Real Estate value range pricing is not that common in Massachusetts thankfully! The term value range pricing can also be known as “variable pricing”, “value range marketing” and “range pricing”.
So what is Real Estate value range pricing exactly? It is when you list a home for sale and rather than going out on the market at a set price you give a range in which the seller will consider an offer.
For example a home could have a value range price of $500,000 – $550,000. Before I get into why value range pricing is deceptive and nothing more than a marketing gimmick let me explain it’s origins. It was originally started here in the United States back in the mid 1990′s by Prudential Real Estate. The idea was borrowed from Australia. It caught on in some areas of the country most notably Southern California, Arizona, and Florida but was never used extensively here in the Massachusetts area.
In other parts of the country the Multiple listing service (MLS) is set up to handle value range pricing as a marketing option. Here in Massachusetts there is no such option. So how and why do Realtors use value range marketing?
When you list a home here in Massachusetts your only option is to select a list price. Using the above example, the Realtors that push this non-sense will list the home at $500,000 in the MLS but in the remarks it will say value range listed between $500,000 and $550,000. In other words the seller may consider offers between $500,000 and $550,000.
The goal is to get more eyes looking at the property that otherwise might not if an absolute price was chosen. Traffic and exposure they say. I say it is a bunch of poppy cock! I can not tell you the amount of times a buyer has called and asked me to show them a few homes where one of them is value range priced and the buyer does not know it. Most buyers don’t read every line of detail in a listing and often times it can be missed.
So what happens when that buyer who is qualified to spend $490,000 thinking they are looking at a $500,000 dollar home finds out the seller will only accept offers between $500,000 and $550,000? You guessed it they are usually pretty pissed off and start to question why a seller would price a home this way. More often than not the seller has been sold a bag of goods by the listing Realtor on why this is a great way to market a home. What good is traffic and exposure if the person looking at the home is not qualified to purchase? It is a waste of everyone’s time.
This kind of pricing strategy is perfect for the Realtor that doesn’t know how to price homes properly! Value range pricing should be re-named “I don’t know what the hell I am doing pricing”.
This works well for the Realtor who used to drop the price on nine out of ten homes they were marketing but has a fallback plan now. Not sure about the comparable sales? Hey lets just value range price it…Brilliant!
All this does is put confusion in the buyers mind. Using the above example again what if the home is worth less than $500,000? The seller could be expecting something in the upper end of the range and the buyer is thinking no way Jose. This kind of pricing strategy just gives sellers false hopes. In a down market how many buyers would ever even consider offering something in the upper end of the range. Not many. What value range pricing really amounts to is ” bait and switch marketing “.
Regardless of any range of price used to market a home a good buyers agent is going to pin point the market value for a buyer. A sellers best bet is to price their home properly and not rely on pricing gimmicks. In fact, I tell people all the time setting the right price is 80% of the marketing. If you come out at the wrong price you can have the most exposure of any home in your town and it is not going to matter.
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About the author: The above Real Estate information on Real Estate value range pricing was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.
Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service the following towns in Metrowest MA: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Franklin, Framingham, Grafton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, and Douglas.
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I completely agree with you Bill. It is a ridiculous concept that only disappoints everyone in the transaction, buyer, seller and agents (except maybe the listing agent because they don’t really care, all they are interested in is getting the listing.)
We don’t have that going on here either Bill, although it is an option in the mls fields. To me, it just gives the seller’s position away.
Catherine & Barb – There are so many reasons why value range pricing is just a big gimmick that does nothing to help the seller move their home. It just creates a lot of confusion especially when the MLS does not allow this kind of pricing.
Bill–Thanks for the great post. I wholeheartedly agree with you. I have only seen a few occasions that seem to merit a value range pricing strategy but mostly it just turns buyers off especially in our current market. It truly does seem like a bait and switch or a way to stroke the seller’s ego. The excellent agent will lay out the facts regarding the how and why of pricing and be less concerned about being liked. We are hired to sell not to be a new friend…
Kathy
Kathy – I agree with you completely and know that you have to deal with this kind of pricing far more often up in the Franklin/Wrentham area. I know there are a few agents that regularly use this pricing strategy. It is a really poor way of doing business especially when Realtors and their buyer clients hate it.
Bill – Thanks for the great article. Here in Oklahoma we don’t see that at all. Such a disservice to the seller. I guess in this case “Incompetence is the Mother of Invention”.
Regards
Ray you are lucky that you do not have value range pricing in your area. All it does is confuse the buying public and set false expectations for the seller.