Read this article about Value Range Marketing in USA Today
What is Value Range Marketing ?
I have to say when I first heard about it the idea of Value Range Marketing in Williamsburg VA it didn’t make sense to me or my clients . A buyer I was working with said why would I offer anything above the lowest price in the range ? I agreed and we made an offer. That in a nutshell is what it’s about. My client would not have even looked at the house because it was priced above their comfort range. The whole idea is to get someone into your listed home. Hopefully they fall in love and then make an offer. If you can get to that point you have started the ball rolling. If they like the house enough you can usually negotiate an equitable offer between buyer and seller. If you don’t then what have you lost ?
A broker in San Diego Ca had a two-bedroom condo that sat on the market for 93 days in 1995 with one showing. Frustrated, the broker , who had heard rumblings about a concept called value-range marketing at an industry convention, got his seller to entertain offers from $120,000 to $150,000. Within 48 hours, the property sold for $137,000.
A decade after the concept of value-range marketing, known as VRM, hit the U.S. real estate market, supporters contend that the marketing strategy draws higher sales prices and happier sellers—as well as helps buyers get into homes they wouldn’t ordinarily think are in their price range. In value-range marketing, the seller sets a price range (i.e., $335,000 to $375,000) instead of just a high price ($375,000). This helps to attract more buyers—since a home set in a range will be within their price range, whereas a home listed only with the high price may not meet their price criteria—as well as generate more offers. The strategy does not obligate sellers to accept any offer. It does allow sellers to entertain and counter offers within the range with an acceptable price and terms, just as they would with a listing that carried a single price.
Prudential Drives the Market
Prudential Real Estate was the first major franchise to adopt value-range marketing, which originated in Australia. It implemented the Prudential Value Range Marketing (PVRM) in 1996 and offers marketing support for its sales associates who use it.
Prudential practitioners in the U.S. are not the only ones jumping on the VRM bandwagon. The practice is gaining favor with real estate professionals across the country and Canada.
Not Everyone Is Sold on VRM
Ron Rutherford, a professor of finance and real estate at the University of Texas in San Antonio, who co-authored a study on range pricing published in The Journal of Real Estate Finance and Economics, remains skeptical of the strategy.
Rutherford’s study, which used a sample of 5,852 residential houses (176 of which used value-range pricing) in Dallas and Tarrant counties in Texas sold from January 1999 to December 2000, found that range-priced homes took about 4 percent longer to sell and sold for about the same price as fixed-price homes.
It has caused some confusion and maybe that’s due to full explanation by the broker prior to offers. After making a solid offers that weren’t accepted, some buyers have become confused and upset .Some buyers feel that if they’re making an offer within that range, it should be accepted.Some buyers feel like it is a bait and switch, where they are lured in with what looks like a decent price but then told they can’t have that price. So it affects everyone involved in the sale and can leave a lot of negative feelings.
How to Use Range Marketing
There are no set ranges within the industry to price a home. But a seller should exercise caution in setting a range—selecting too narrow a range can undervalue a home and too high a range can price the home out of the market.
For optimal range pricing, it has been suggested that the end of the scale is close to the seller’s dream price and use a 10 percent to 12 percent spread below the top price to allow for changing market conditions.
The top price of the listing is in the price field and information that the seller will “entertain” or “consider” offers within a set range should appear in the MLS remarks section, the listing contract, and on related advertising and for-sale signs. The home will also appear in an MLS search when searching in the lower part of the price range.
Our Williamsburg MLS (WAAR ) has implemented value-range listing display and search capabilities. In September 2004, REALTOR.com adjusted its site to be able to display high and low price ranges for MLSs that adopt the listing practice.
If you are thinking of selling your home in the Williamsburg VA, james City County, York County, New Kent, Gloucester area and would like to discuss Value Range Marketing or any of the numerous marketing plans used by Mr Williamsburg.com and Liz Moore and Associates call John Womeldorf 757 254 8136 or email John@MrWilliamsburg.com
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