Tim’s Two Cents – Set Price or Value Range Marketing?

I want to share my insight regarding a topic that we see a lot of questions about with sellers and buyers.  I am referring to Value Range Marketing as opposed to the traditional and standard set asking price strategy for sellers when listing a property for sale.


Value Range Marketing originated in Australia and began to be implemented in our San Diego market in 1996. In 2004, REALTOR.com adjusted its site to be able to display high and low price ranges for MLS listings that adopt the Value Range Marketing listing practice. Research data indicates that more than 50 percent of the database’s current listings are range-priced today.


This is how it works from a seller’s perspective: Most sellers listing their home for sale want top dollar and they want get the highest and best price in the least amount of time.  Depending upon market conditions they are going to attempt to stretch above the most recent sales to see if they can obtain more money for their property than their neighbor did. So, we work with the home owner to review the last 3-6 months of similar sales (the properties comparable sales) and determine a current fair market value just as a bank appraiser would to assist with a residential purchase or refinance mortgage loan.  We are then faced with the decision to list at a set price or use a Value Range Marketing (VRM) strategy to bring the property to market.  As the generic stats depict, I too end up suggesting a VRM more than half of the time.


The VRM strategy does several thing for the property owner/seller.  It enables them to place the top number of the range at their dream price, within reasonable reach of the comparable sales.  From there, I rely on the 16 years of experience that I enjoyed during my carrier providing both real estate sales and financing services to my clientele.  There used to be a time that you could do both sales and financing efficiently and effectively to the benefit of the client.  I focus in on the price point that the majority of buyers for the area may be targeting.  Understand that a buyer pre-approved with their bank for a $875,000 purchase most likely has the same financial make up as a $925,000-$950,000 buyer. There are also alternative loan products that are available and may fit best after asking the best mortgage loan qualifying question, “How long do you anticipate being in this house?”  So, a $874,900-$949,900 VRM would attract more views online, garner more showings for the sellers, translate into more offers and in most cases produce the best possible option for any seller, multiple offers that come in at the same time!


The VRM strategy provides several benefits for buyers in the marketplace as well.  For one, the stats show that approximately 90% of buyers utilize the internet during their home search process.  A large percentage are on the internet searching actively marketed properties for sale 5-6 weeks before they even engage with a real estate professional & work with a mortgage specialist to focus in on their financial affordability. A lot of buyers use a mortgage calculator to get an initial, general idea of what they might qualify for in terms of a mortgage loan.  So, the VRM listings help to insure that more people see the listings online in that initial interest stage as well as later in their new house hunt. The other thing that a VRM listing offers is a bracket in which the buyer can be assured of getting a response from the seller to their offer.  As long as the offer is in between the top and bottom of the range the seller will not reject the offer, but rather provide a counter offer or maybe even an acceptance.


Where the VRM gets tricky with buyers is that they interpret the numbers to be a price.  They will often ask, “Why would I ever offer anything more that the low end of the price range?” This is where you need to make sure that you have a strong, experienced, business minded real estate broker on the listing side to properly manage the negotiations.  The buyer’s broker should be advising that once they have located and toured the property, found it to be to their buyer’s liking enough to get the ball rolling with an offer, that the broker take the VRM and toss it out the window. The broker should research the last 3-6 months of comparable sales, determine current fair market value and develop a negotiation strategy to execute beginning with an initial offer to purchase in writing.  There are a lot of buyers who will allow less experienced agents assist with the home finding process, so this is what makes hiring the right person to list your property for sale the most important decision that you can make!


If you have additional questions regarding these two strategies, please email or call me directly!


If you are curious to learn about your property’s current fair market value, contact Kristine and me to set a no obligation consultation.  We will visit with you personally at your property, take a tour and provide you with an assessment of value with comparable sales to back our opinion.


And as always, if you are considering buying or selling it is never too early to begin to strategize and to get organized! We are here to put our 21 years to work for you! As a family owned, independent brokerage we are able to tailor our serviced to best work for you and how you want to be represented!  I look forward to hearing from you.

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