If you are thinking of selling or buying and you’re on the internet doing “research”. You’ve seen language like “Seller will consider offers between $xx – $xx” or “VRP Seller to entertain offers between $xx – $xx”, etc. You probably didn’t pay much attention to it thinking it’s the equivalent of the old way of writing listings like BR, BA, BD, etc.
Value range pricing is definitely more popular in some areas (like from Franklin, MA to Attleboro, MA) and not so much in other areas so not all agents, sellers, and/or buyers are familiar with this but I would venture to guess that you’ve seen the disclosure about this at one point or another in your home search/research.
HOW DOES IT WORK
A seller and their agent will determine a range of price that is the lowest number a seller will accept and a highest number that the house could appraise at. It’s the best of both worlds because the lowest number is entered into the Multiple Listing Service (“MLS”) which, in turn, gets out to all the real estate websites. Getting the lower number into the MLS means the maximum amount of buyers will see your listing. The agent will then include language (usually within the description of the property) that seller will entertain offers between this number and that number or it will say “Value Range Pricing – $xx to $xx. So the seller and their agent are basically telling you range of what you can own this home for. When you, a buyer, views the home and decides to write an offer, you choose a number within that range. Most buyers still start their offer at the lowest number so they can get a counter offer and see where the sellers’ head is at in terms of price. Sometimes a buyer will write an offer in the middle of the range. There is no wrong offer if you are offering within the provided price range.
So what are the advantages and disadvantages of this type of pricing?
SELLING USING VALUE RANGE PRICING
When you are a seller and you’re sitting with your agent discussing the best pricing for your listing, sometimes a seller will have a different number than the agent. A seller always believes that what they are selling is the best product out there and the agent will be basing their number (hopefully) on a market analysis using like-for-like COMPARABLE homes that have sold. So a good compromise would be value range pricing because you could essentially achieve the best of both worlds with this strategy. Utilizing this strategy in this instance would hopefully attain an offer(s) somewhere in between or higher. But the goal is always to get the foot traffic (showings) through your door so that you can GET offers and sell.
Sometimes the home being sold is extremely unique or just a pleasant surprise (bigger than it appears from outside) or the home has some challenges (location) but is a great house and you just need foot traffic through your door to get a buyer to see how amazing the home is. Using value range pricing is extremely beneficial in this instance. Without value range pricing, buyers may not consider even setting up a showing to your property because they think something negative about your home or something about the photos put a buyer off. So using the energetic price at the lower end of the value range will get you the desired foot traffic and your buyer or, better yet, multiple offers.
The disadvantage to a seller is that you may only get offers lower than your low range number because the buyer and their agent don’t understand the value range pricing strategy. This is frustrating for you the seller, but it’s a bi-product of this strategy. Fortunately, it’s not as common to get lower offers because it’s more widely used and agents are now familiar with this strategy.
BUYER OFFERING ON A VALUE RANGE PRICING
As mentioned above, when a buyer visits the home and decides to write an offer, your agent will likely provide you with a buyers’ market analysis to help you determine where you want to start the offer within the range provided by seller. Writing an offer on a value range is no different than writing an offer on a home not using this strategy. Provided you stay within the range, you should get a counter offer from the seller.
What is most important for a buyer is to read the fine print in the property description BEFORE setting up the visit to the home. I find that most buyers don’t really read the description of the property and focus on the price and photos. You do not want to waste your time viewing a home you cannot afford. So if you have a maximum pre-approval amount of $350,000, you do not want to view a home with value range pricing of $350,000-$400,000.00 because the reality is that the seller will likely NOT accept a $350,000 offer and you don’t have the financial ability to buy a home above that purchase price. The devil is in the details!
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We service Real Estate sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, Uxbridge, Blackstone, MA. We service Bristol County, Massachusetts as well (Attleboro, North Attleboro, Easton, Norton, Mansfield, MA) and all of Rhode Island! We have experts on Cape as well and in the City of Boston and surrounding towns. We go where you need us to be because we know you want to work with truth-worthy, honest and hard-working real estate agents! Have car – will travel 🙂