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Sellers increasingly opt for 'value range pricing' instead of a fixed price

A new sales tactic known as “value range pricing” is growing in popularity due to the unique advantages it offers to both buyers and sellers.

Value range pricing is still quite rare, and basically refers to listings that indicate a price range rather than an exact figure. So for example, a listing that says $450,000 to $500,000 would be defined as such.

“Once buyers and sellers understand the rhyme and reason of the concept and how it can uncover more opportunities for both sides, value range pricing will likely expand throughout the industry,” said Sacha Ferrandi, founder and CEO of Source Capital Funding, in an interview with Realtor.com.

The most obvious benefit of this strategy is that it clearly indicates that the price is negotiable, said Ernie Rafailides, a managing partner of Bayview Management in Townson, Maryland. “Since potential buyers now know the bottom of the acceptable range, many sellers have found that they are wasting less time dealing with lowball offers from speculators or bargain hunters,” he explained.

Rafailides reckons this tactic can attract more offers as well. For example, if a home is listed for $510,000, it might be missed by those who limit their home search to properties valued at $500,000 or less.

Meanwhile, buyers themselves can submit reduced offers knowing that they won’t offend the seller, so long as it’s within the price range set. “Buyers are often afraid to make offers below list price,” Rafailides said. "But value pricing helps mitigate this fear."

There is of course a risk that value range pricing could cause more buyers to submit offers at the lower end of the scale. But then again, with today’s housing inventory shortage meaning there are fewer options available, setting a range could well initiate a bidding war on the property.

“What buyers often forget is that a value range pricing listing is attracting more visitors, which means more offers will likely be made, resulting in an organic price inflation and a potential bidding war,” Ferrandi said.

Mike Wheatley

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at mike@realtybiznews.com.

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