Deciding If Value Range Pricing Is Right
In San Diego, it is common to see listings with value range pricing. This is when a home is listed for a range price instead of a set price (i.e., a listing price of $475,000-$525,000 vs a listing price of $500,000). Value range pricing is not a new idea; it has been around for years. In the San Diego home market, the value range pricing trend started in the mid 90’s and still continues to this day. Its effectiveness has been debated since the beginning and, although its use has decreased over the years, it is still practiced widely in San Diego.
Value range priced San Diego houses are more likely to pop up when searched for by potential homebuyers and their San Diego real estate agents. This is due to the fact that the listing is not stuck at a specific dollar amount but encompasses a range of prices. More interested buyers frequently leads to more offers, which can give way to counter offers, followed by negotiation of the highest and best price and terms for the seller.
After meeting with June to talk about the best way to prepare, market, and sell her La Mesa home, we chose a range price. Because June was hoping to get over $500,000 for her home, we established a price that would lure La Mesa homebuyers to my scheduled open house. I explained to June that San Diego homebuyers are looking up to certain price points, i.e., $450,000, $500,000, $550,000, etc. June was considering a price of $510,000, but after explaining how buyers search, June agreed to a range price of $499,000-$519,000. In that way, buyers looking up to $500,000 would find June’s house. And, I’m happy to report that I negotiated a price of $515,000 for June!
However, there is no guarantee that this will be the case. For example, if the only offer received is at the low end of the listed range, the seller’s agent may have a hard time getting the buyer to increase their offer. In San Diego, this scenario is less likely to be the case, especially in our current seller’s market. Houses are selling fast and for top dollar. So while using value range pricing is a gamble, experience shows it typically pays off in the end.
To be sure, one of the most important factors when using value range pricing to list your house is that, as the seller, you’re willing to consider an offer at both the lowest and the highest values in the range. Nothing is more frustrating for a buyer then to be the only offer on a property that is marketed with value range pricing, but the seller will not accept your offer because they are unhappy with the lower range price presented. If you are a seller who is considering value range pricing, be sure to think through the price you would be willing to accept so as not to seem deceptive to potential buyers.
Value range pricing does not allow for the overpricing of a property. Listing a house for a range that is well above the appraised value of a house will not help to get offers rolling in. This scenario will only cause the property to sit on the market for an extended period of time with little or, even worse, no offers simply because the rest of the market in the area is priced at a more acceptable range. Overpricing a property, whether using a set price or a range, will not help to sell the house at its optimum price.
When pricing someone’s home, my favorite situation is to have multiple offers that are within 5% of the list price to allow for optimum negotiating. Multiple offers lead to the seller’s multiple counter offers, which places the ball in the seller’s court and gives them the opportunity to get the highest and best offer from potential buyers.
Bottom line: if you’re looking to get top dollar for your property, choose a San Diego real estate agent or broker, like me, with plenty of experience. Your experienced real estate professional will help you to determine the right form of pricing to use with your property and help to answer any of your house-selling questions. Still looking for the right person to help you determine how to price your San Diego house for sale? Feel comfortable calling me, Kim Ward, your real estate advisor for life.