RE/MAX Lighthouse Realty principal David Willis posted a 650-word letter on Facebook after his regional Western Australian agency was “slated on Facebook” for using a strategy called the ‘buyer feedback range’.
“Let me balance the argument: the buyer feedback range is a method of marketing that removes the risk of over-pricing and of under-pricing a property,” Mr Willis said in his post, which was published last week.
“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.”
Mr Willis said his 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?’”
Mr Willis said 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, according to Mr Willis.
Mr Willis said in his Facebook post that he sold a property on 19 January using the buyer feedback range after it had languished on the market for nine months with another agent.
“[The vendor] didn't want a wide range, so I 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,” he said.
“The successful buyer offered in excess of $20,000 above the bottom range as his first offer, which was accepted by the seller.”
RE/MAX Western Australia managing director Geoff Baldwin, who coaches agents on the buyer feedback range, has explained the strategy in a blog post.