joel Well-Known Member

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    Just get a contract or offer form and write "200-220k" as the purchase price.
     
  6. Perthguy

    Perthguy Well-Known Member

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    It might work with some people and not with others. It certainly wouldn't work with me. I would offer $180k :p

    I have seen in WA where someone offered within the range and got knocked back. That's inexplicable.
     
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  7. D.T.

    D.T. Adelaide Property Manager Business Member

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    Surely you'd ask why its advertised for a figure that's unacceptable? Comes under the ACL as bait advertising.

    Sales agents are pretty dodgy, that's part of the reason why I don't want any in my company.
     
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  8. Rugrat

    Rugrat Well-Known Member

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    I see that here in canberra a lot. It was one of the suggestions our REA suggested to us. It generally means that the seller wants the top price for it but is probably ok with somewhere in the middle. The bottom price is not really anything except to try and draw buyers in that are looking for that lower price but may have room to wriggle up a bit.
    Just like pricing at $xyz+ or offers over $xyz. They are just fishing for the wider market.

    A lot of states wont allow underquoting like that. Not sure of the actual laws here in ACT, but a huge portion of advertised prices are 'offers over' or 'price range'.

    They basically just dont want to give anything away to the buyer, hoping to get the best price.
     
  9. Perthguy

    Perthguy Well-Known Member

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    I guess the purchaser had a choice of picking a fight with the agent or negotiating within the price range. They chose the latter.
     
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  10. Esh

    Esh Well-Known Member

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    Doesn't make sense to me either. Either have a listed price or a guide
     
  11. Xenia

    Xenia Adelaide Property Manager Business Member

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    People often offer the higher price.
     
  12. tilt10

    tilt10 Well-Known Member

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    Range pricing is vendor crunching.
    No sane person would sell there property with a range price.
    The buyer is always looking at below the bottom price.and agents know it.
    A far better way is to offer offers above which leaves the top end open and the vendor can't be crunched. Agents know this so they would be happy with the see the new NSW legislation which prohibits offers above. Really dumb. I wouldn't be surprised if NSW agents had something to do with this legislation being bought in.
     
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  13. wylie

    wylie Moderator Staff Member

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    When I see a range, I think that the bottom figure is the one I'd offer (or less), depending on the property and the price of course. I'f never understood why anyone would start at the higher end of the range, unless it was a really hot market.
     
  14. jpcashflow

    jpcashflow Well-Known Member Business Member

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    Hi,
    Being an ex agent my self, this method is what we call a "price range". I would say the owner usually wants some where in between that price range.

    But believe it or not, there are some buyers who may pay above the price range.

    You may also discover that some vendors want less then what the price range is being advertised.