The only problem with that theory is how the MLS actually works. Let's say you Value Range a Property from $699,000 - $775,000 and we assume the seller wants $750,000.
Buyer A is searching for homes up to $700,000. Yes, the property shows up on their search sheet, but when the buyer looks at the list, the home's price shows as $775,000 among all the other up to $700,000 homes because the MLS always advertises the high end of the range . Everytime a search site (like Realtor.com) pulls info from the MLS, it will show the high side first if it even shows the low end at all. (How does it attract more buyers if it doesn't show or shows for someone who isn't looking to pay that price ???
Now the seller has attracted a buyer that has no intention of buying anything over $700,000 when the seller's goal is $750,000. (If the buyer is willing to pay $750,000, then that is the price they will search.)
On the flip side, you have Buyer B searching for homes up to $800,000. $775,000 pops up and then Buyer B clicks on the detail sheet and now sees the "Value" Range price below $700,000. No buyer in today's market is going to pay more than list... And Guess what? The low end of the Value Range is the list price...
I think Value Range Pricing has a purpose, and in my opinion it is to ease the seller into a price reduction down the road. A better strategy is to price it properly in the beginning with a company that can offer you REAL Marketing & Advertising. Time is money in this market.
(If anyone can show me that it does generate more money for a seller, I'd be willing to revisit and or retract my opinion. As it stands today, I've never seen any proof.)
That is exactly what is happening right now. No amount of realtor/mortgage broker lies can re-inflate the bubble. When bubbles burst, they are done for a long time.
Anyone buying a house now is a sucker in my opinion.
Another benefit to VRM pricing is in a heated market, like we had a few years ago, frankly we never knew from day to day what the value of a proprty was! A house today might sell for 50K more than the house next door did yesterday. VRM helped by encompasing yesterdays price, with a price a bit higher, and then buyers would start their "bidding process" on the property.
In a more stagnant market like we have today, sellers don't have to do a price reduction as quickly on the property- the reduction is already built into the VRM.
Research has shown that sellers statistically receive more for their property when Value Ranged.
I usually tell my buyers to assume that the seller wants a price in the middle of the range, however, if the home has remained on the market for a period of time they may take the very bottom of the range. I don't know it this explanation is helpful to you- but that is how it works.
As was already stated- no matter what the price is on a home, you need to know the comps, what is going on with the market in that particular area, and make your offer accordingly. I would suggest that you have your agent draw up a letter, with supporting comps as to why you are making the offer that you are making, and why the seller should consider it seriously. That has worked for my clients many times in the past.
You can't do anything about the seller, except have a stron negotiating agent to help you!
We do seem to agree on at least one purpose though... "sellers are more likely to see the true value of their home (rather than the hoped-for price.)"
Also I've found that it's more than just the $$$, it's also the amount of deposit, contingencies and timeline. VRM just allows the seller to have more options when it comes to offers.
Another comparison to this situation would be a short sale or auction situation. The starting point may be low to invite offers to negotiate. Some buyers are uneasy with Value Range Marketing because there's no fixed price stated from the owner. Many sellers like this method as opposed to "chasing the market" with price reductions especially with all the short sales and auction properties out there.
Anxious, I'd have done exactly what you did. Now maybe a silver-tongued agent in a warm market can upsell someone from the low range to the high range. But many can't, and this sure isn't a warm market any more. The tactics you describe are bound to create ill will.
Just my take on the matter.
First off, you need to be doing your homework 3 or 4 months in advance before making any offers ....
Second, you should have 5/6/7 homes that you've researched and are ready to make an offer on - not one ..... if everything was done correctly, good rapport with the agents (and the seller) and you weren't firing darts at 800lb gorillas, then who cares what his "FIRM" price was ..
It doesn't make him right and it doesn't make him wrong - you just don't agree ... sometimes the seller can get some very bad information from their agent, and sometimes the seller is a blockhead.
Good luck and - move on ......
I personally feel that it sets up a conflict in perception between a buyer and seller that doesn't need to be there from the beginning. It's about price, terms and comps regardless of whether it VRP'd or not.
I can remember that old marketing "plug" being used in the first days of development of Port Charlotte and Charlotte Harbor .... that was 25 years ago.?
They used to fly the retiree's down for free and drive them from zone A ($5,000 for that lot ) to zone B ($3,500) then zone X out with the alligators for $2,200 etc, etc ....