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Thursday, May 7, 2015

A Buyer Asks: "I see 'range pricing' on a listing. What is that"

Range pricing is a marketing concept that crept over to Tucson from California a few years ago. It is designed to give the listing a greater spread of visibility in the MLS when searches are performed based on the price of homes.

The MLS listing will indicate a "range" of pricing, say from $200, 000 to $220,000. In such a case, the Tucson MLS requires us to put in the listing remarks that the “Seller will accept or counter offers between $200,000 and $220,000”

Does that mean that the Seller will automatically accept an offer in that range on their Tucson home? Not necessarily. The Seller will also be considering other aspects of the Buyer's offer, including financing, closing date and other variables. 

In practice, here is what I have found about "range pricing" and how people respond to it. Sellers tend to look at their range and remain focused on getting an offer at the upper end of the range. Buyers, on the other hand, look at the range and the "Seller will accept or counter..." language, and of course want to make an offer at the bottom of the range.

And in practice the Buyer can always make their initial offer below the bottom of the range price, and a smart Seller will still counter that offer. I have seen many sales where the eventual selling price was below the range indicated in the Tucson MLS listing.

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