Variable and Value Range Pricing for Homes

Many real estate agents, home sellers and home buyers roll their eyes and shrug their shoulders when the subject of variable or value range pricing for homes is discussed.

This value range property pricing strategy has been successfully used in the San Diego real estate market since the mid-1990s. In those days, it was an innovative vehicle used to bridge the gap between sellers wanting yesterdays prices and buyers demanding todays lower numbers (sound familiar?).

In other words, a value range of $899,000 to 949,000 might have captured both the seller’s and buyer’s fantasies–with settlement resulting somewhere in between.

Many real estate agents from outside the San Diego area don’t understand the logic of variable pricing, even though it actually allows for more precision in the buyer’s offer. For example, if a home has been listed for a longer period of time, the buyer may feel more comfortable making an offer at the lower end of the range. If the property is priced exceptionally well and is new to the market, an offer at the top of the range would likely be in order. The important issue for sellers is that their home be exposed to the broadest range of qualified buyers as possible.

We have successfully used value range pricing in both buyer and seller-favored markets, especially with internet-centric property searches. For example, if a seller wants an approximate price of $1.1 million, we might suggest a range of $999,000 to $1.175 pricing, knowing that this property would show up for online seekers in the sub-$1 M price range. This is done to display the property to as broad a market as possible, as long as the seller would seriously consider an offer at $999,000 (fast closing, cash or non-contingent offer perhaps?).

Variable price ranges were useful during the hot seller’s market (especially when testing the upper range of pricing) and have been useful once again in softening the price landing for these same sellers. It is truly a tool for all markets, once buyers and sellers understand the concept.

by Roberta Murphy