As some of you may remember I was a HUGE fan of Range Pricing for many years. When we first opened Tutas Towne Realty 13 years ago Range Pricing was our UVP (Unigue Value Proposition).
I haven't used Range Pricing since the market changed in late 2006. It made a lot of sense when the market was moving upward. It doesn't make sense today.
You can see by the comments in this article that many agents didn't get it and some buyers didn't like it. But none the less it worked. My properties sold quicker and for more money using this technique. Fortunately for me I worked for the seller and didn't really care what the agents or buyers thought. I just wanted to sell the property for my seller.
In my market right now properties are selling on average for 102% of the asking price. So it's really no different than when we used Range Pricing. Back then, 2006 and earlier, my properties were selling for almost 104% of asking price.
In the current market, where banks are pretty much controlling things, the technique being used is pricing low and creating bidding wars. It's like the old days of Range Pricing. The only difference is there is no top of the "Range" being mentioned.
Foreclosures and Short Sales are now selling with multiple offers to the highest bidder. What I was doing 15 years ago, that was very controversial then, is now the norm. Funny how that happens. I guess we were just way ahead of our time.
My advice to buyers now is the same as it was then. Make your offer based on the value of the property NOT based on the asking price. The asking price doesn't mean squat. It could be too low or it could be way high. Have your agent do an analysis on the property and then submit an offer that has a chance of getting accepted.
Buyers who base their offers on asking price instead of the value of the property will end up without a property to buy. This is true in ANY market.
By the way here's a link to a market analysis I did for one of our buyers. He was well informed and his offer was accepted. What say you?
Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.
Want to find out more? www.CentralFloridaShortSales.com
***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.
Copyright © 2010 http://www.brokerbryant.com/ | All Rights Reserved
Buyers around here don't seem to like it much either. Last week when we had a multiple offer going on an REO and asked each of the 5 buyers for highest and best one actually came in 30,000 below list. His agent explained to him that the house would not be selling below list, but he thought she was "out of her gourd". And while it's not closed yet, so not a matter of public record I can't wait for him to find out how much over list we sold this listing for in the end. But he said... "I'm not playing those games" He also isn't going to be the owner of this lake house either.
Resrved for TLW...if she ever shows up :)
Tammy. I guess while buyers are trying to figure it out we'll just keep selling properties :)
It's tough for buyers. In the REO listed private remarks, I'm seeing more "Buyer to pay appraisal difference if lower than offer price" or similar.
I do not usually do CMAs for my buyers - just verbally, and perhaps meet and go over the comparables. It's a really nice touch to do a full CMA like you have here... Thanks, Bryant!
Bryant - It's all good as far as I'm concerned. The prices moving up need to happen.
Wow, BB. That's one complete CMA. I like how you present the same information but in a different format. You never know which format clients will like the most. More importantly, it's easier to grasp information when it's presented a couple of ways and repetitively. -- Tanya in Montreal
As the banks drum up business by low balling their own properties, the feeding frenzy begins. A sucker born every day. Glad your clients used you. They need a tempered approach. i do the same
You are spot on as the banks know we have plenty of buyers and they do price them, most of the time, to create multiple offers. I still get agents who want to lowball and then explain why they are coming in low. Oh well !!!!! Liked the market analysis you did for your buyer.
I couldn't agree more. The day of the "low-ball" offer is over. The banks are getting wiser. Perhaps because the Superstars are giving them the business? Telling them that we know more than they do. Getting a good offer is just the start, keeping the offer is now the challenge.
This information is absolutley critical for buyers to understand. The problem I have sometimes is that buyers think they can lowball the bank and just let the bank counter offer. As we all know, the bank is only going to play ball with the highest and best offer. The rest of the offers are just rejected out of hand. It's almost like buying a house at a silent auction. You never know what the other investor is going to offer so you have to be ready to put in a decent offer or all you've done is waste time.
From the desk of David Dee,
BB, great suggestions as I have seen short sales listings where it was ridiculously underpriced by over 70k! They had multiple offers as anyone can see that it was underpriced. The main thing to do is to make sure to check the market value when placing the offers.
Yup, sellers set listed prices. Buyers set selling prices.....and many know more about the market than sellers - because they have been out looking.
A seller needs an agent just to be playing even.
Absolutely 200% right on Bryant. Unfortunately many novice buyers and some who've read a few too many 'how to get rich in real estate' books just don't understand, even after you show them compelling evidence.
TLW is having too much fun on Facebook. It is fun to see all her antics there. You are blessed to have her in your life. I know you use mlxchange. I went to scribed and took a look and saw some of the ways of reporting that you are doing, and I will go make sure those forms are on mine.
Thanks BB, you are so helpful !
Hey!!! Where did Billie go?
Bryant, this makes sense on so many different levels. My question for you is, at what point to you as a listing agent encourage buyers to get a value opinion and make their offer based on that? I think that in states where listing agents have fiduciary responsibilities to the seller, telling buyers to have their agent perform a CMA on the property they wish to purchase may not fly...but it is a very interesting concept.
It's hard to believe that at least on the low end properties that we are basically in a seller's market. Pretty crazy the wild swings of the last few years. Highest and best seems like it is the norm anymore.
I guess you really are ahead of your time.
:0
Bryant - I see a lot of properties incorrectly priced by agents thereby leading to higher sales prices in our area, especially on short sales. Another problem I run into is that buyers want to "steal" something today. Because Florida is public record, they come armed with facts and figures from the tax rolls before you're even ready to make an offer.
Offers greater than list price are good. I think the key is pricing to get the offer. No one has to sell at the list price.
I just laugh at all of the creative pricing strategies that agents use on these short sales. The bottom line is the BPO and that's that.
BB- I absolutely agree with you! My market doesn't have a huge number of short sales, but having a market analysis performed for a buyer is key in any offer situation. I always do so, and any agent that represents a buyer should. As for foreclosure/short sales, Nathan's comments are my thoughts, too. Thanks for sharing your info!
I totally agree--list price means squat. Educating buyers about that fact is somewhat of an uphill battle but once they get it things start moving. Buyers around here have somehow been under the misconception that declining prices mean "buyer's market", but in reality multiple offers have become the norm and there's always a lot of competition for the good properties.
Missy...Thank you. It's so much more personal over there. It reminds me of the way AR was many years ago. I miss that :)
James...I'm here. Sort of :)
Hun...Whatever :)
TLW...ROAR!
I have buyers that say their not playing that game as well. After losing a few properties, they ask me where they can get their game face.