Price bands are not 'range pricing', as used so effectively by Broker Bryant. Price bands are another way of gauging your inventory and absorption rates in different price breaks.
Tonight I have been preparing a market analysis for a property in Huntersville NC (just north of Charlotte, on the south end of Lake Norman). Pretty hot market overall, new construction is handled pretty tightly by the town since they don't want the town to become a sea of concrete.
The property in question is scheduled to be completed next month. My buyers need to sell it as soon as it's complete, since they have already been transferred back out of town. The builder isn't going to let them out of the contract without a hefty penalty, and since the overall market is up since they contracted, we'll turn around and list the house and they may even break a profit!
Pricing new construction is a crap shoot at best (pardon the expression, it's one of the ones I can't seem to do without), since you're having to account for the fact that technically it's not new, once someone besides the builder owns it, account for what resales in the neighborhood are selling for, and account for what the builder is currently charging.
Every pricing recommendation I make to sellers is in a range, since real estate pricing is not an exact science. Where you fall in the range depends on your floorplan, neighborhood, location, condition. And when you're competing with new construction, you'd better be just under what the builder would be charging-because the scent of new sheetrock is positively addictive to buyers and they will take the new toilet seats over the used ones any day of the week! (at least, that's true in the Charlotte NC market, where new construction accounts for almost half of our annual real estate closings)
So this house is shaking out somewhere around $350,000.
I ran my State of the Market report for the price band of $300m to $350m in Huntersville, and also from $350m to $400m. The difference is STAGGERING.
In the first band, 1.7 months of inventory, selling at 98.2% of list price.
In the second band, 9.1 months of inventory, selling at 97.9% of list price.
What does this tell the intelligent seller? You want to be in the first price band. Why? The buyers are THERE. You have a ton of competition and fewer buyers in the $350m-$400m range, and it's going to take longer to sell. This is the difference between pricing at $349,900 and $351,000. Being discovered by buyers. After all, to buy you, they have to see you!
And a fact that makes this even more pertinent-in the $350m-$400m price band, the average sale price was $350m. If you think you're going to squeeze the market or squeeze buyers to pay more than market, check the statistics first.