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Homes on the "Range"

Garner avatar
GarnerBeach Fanatic
8,197 views
Here is a press release we recently submitted regarding a new marketing and pricing strategy that we are employing at Davis Properties of NW Florida



HOMES ON THE ?RANGE?​



Seaside, FL - Marketing properties for sale in a price range instead of a fixed price can often spur interest and get real estate sales moving in a down market or encourage multiple offers in a sellers? market. Called ?Value Range Marketing? or ?VRM,? properties have one list price but are marketed within a predetermined price range. This simple marketing strategy is designed to bridge the gap between the Seller?s high opinion of value and the Buyer?s desire to purchase for the lowest possible price. Sellers agree to entertain offers based on price terms and conditions within the advertised range. It encourages open negotiations with a seller who will come down and a buyer who will go up in price. Compromises are frequently negotiated to reach a final price, terms, and conditions that are acceptable to both parties.

The concept, which started in Australia in the early 1990?s and was adopted a few years later in the United States, is changing the rules for real estate. For example, in San Diego, California, over half of the homes sold last year employed Value Range Marketing.

Davis Properties of NW Florida, Inc. is the first brokerage firm on the Emerald Coast to offer VRM. Larry Davis, Broker and owner, says the strategy is ?similar to fishing with a net instead of a single hook?. The key in Value Range Marketing is that it creates a larger pool of potential buyers by exposing them to properties that were previously viewed as unattainable. The result is more buyers which create more written offers.


About Davis Properties of Northwest Florida, Inc.: Davis Properties has been in business and located in Seaside, Florida since 1992. During that time, Davis Properties has been a key player in marketing many of Northwest Florida?s major developments, including Rosemary Beach, Sunrise Beach, Preserve at Grayton, and most recently, Owl?s Head in Freeport, Florida.


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Replies

49
Smiling JOe avatar
Smiling JOeSoWal Expert
#27
I have only heard of it being used in CA, but it may be used elsewhere. I believe the CA movement came when it was a Seller's market.
SHELLY avatar
SHELLYSoWal Insider
#28
Not true, because as Davis Properties explained earlier, there is only one price listed in the MLS price box, and it is the higher of the two range numbers. ..

That's not such a bright idea, considering an overwhelming number of home buyers begin their house search on the internet.

Trying to persuade sellers to come down from the roof with their overly optimistic sale price will be cakewalk compared to trying to sell the concept to buyers that the "low price" in the MLS isn't really the price at all, it's just a starting point for negotiations. (Some may even say this is a "bait and switch" tactic if they offer the low "advertised" price and the seller tells them "no deal!")

Being a Realtor(tm) just got more difficult. I can hear newbie Realtors(tm) saying, "This isn't what I signed up for." :nono1:

Edited

JohnBeach Fanatic
#29
The expert has spoken


Who's that, SHELLY or SJ?
Garner avatar
GarnerBeach FanaticAuthor
#30
Here's some information to further clarify things.
  • When VRM was introduced in the San Diego in the late 90's it was a "down market" and has proven to be effective in both buyer's and seller's markets over time . VRM has become widely successful, and last year over half the property sold in San Diego County used VRM as a marketing strategy.
  • VRM intitally started in Australia but over the last 11-12 years it has been used in Hawaii, California, Washington, Colorado, Florida and numerous smaller markets throughout the U.S.
  • Realtor.com supports the use of range pricing as a search option for buyers.
  • Our local MLS system currently does not have the option for a "price range" so in the meantime properties are displayed in MLS at the high end of the range: i.e $599,000 - $698,876 - the price displayed is $698,876. "876" is the cue to indicate a VRM listing. In customer and agent comments the price range is clearly stated followed by: Seller will entertain offers within the range based on price, terms and conditions.
  • The full price range is shown in all other media of advertising.
  • Buyers and Sellers are going to be negotiating anyway, offering a property in price range defines the parameters to jump start the process.
  • VRM "opens the door" for dialog between buyers and sellers. While price is obviously the primary factor in negotiating a sale or purchase it is not the only factor that should be considered.
  • Buyers are already thinking in ranges when looking for property and meeting with Realtors to search for properties. They communicate in price ranges.
  • Lenders communicate in price ranges when pre-approving buyers for loans. They pre-approve buyers "up to" $xxx amount.
  • VRM allows consideration of properties in a range that buyers may not have considered, had that property been listed at a fixed price.
We hope this clears up some of the questions and look forward to more discussion.
Seagrovedude avatar
SeagrovedudeBeach Lover
#31
Bobby,

I am being sarcastic about Shelley's negative attitude (seemingly toward everything). By the way, I have all of the Robert Fulghum books if you want to barrow.
spinDrAtlBeach Fanatic
#32
VRM was used in the Park City, Utah market some years ago but I have not seen any indication of it in the last couple years.
Smiling JOe avatar
Smiling JOeSoWal Expert
#33
Who's that, SHELLY or SJ?
:floor: Everyone knows that Shelly is the expert.
Smiling JOe avatar
Smiling JOeSoWal Expert
#34
DavisProp,
Would it be true to say that the upper end of the price range is the price a seller will take with a bunch of contingencies and the lower end of the range, the price a seller may take for a cash, no contingencies type of offer?

FYI, Shelly - It is not bait and switch the way Davis is setting it up, because in the MLS, they are currently listing it at the higher end of the range, not the lower. However, each Broker has to determine how they will handle that. The MLS Committee has not set rules regarding that issue, and the last time it was brought up, it was shot down with many guns firing.
SHELLY avatar
SHELLYSoWal Insider
#35
:floor: Everyone knows that Shelly is the expert.

Thanks for clearing that up SJ. :clap_1:
SHELLY avatar
SHELLYSoWal Insider
#36
FYI, Shelly - It is not bait and switch the way Davis is setting it up, because in the MLS, they are currently listing it at the higher end of the range, not the lower. However, each Broker has to determine how they will handle that. The MLS Committee has not set rules regarding that issue, and the last time it was brought up, it was shot down with many guns firing.

And what reasons did they give for shooting it down?
Beachlover2 avatar
Beachlover2Beach Fanatic
#37
Trying to understand all this......

So if someone is using this and lists in the range of 350 - 400. If someone bids 350 and the seller turns it down - does he still owe the realtor his commission?
Smiling JOe avatar
Smiling JOeSoWal Expert
#38
Trying to understand all this......

So if someone is using this and lists in the range of 350 - 400. If someone bids 350 and the seller turns it down - does he still owe the realtor his commission?
Now that is a good question. I guess it would have to be covered in the listing agreement, and the standard FAR lisitng agreement does not cover ranges. In par 6)d)2, it states that the seller is responsible for the Broker's fee "if Seller refuses or fails to sign an offer at the price and terms stated in this agreement..."

So, unless the specific terms are given otherwise, there may be some responsibility on the Seller's side to pay the Broker. That is a very good question and, personally, I would want some legal advice, before I would take it to my selling customer.

Edited

Smiling JOe avatar
Smiling JOeSoWal Expert
#39
And what reasons did they give for shooting it down?
The Committee didn't feel that it buyers, sellers and majority of Realtors would understand it, for the same reasons presented by a few of you on this thread.

I understand the concept, but as Shelly stated, it would be more difficult to communicate it to my buyers, than it would be to have some sellers, lower their price. I have a good group of listening sellers with whom I am currently working, and they are highly interested in listening to me and understanding the market so they can move their property. :wub:. However, not all sellers are my customers on the Sell side.
Garner avatar
GarnerBeach FanaticAuthor
#40
Trying to understand all this......

So if someone is using this and lists in the range of 350 - 400. If someone bids 350 and the seller turns it down - does he still owe the realtor his commission?

Hi Beachlover,

Each of my VRM listings has been modified to reflect the top number of the range as the list price and that is what shows in MLS. The seller remains obligated to pay a commission if an offer comes in at the list price, with terms and conditions as described in the listing agreement.

Thanks,

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