Price Spreads on Listings — Why

[sdappraiser]

powayseller,

The only way to verify sales concessions is to call the listing agent and ask them to disclose it. Unfortunatly, it is not required that the agent disclose this in MLS (it really should be).

It’s easy to spot them with a single listing price as the sales price will typically be exactly $5k or $10k over list. With market times of 45-90 days its unlikely anyone put a true offer in over list.

With the variable range, there is no way to tell w/o calling. I have no doubt many of the sales in the variable range sample had concessions as well, but the majority had final sales prices significantly higher than the low end price (more than 5-10k).

Why would someone offer a price higher than the low end? Maybe they didn’t, got countered, let emotion take over and accepted the higher counter offer.

In any case, variable range listing is a good way to maximize the final sales price and it appears to still be working for many sellers even in this softer market.

[powayseller]

A second question must be answered before I can be absolutely sure that range pricing works. A set price listing is the price the seller wants to get, while a value range listing will be lower to higher than what the seller wants to get; the idea is to put in a lower range to attract buyers searching the MLS in the lower price range, and hope this buyer will come up with the extra money for the home.

For example, say I have a house that should sell for $805K. I price it at $805K. My neighor with the identical house uses value pricing of $775K – $825K. We both get offers for $805K. Same houses, same offers. Now your data shows I got my asking price, and he got above the lower end of his asking price, confirming your bias that range pricing works. But it didn’t make any difference in this example.

I would like to know from the realtors if range pricing works.

[Chris Johnston]

Chris Johnston
iamafuturestrader.com

My experience in dealing with the VRM was that the lowest price in the range was a price the seller would never under any circumstances take. They put it there to get more people into the game. How it will work in a changing environment is anyone’s guess. I dealt with it in 1998 with Prudential people. They told me at the time that the low price would always be below where you would ever want to sell. It is annoying when looking at listings to see that.

[Steve Beebo]

I don’t like dealing with VRM, but it’s here to stay.

The reason I don’t like it is that you really don’t know what the seller will accept as an offer. It seems to me that most VRM listings sell somewhere between the upper and lower price, not typically below the low price. When the market was strong it was not unusual to see homes sell at or near the top price.

If I’m in the market to buy, and a house is listed at $700,000, I know that the seller will accept $700,000. He may accept way less than $700,000, too. But if a property is listed at $675,000 to $725,000, you can’t be sure that the seller will accept $700,000. It’s not hard to figure out what the fair market value is, but you don’t know what the seller is looking for with a VRM listing.

[MANmom]

I don’t pay any attention to the VRM, when I search for a house, I search by size, bedrooms, location, etc., in this market, price listed means nothing, especially when the property has been listed for a long time. How about this: I recently ran accross this listing, MLS# S443675 with a value range of $899,500 – $1,169,500…$270,000 difference! Obviously trying to draw in people who have a budget in mind and “won’t go above $900,000.” I doubt they would actually sell at $899,500, but it’s all about getting buyers to come look. This is also a newer house, I bet the taxes and Mello-roos are sky high.

[Author]

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