The gimmick known as ‘value-range pricing’ got it’s American start here in San Diego years ago. It’s when a listing agent and seller decide to offer the house with a price range, saying, “sellers will entertain offers between $999,000 and $1,100,000”.
Range-pricing sends a mixed message to buyers, who typically just want to know how much.
When the answer is a range, it’s not specific – it is murky. Buyers hear the bottom price, and want to go down from there, while the sellers gravitate towards the high-end price. What’s worse is that there isn’t any conformity between agents, so you’ll see ranges with 1-2% gaps, and others with 10-20% spreads.
While our MLS companies have been asleep at the wheel, third-party websites have taken over the dissemination of our listings. Their reporting of range-pricing isn’t uniform either, leaving the consumer wondering what the actual price is!
How Third-Party Websites Report Range-Pricing on Listings:
Zillow: Low-end price only.
Redfin: High-end price, with the low-end mentioned in the fine print.
Trulia: Low-end price only.
Realtor.com: High-end price, with low-end in the fine print.
SDLookup: Shows the full range at top of listing.
Rather than complain, I’d like to simply encourage sellers and agents to stick with a single price.
I think buyers will appreciate the honesty, and be more willing to to do business with those who provide this sort of transparency, instead of the constant flim-flam. I know there are agents who swear by it, saying that range-pricing “gets the conversation started”.
But the industry has changed in the last ten years. With the price range being reported differently on every website, we need to recognize that our primary data is getting more garbled in tranmission – we need to take corrective action.
Just Say No to Range Pricing.
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Or we could just terminate the listing syndications, but I think the jeannie is out of the bottle.
Here is the update on what has happened since Jim stopped sending his listings to The Big Three:
He complains that the Big Three websites re-sell his proprietary information (listings) to agents who have no knowledge of the homes. But then he allows the entire MLS to be advertised on his website via the IDX feeds, and I’m pretty sure he hasn’t seen all 6,000+ listings in San Diego.
My point?
Let’s make it easier for buyers and sellers to experience full transparency, and demonstrate why we can be trusted to assist them with the biggest transaction of their life.
A “range” just tells me the seller/agent haven’t done their homework to establish a value.
Kinda cool, our Lakside fire department is auctioning off one of their fire stations. $180k starting bid.
http://www.lakesidefire.net/documents/station-2-auction-notice.pdf
Basically a big garage/shop with a small living space attached. Res zoning. I think there will be a fair amount of interest. They have several banners around town, starting bid seems reasonable.
He says it all when he says that it’s about control. From my point of view, his control runs counter to my interests as either a buyer or a seller. If I’m buying, I want to have unfettered access to information about what’s available. If I’m selling, I want the widest possible exposure to potential buyers. The Zillows and Trulias of the world add real value. Maybe not as much as they’d like us to believe, but value nevertheless.
His presentation skills seem to have improved since the first video, but he needs to keep working on his hand waving. It’s distracting.
I’ve always hated range pricing. I kind of understand if the reason their doing it is to hit somebody’s search criteria. I.e. 3000 SF, etc, and hope you can get them to fall in love with it and work up the pricing scale.
At the same time there’s only a few listings hitting 92130 everyday so people probably don’t need to be that specific with search criteria. The amount of new data isn’t overwhelming so why filter to that level. Buyers probably just go with give me everything new or lowered in price in my target market and I’ll figure it out.
Range Pricing is the best way to “End the Conversation” with me. A listing filled with good photographs, sales history, and comps is a great way to get the conversation started.
It’s like saying “I will obviously accept offers of X, and if you are a major-league moron who wants to ignore that clear signal and instead offer me 10% more just because I also wrote that bigger dream-number in my listing , that would be awesome”
If you are interviewing listing agents, it is a great question to ask – “how do you feel about range-pricing?”
Be prepared for an avalanche of psycho-babble.
Those that practice the super-large spreads are telling the world that they really have no idea what it is worth, and that you Mr. Buyer have to figure it out. And I better like your answer, or no soup for you.
Hey, when you see a range listing, just make a range offer.
I was competing for a listing over the last week, and just lost to an agent who took my price, and added 10% on top and turned it into a range.
I’m sure the seller was happy, and will be dreaming tonight about what she is going to do with the extra 10%.
But is that ethical service? I think not.
In commercial, they RARELY ever list a price. Always marketed (without an MLS system I may add) as “Price: Unpriced, Make Offer”.
Now try playing that game on a 200k sf property with 50 leases/tenants.
Jim, you know damn well that isn’t ethical practice. It’s also not uncommon. One way to judge a brokerage is by how closely their Listing Price is to the Sales Price and what are their average DOM. There are 2 or 3 brokerages in my neck of the woods who really stand out from the rest in this regard. Sellers want the maximum price and if someone promises more…The first home I leased in Sebastopol is on the market and has been for 6 months. It went to an agent who promised the seller more $. Exclusive of carrying costs that seller has lost close to $30k because that class of home in that neighborhood has been hit hard.
Where does that Abbot character get off with his “proprietary information” BS? His JOB is to get that information out as far and wide as possible, not to protect it.
Here’s some one who didn’t care for range pricing or anything else:
http://www.malaysia-chronicle.com/index.php?source=Patrick.net&option=com_k2&view=item&id=33425:sword-rampage-japanese-man-chops-off-realtor%E2%80%99s-arm&Itemid=4
Have a Nice Day.
Yes, range pricing sucks. Might as well pick a number in the middle.
Went to the ARG website, randomly found a “featured property” for sale. Sure enough, zillow does not show it is listed. But Redfin shows it is pending. While ARG is still selling it as an active.
Reminds me of a time I called a dealer on a listing found on autotrader, of course the car was already sold. 2 weeks later I saw that the same car was still on autotrader so I called again, of course the car was still sold, but they quickly tried to sell something else to me.
Seems to me ARG just want to retain its ability to pull some of the same used car salesman tricks that would only be possible in an exclusive listing setting.
Some agents consider range pricing as a tool to gauge the near correct pricing.
For example, a house priced at 600,000 to 639,000
if offers come in mostly below 600,000, the house is priced too high;
if they come in midway of the range, it’s just right;
if they come in more than the high range, the market is hot and the best offer the winner.
That seems to be the reasoning behind range pricing but then what I know..
I called it the “Value Range Pricing and the Priced to Sit Phenomenon”.
http://www.socalbubble.com/2007/02/value-range-pricing-and-priced-to-sit.html
I also recommend making a range offers. Have escrow sort out which one you’re going to pay.
Chuck
We never saw this before looking at SD real estate, and never once considered making an offer that wasn’t less than the lowest end of the range, but then we never once saw any house that we would have hesitated to walk away from if the seller didn’t consider our first offer.
Range pricing might have worked during the bubble on people who actually believed their houses would never stop going up and they would turn over and refi before their teaser rate ran out, but aren’t those people all out of the market now? Who do they think is left who’s going to fall for this?
😆
http://www.neighborcity.com/CA/agent-profile/608742-Jim-Abbott/
Be sure to click the “read more” link to catch the last sentence of his description.
This stuff must drive him insane.
@GeneK, it may be a California thing because I’ve seen it in Sacramento area MLS listings since the bubble popped.
@Chuck, great link and the comment section gives the history for your moniker too. 🙂
Terrible Argument. Not well thought out. I’ve bought six homes in last 15 years Nd called straight to listing agent. Sure, some pf those calls won’t result in sales, but some will – just like every other call they get.
Maybe if he went to an Ivy League school he would be more intelligent. This guy sounds like a dope.
And what’s with calling out Napster then saying they aren’t that bad . . . He’s taking this too personal, it is just business. Seems he loves his 15 seconds in the spotlight too. What a douche.