When you come to sell your property you will be presented with several different pricing methods by different agents.
A small number will suggest not putting a price on the property. Their thinking is that if there is no price then the buyers have to ring and enquire. The agent can then get there details. The problem is that buyers find it annoying and research published by a leading real estate web site shows over 60% of buyers overlook properties that don’t have a price.
Then there is the fixed price method, common in many private sales. This is fine if there is only a small negotiating buffer built into the price. The problem is that there are often many layers put on top of the market value that the comparable sales reflect. There is the wishful layer of the vendor (which is understandable), there is the layer of the agent who overpriced it to get the listing and there is the friend/relative layer, who responded at a BBQ you were holding, by saying “your crazy it’s worth heaps more than that mate”, when you told him what the highest quoting agent said. This results in the property sitting on the market for a long time and getting less than what the original comparable sales said.
Then there is price ranging, commonly seen used in Auctions. We also use it in private sales (with a deadline for offers to be submitted). This works best when there is an upper and lower figure quoted. By law you are allowed a 10% range but often its smaller. Price ranging, in our opinion, works well because it can cater to buyers who have various budgets and encourages them to inspect the property. To form an emotional connection to a property, a buyer must inspect it first. No one knows the exact figure a property will sell for at the start of a campaign but based on comparable sales can usually predict a range it is likely to. A price range can also cater for the vendors aspirational price as well as what the comparable sales reflect. This is important because the buyers all have access to this information now and will make offers based on these. More buyers mean more competition which then results in a premium price.