Value range pricing, also known as variable range pricing, is when a listing indicates sellers are looking for offers between two suggested prices, such as "$450,000 to $500,000," rather than just one price, such as $475,000. This tactic is still relatively rare, but it’s becoming more popular because it offers advantages to both buyers and sellers, according to realtor.com®.
“Once buyers and sellers understand the rhyme and reason of the concept and how it can uncover more opportunities for both sides, value range pricing will likely expand throughout the industry,” Sacha Ferrandi, founder and CEO of Source Capital Funding in San Diego, told realtor.com®.
The potential benefit to sellers is that it clearly shows home prices are negotiable. “Since potential buyers now know the bottom of the acceptable range, many sellers have found that they are wasting less time dealing with lowball offers from speculators or bargain hunters," says Ernie Rafailides, managing partner of Bayview Management in Towson, Md. This strategy may also attract more buyers too. If a home is listed at $510,000, sellers could miss buyers who have limited their search to homes $500,000 or below.
As for buyers, they’ll be able to submit lower offers without worrying about offending the seller, as long as they make their offer within the range that's been set. “Buyers are often afraid to make offers below list price,” says Rafailides. "But value pricing helps mitigate this fear."
That said, some housing experts warn that value range pricing may prompt buyers to gravitate toward the lower range number when submitting an offer, which could put them out of the running. “What buyers often forget is that a value range pricing listing is attracting more visitors, which means more offers will likely be made, resulting in an organic price inflation and a potential bidding war,” Ferrandi told realtor.com®.
Another caveat is that the price column in some multiple listing services allow only a fixed dollar amount to be listed. Realtor.com® predicts that may change if more real estate professionals start to adopt this pricing strategy. Until then, sellers who still want to list this way can add the range in the listing details as a way around technological barriers.
Source: “What Is Value Range Pricing in Real Estate? A More Flexible Way to Price a Home,” realtor.com® (Aug. 22, 2017)
