Benefit of Value Range Home Pricing

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by Roberta Murphy

Value Range Pricing
Value Range Pricing

Not long ago, San Diego real estate agents, home sellers and home buyers rolled their eyes and shrugged their shoulders when the subject of variable or value range pricing for home listings was discussed.

Many did not feel comfortable with a property price that was not firmly set. After all, how would buyers know what to offer for that Carlsbad or Encinitas or Coronado home? And why would that Carlsbad, Encinitas or Coronado buyer even think of making an offer at the top end of the range?

Though initially resisted by many, this property pricing strategy has been successfully used in the San Diego real estate market since the mid-1990’s. In the early days, it was an innovative vehicle used to bridge the gap between sellers wanting yesterday’s prices—and buyers demanding a bargain. It was a strategy that worked well in the California real estate doldrums of the mid 1990’s–and works once again in today’s buyer’s market.

How Does Value Range Pricing Work?

Allow me to explain: A value range of $699,000 to 749,000 for a Carlsbad home might have captured both the seller’s and buyer’s fantasies–with settlement resulting somewhere in between. Even a home with a set price is usually open to negotiation. This pricing strategy simply sets a range for negotiations.

Many real estate agents from outside the San Diego and Southern California market areas don’t understand the logic of variable range pricing, even though it actually allows for more precision in the buyer’s offer. For example, if a home has been listed for a couple of months or more, the buyer may feel comfortable making an offer at the lower end of the range. If the property is priced exceptionally well to begin with and is new to the market, an offer at the top of the range would likely be in order.

The important element for our San Diego sellers is that their homes be exposed to the broadest range of qualified buyers as possible–especially when over 80 percent of all home buyers begin their home search on the internet.
As San Diego Realtors, we have successfully used value range pricing in both buyer and seller-favored markets, especially with internet-centric property searches. If a Carlsbad home seller, for example, wants an approximate price of $1.1 million, we might suggest a range of $999,000 to $1.175 pricing, knowing that this listing 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?).

We currently have a large and lovely La Costa golf home listed that has a value range of $997,000 to $1.075 million. The owner cringes at the thought of accepting less than a million for her home, but would consider that figure if it were a non-contingent and as-is offer.

Variable price range listings were also useful during San Diego’s hot-hot-hot seller’s market, especially when sellers and agents were testing the upper range of pricing. And as cycles go, the value range pricing strategy is useful once again in softening the price landing for these same sellers.

Value range pricing is truly a tool for all markets, once buyers, sellers and agents understand the concept.

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