Reshmi, Home Seller in Portland, OR

How many of you have used "value range marketing" for listing your property? It is something that Prudential uses. We are considering using

Asked by Reshmi, Portland, OR Mon May 17, 2010

it. If you've used it can you share your opinions about it?

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20
Patrick Thies, Agent, Anytown, IL
Mon May 17, 2010
Value range is a marketing technique that if done correctly can be effective. It is more common on the west coast especially in CA. It does not wsrk in all areas or markets and works better in a sellers market.

Houses need to appraise out. The appraisals are coming in very tight right now. The key to pricing your home for sale in this market is to know what the competition is listed at and price your house just slightly lower then that to attract buyers.
2 votes
Reshmi, Home Seller, Portland, OR
Tue May 18, 2010
Thank you for all the energies all of you have devoted to this question. I've a lot of digest and think.

But I'm also laughing because I'm thinking of "amusing" marketing strategies. I'm not a realtor, but a faculty member teaching undergraduates. So, I'm thinking, given the rising cost of college education I should say, "if you buy my house paying full price, your child can attend the college where I teach "half price".

Writing a dissertation was more predictable than selling a house I have to say.

Theoretically speaking, I like the concept of VRM. We've realized from experience now that the market is all over and it is extremely difficult to "price" your house right based on comps (because these comps are changing more rapidly than we thought).

If as a seller we use VRM we will set the "lower range" at a price that we'll be absolutely OK selling the house. The advantage may be to negotiate a few more thousand $$$'s over the "lowest price" if an offer was made at the lowest price set. I don't think VRM should be used as a bait to pull people in and then reject their offer. This "bottom" # ought to be carefully and realistically thought through. In our case, we'll only sell the house if we can get X amount of equity to make the full 20% on the next purchase. We know what this X amount is and we'll be happy to give the house at the "lowest" # set if this "X" amount is met.

Also, we love our house and will not sell it if this "bottom" # cannot be met. Anything over that is good bonus.

Makes sense?

Reshmi
1 vote
Debra (Debbi…, Agent, Livingston, NJ
Tue May 18, 2010
Scott - just as a correction to what you said....the homes in the program are listed at the HIGHEST price in the range, NOT the lowest.

Don.................The sellers are prepared to sell the house at full asking price - just like any other seller. Terms are also factored in - as with any other offer. This isn't so different than a traditional listing, othet than to encourage more showings by inviting agents to open the showings up to buyers who might not be brought in at that point.

No one knows how much below asking price any seller will go until they place an offer in front of them.... It works the same way here - it's not really that complicated.

The big difference is that agents are encouraged to show the home to buyers they might be hesitatnt to show it to...........they may wait for the home to be reduced, for example, before brining in their buyer.............all this program does is say...."Come on in.......let's talk"

I am sure many of you have had a buyer pay more than they said they would pay for a home......this way they are encouraged to take a look and let the negotiations begin.
1 vote
Debra (Debbi…, Agent, Livingston, NJ
Tue May 18, 2010
Value range marketing has beren around for many years. As mentioned, it was (possibly still is) extremely popular in CA, and I believe it originated in that part of the country, here in the USA, and spread east. By the time we were told about it, they already had stats that were very promising.

It has been found to work in many cases.

I am neither a proponent of it , nor a detractor - am just trying to explain it as best I can.

What it tries to do is put into writing a range that many agents may already have in their minds. When I see a home listed at 525,000, for example, I might hesiate to bring in a buyer who only wants to pay 475,000...............if the value range is 465,000-535,000 (these homes are always listed at the highest number in the range).....the buyer feels comfortable viewing the home, and the agent is not afraid of insulting the seller with an offer in the range - even a lower offer in the range.

What the seller is saying by participating in this program is that they "will entertain offers in the selected range". They are not forced to take any number..........and as we all know, terms also play into the final decision.

Most agents mentally have a range where they see a home selling......this program attempts to throw out the net to include and capture more potential buyers, and encourage them to be brought in, rather than waiting for a reduction.

Statistics have shown that on average, most of the homes tend to sell above the mid point of the range.

You may think - why wouldn't everyone just start at the lowest point - and they may - the point is........this is hopefully going to attract more buyers and more offers. Once a negotiation has started........who knows where it will go.
Many buyers (and their agents) often say they are "waiting for a home to be reduced" before making an offer,. They don't have to wait when VRM is used.

The agent and the seller don't have to lock horns and have that dreaded "reduction" conversation.
Of course, the key is making sure you have the correcrt range to start with.

I have found it works well in the upper range where it may be more difficult to pinpoint a number.
Also, and maybe this is one of the best parts.........rather than have to engage a seller in a discussion or battle about the list price...............they feel better seeing they have that upper number as a possibility..........so, if I want to list a home at 489,000, and the seller wants 510,000..........we get to cover all bases in a range of , say, 475,000-525,000.


Do I use this for the majority of my listings? No.........but it is nice to have it in my arsenal of options when speaking with a seller. It's just a tool...............maybe it will work, maybe it won't............
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Mack, maybe it is different where you are, but no one here is "obligated" to accept an offer...............and certainly, they are not forced to accept anything less than full asking price.....plus, the terms have to work, too.
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@Dan: "value range pricing means you see a bottom number and bid below it. You never go high, go low and be prepared to go elsewhere if you do not get a deal.:
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With that philosophy, you may very well be going elsewhere, instead of buying a home.

Dan you have some interesting theories about how to buy or bid on a home............perhaps when you finally do decide to buy a home one day, you will let us know how those theories worked out for you.
You can certainly offer as low as you want...............you may stick to your very rigid way of looking at negotiating............I hope, for your sake, when the time comes. you don't paint yourself in a corner, and leave no room for some flexibility..
..........................
.Reshmi - good luck with your home sale.............please let us know what you ultimately decide to do! I don't think dismissing this program as "stupid" is productive, which is why I tried to explain the rationale behind it...........and for those sellers, and there are a lot of them, who have successfully marketed their homes with this......they would strongly disagree.

As Patrick mentioned - it certainly isn't for everyone in every area........but it's just another marketing tool that might work in the right situation.
1 vote
Dan Chase, Home Buyer, Texas City, TX
Mon May 17, 2010
value range pricing means you see a bottom number and bid below it. You never go high, go low and be prepared to go elsewhere if you do not get a deal.
1 vote
Anna M Brocco, Agent, Williston Park, NY
Mon May 17, 2010
One believes the value range trend began years ago in Australia--Factors to consider in setting a selling price incorporate condition and updates with market value. But, the actual selling price (i.e., what is ultimately paid) can be sometimes maximized by offering the property within a price range. Here’s the scenario: set the range from 5% below market value to 5% above. Initial offers will be/may be closer to the bottom of the range but interest generated may put the property into a “bidding war” which oftentimes yields an actual selling price in excess of the upper range value. If this strategy is not explained properly to the potential buyer(s) confusion will occur, however when handled properly it can yield good results--if you are eager to sell quickly, consider a fair listing price to begin with, coupled with great marketing to maximize your exposure in order to attain great traffic and multiple offers.
1 vote
Team Real Es…, Agent, STATEN ISLAND, NY
Mon May 17, 2010
At one time when we were part of Prudential it was used to capture buyers that were looking with in the bottom and the top price range. In other words the goal was to get more potential buyers to walk through the door. In the end of the day it is al about negotiations.
1 vote
Gary and Kar…, Agent, Boca Raton, FL
Tue Jul 29, 2014
I think this is a good "inclusion" on a listing -
Especially one that may be at the top of the market in it's asking price...

Regardless - any "tactic" that can be used to get additional eyes on your listing is a "good tactic"...

Get it SEEN - Get it SOLD

Gary -
http://www.garyyoungman.com
http://www.reviewgaryyoungman.com
Web Reference:  http://www.garyyoungman.com
0 votes
The Rob Levy…, Agent, Portland, OR
Thu Apr 4, 2013
Having been a too selling Realtor for almost 25 years, I have tried VRM a few times. It is ver popular in Southern California where Prudential (the main user) has a strong presence, but I have found here in Portland in my personal experience it does more harm than good. I have found that while the sellers and buyers are good with it, I had agents who felt it would compromise them if they wrote an offer and then it wasnt accepted. Also many sellers seemed to only want to accept offers at the top of the range, which given the house was worth the middle of the range also caused some issues.

So while I am a fan of VRM, I don't feel in Portland it works to the sellers advantage in this market at this time.
0 votes
Mack McCoy, Agent, Seattle, WA
Tue May 18, 2010
- "if you buy my house paying full price, your child can attend the college where I teach "half price".

I think that's brilliant!!!
0 votes
Mack McCoy, Agent, Seattle, WA
Tue May 18, 2010
- Mack, maybe it is different where you are, but no one here is "obligated" to accept an offer...............and certainly, they are not forced to accept anything less than full asking price.....plus, the terms have to work, too.

Of course, but the seller is still obligated to pay a commission on a full-price-and-terms offer. So, with VRM, what constitutes, "Full Price?" The low end? Certainly not. The high end? Correct-o.

- which is why I tried to explain the rationale behind it

And which is how, in yet another way, you are a better person than I am!

But it's still a stupid idea!

Dear friends. If you list the property at "465,000-535,000" - you are lying. You are not willing to accept an offer at 465,000, are you? Are you willing to pay a commission to a broker who brings you an offer at 465,000? No, you are not.

- Also, buyers need to be educated about VRM.

Well, Reshmi, I can't advise you on how to best spend your energies, but I think that educating them about the benefits and value of your home should be your priority, not explaining to home buyers that, "Well, if you're shopping at 465 (or whatever), why not consider mine, although I'm really looking to get something closer to 500."

What I see are people like Dan Chase, who see that you're listing the property at 465, and are thinking, "Well, what if I tried 375, see where that gets me?"

In the hot markets, yes. it was fine - but, everything worked in the hot markets.

The fact is, there's always another way to do something, but just because it's new or novel or different doesn't make it better.

- So, I don't think the idea is as "stupid" as you think.

That is why we're having this discussion!
0 votes
Debra (Debbi…, Agent, Livingston, NJ
Tue May 18, 2010
Maybe I am not making this clear.......once again......the house is listed at the HIGHEST list price in the range...the seller would accept that figure , as would any seller.

All this program tries to do is put in wiritng what agents are already doing in their minds - making vlaue judgements about homes.. As agents, we make value judgements about where a house might sell..........if we have a 500,000 buyer, and see a home listed at 549,000...........and we think it is ovepriced.....we may or may not show it when it is new on the market....we may wait it out a bit...wait for a price reduction to signal the seller is open to lower offers..................all this program is trying to do is invite the showings right away. Will the owner accept the lowest number? Probably not, but at least a conversation may be started.

I just had an offer preseted last night on a listing of mine.....listed at 499,000...............offer was 425,000.............my sellers were not at all pleased, but at least dialogue has begun.......who knows where we will wind up.......Where there is an offer, there is hope for a resolution.

The people who presented this offer had seen the home when it was listed in March, but waited until now to make an offer..................in the value range program, they might have been encouraged to come in sooner.

It's just a tool.............it is really logical if you step back and look at it, and it really isn't so complicated.

It would be great if some other agents who have successfully marketed homes using it stop by and comment.
It is not used in my company as often as it was some years ago, but it is still a viable option for some circumstances , .....and there were a lot of homes successfully marketed using this program. So..whether you think it;s great or not - is irrelevant, as it has worked.

I am not trying to convince anyone that this is the way to go.....just doing my best to explain it, and remove any misconceptions that seem to be cropping up.

And........in closing................if you don't work for a Prudential company - don't worry, this isn't an option for you!

And on that note, I will gladly step down from my soapbox.............and stop acting ike I am a spokesperson for Purdential (which I am not.... haha - they don't pay me enough). I will now resume just being plain old Debbie!

Have a great day all....this explanation has tired me out! Maybe i will have a cookie for energy!!!!
0 votes
Jim Starwalt, Agent, Grayslake, IL
Tue May 18, 2010
I could see a simple reason for this. And it probably works well in hot areas when the market was hot for sellers.
A seller might consider say, 300,000 for a cash offer closing in two weeks, but want 340,000 for a home sale contingency. So this would be an easy way to explain to difference in prices.
Jim
0 votes
Dp2, , Virginia
Tue May 18, 2010
It's an interesting theory, and I appreciate Debbie's explanation.

"The key to pricing your home for sale in this market is to know what the competition is listed at and price your house just slightly lower then that to attract buyers."
I mostly agree with Patrick's answer, but I'd also add the following. One can also use bid-pricing strategy (which tends to trigger bidding wars), or one could reposition the property such that its listing will stand out clearly against the competition.

More so than price, buyers are looking for value. They want to get the most bang for their buck, and they want to know that this value will still be there 6/12/24 months, or several years later. (Please don't mistake value here for the current market value.)
0 votes
Scott Godzyk, Agent, Manchester, NH
Tue May 18, 2010
It is one of the worst marketing plans invented as the agents list the homes at the low price where potential buyers see that price, make and offer on that price and teh seller turns it down time after time, upsetting buyers and their agents. When i brought it up to one Pru agent once, they responded see without VRM pricing your buyer wouldnt have made an offer. They said teh VRM sis what it was supposed to and attracted a buyer to encourage negotainis. Unfortanately most buyers are already looking at the highest price the loan officer twlls tehm they quailify for, so they can not go up to that high range of the VRM that the seller really wants to be at. I think it is more of a hastle leading to more unhappy buyers than it is worth.
Web Reference:  http://www.ScottSellsNH.com
0 votes
Don Tepper, Agent, Burke, VA
Tue May 18, 2010
I just don't get it.

I appreciate Debbie's explanation. Still, I don't get it.

If the owner isn't prepared to sell a house at the price listed, why bother listing at that price? The explanation seems to be: "the buyer feels comfortable viewing the home, and the agent is not afraid of insulting the seller with an offer in the range - even a lower offer in the range," as Debbie explains. But why should a buyer feel comfortable viewing a home if there's a strong likelihood the seller has no intention of selling at that price?

And: "rather than have to engage a seller in a discussion or battle about the list price...............they feel better seeing they have that upper number as a possibility..........so, if I want to list a home at 489,000, and the seller wants 510,000..........we get to cover all bases in a range of , say, 475,000-525,000." Well, the seller may feel better seeing $525,000 . . . until the buyer, seeing the number $475,000, makes an offer at $475,000 or less.

And if the seller isn't prepared to sell at the lowest price, I have a real problem with that. Now, fine: If other potential buyers want to offer more than the base number--in Debbie's example above, if someone wants to offer $525,000 on a home priced in a range of $475,000-$525,000, that's fine. Or offer $510,000. Or offer $500,000. But if a house is offered in a range, with $475,000 being the lower end, and an offer comes in at $475,000 and is rejected, the phrase "bait and switch" would come to mind.
0 votes
Mack McCoy, Agent, Seattle, WA
Mon May 17, 2010
Fine, Reshmi. It's your house, and your agent, and you can do what you want.

But, for our readers - what's your range, and at what price are you obligated to pay a commission?
0 votes
Reshmi, Home Seller, Portland, OR
Mon May 17, 2010
Mack, the price range is listed and the MLS system has been changed to work on this range. So, I don't think the idea is as "stupid" as you think.
Also, all the searches will come up if the search price is within the range. Prudential is using this for a while and it is working in many cases. It simply opens the market to more buyers and in this way the sellers doesn't have to either "chase" or "be ahead" of the market.
Also, buyers need to be educated about VRM. Every offer is up for negotiation, but at least it allows buyers to entertain the idea putting an "offer" on a property that they like, but the "listed price" is too high. The "range" allows both the buyer and the seller to enter into a reasonable conversation.
I know someone who put a "reasonable" offer on a VRM property. There were 2 other "higher" offers, but the lower offer won the bid because the terms of the offer (closing date, etc) were better.

Reshmi
0 votes
Mack McCoy, Agent, Seattle, WA
Mon May 17, 2010
Well, it's stupid beyond belief. Most MLS systems will only allow it to be input at one price, because MLSes require that a listing agreement contain a clause that ensures compensation for an agent bringing a full-price-and-terms offer.

So, if you list at, "between $400,000 and $475,000," are you going to pay a commission if an agent brings a $400,000 offer? No. If they bring one at $475,000, you're obligated, so ... it will show up in the MLS as $475,000. Are you willing to accept a $400,000 offer? No? Then why did you mention it? Yes? Well, then, why not list at $400,000?

Too clever by nine-tenths.
0 votes
Joe Arnao, Agent, Sanwich, MA
Mon May 17, 2010
Fortunately in MA we do not use it. As someone who often represents buyers, most buyers are going to look at the bottom number and maybe start there. When representing sellers, I usually don't suggest they disclose their bottom number at any time. It seems counter intuitive to show all cards at once.
0 votes
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