What's wrong with the traditional fixed-pricing method?

Fixed pricing in today's market is a lose-lose proposition, especially for sellers. Some sellers' asking prices are absolutely firm, while others may ultimately accept offers for tens of thousands of dollars less than the stated asking price. This puts buyers in a difficult position of guessing which is which.

Many buyers and their agents only pull up homes that fit the price that the buyers hope to pay. This means that sellers who ask a fixed price but who may be willing to accept something less lose many opportunities with potential buyers. Buyers lose out too, because there may have been more homes that would ultimately accept the buyer's price, but they'll never know it either.

What is "Value Range Pricing?" (also known as Range Pricing, or Variable Pricing)

Value Range Pricing (VRM), also known as Variable Pricing or Range Marketing, is a unique but effective method of pricing a home for sale. Instead of one fixed number (e.g. $349,950), upper and lower parameters are established for a home's asking price (e.g. $329,000 - $378,876). This allows for more people to become aware of the home without setting an exact price expectation.

What is the purpose of using Value Range Marketing?

Virtually all real estate searches today are conducted online through a computer database. The database is very exact--if a search is done within the price range of, say $350,000-$375,000, ONLY homes whose asking price is in that range show up as search results. The home asking $349,999 and the one asking $376,000 will not come up as search results. The buyer will never know those other homes were for sale. What a pity! Perhaps the home at $349,999 is really great (not to mention a lower price)! Perhaps the seller asking $376,000 may really take $355,000 if it came right down to it! But with traditional fixed-pricing, those opportunities will never occur for the buyer or the seller, because they would have been excluded from the search results. The buyer never knows the home at $376,000 is for sale, and buyers don't buy homes they don't know are for sale.

In reality, buyers are shoping in a price range. When sellers use Value Range Marketing, they allow their home to be made more accessible to potential buyers. When a range of $339,000-$398,876 is used, the property is made more accessible to more buyers. Buyers can know that the property is being offered in that range, and they can see the home and determine whether they like it first before getting hung up on the asking price.

How should buyers interpret Value Range Pricing?

Simply put, the seller will respond to any offers within the stated range. Response doesn't necessarily mean acceptance though. Depending on the offer price and terms, the seller may also choose to counter-offer. Another way to think of it is that the bottom of the range is the minimum bid to generate a written counter-offer from the seller. Usually, the seller does not require the top end of the range. However, the seller does not usually accept a price at the bottom of the range either.

If a buyer really likes a home that uses Value Range Pricing but wants more clarification on the seller's expectations, they may wish to consult with the listing agent, who may be able to provide more details.

Conclusion

Value Range Marketing is just a way to not "put the cart before the horse." Buyers and sellers both can explore more options by finding each other more easily. Especially in today's market, it is essential.