One of the toughest decisions when selling your house is trying to determine what price to list your house at. There are many tips on how to do this, including looking at the comps in your neighborhood. Even when you have that information, you have to determine the exact number you should choose. There are ideas and superstitions to help you determine which number, but in the end it all comes down to what you choose. Until now.
The growing trend in home pricing is known as Value Range Pricing (VRP). Instead of selecting an exact listing price, the seller chooses a range for the price. For example, instead of listing the house at $260,000, the seller indicates they are looking for offers between $245,000 and $300,000. This strategy can actually be an advantage to both buyers and sellers.
Benefit to the Seller
When you list your house at a set dollar amount, you limit your exposure to any buyer that is searching the house listings just below that price. That is a bad thing to do if you are willing to take less than asking price for your house.
As an example, if you list your house at $255,000 but would really be willing to accept $240,000, you have eliminated your listing from anyone that is searching with $250,000 as their maximum price. If you list at a range, you have opened it up to both levels of buyers.
Benefit for the Buyer
As the buyer, it would be a benefit to you if all homes were listed with value range pricing. It opens up a lot more listings for you to search. It also allows you to place an offer on a house that you might have been uncomfortable placing an offer on if it had a set price.
Buyers have to be careful not to put in a lowball offer that would insult the seller in normal cases. With VRP, they are able to see the low range that the seller is willing to go to and can then make an offer within that range. Some buyers would otherwise be uncomfortable offering $20,000 less than the asking price.
Drawbacks of this strategy
The major drawback to this strategy is that buyers don’t like to pay more than they have to. That means if you tell them how low you are willing to go, do you really think they are going to come in with an offer on the high end? Typically, buyers will gravitate towards making the lowest offer they can.
However, value range pricing listings tend to draw more attention from buyers, which could mean these listings will be more likely to end up with multiple offers, thus starting a bidding war.
Another drawback to this strategy is that many MLS systems cannot handle a VRP listing. There is only a place to enter one dollar amount. You can still include the information in the listing description, but you could still lose buyers, or momentum, towards the higher price.
Value range pricing is an interesting idea that is predicted to grow in popularity. If you are ready to try listing your house with a range, find a real estate agent that understands and supports the idea. Remember to keep your range smaller and make sure you don’t list the option any lower than what you are really willing to accept.