Yesterday reader DaCounseler asked about value-range pricing, and how it shows up on the statistics.
Using two list prices to create a ‘price range’ was added as an option about ten years ago as an alternative to “get the conversation started”.
It does provide one benefit on the MLS. Agents looking for properties up to $800,000 would see a listing priced on the range $799,000 to $849,000, where if it had just the one price of $849,000, the agent wouldn’t see it.
How is it working? Here are the stats for the NSDCC detached homes sold in September, 2013:
-
Total homes sold: 259
-
Number of listings that used value-range pricing: 67, or 26%
-
Average SP:LP, using the bottom of range: 101%
-
Average SP:LP, using the top end of range: 94%
-
Number of sales closed under the bottom of the range: 16, or 24%
In September, the average sales price was just barely above the average bottom price of the range. Almost a quarter of the sales prices were under the low end.
Here is the comparison of the sales using the value-range pricing, vs. those using just one price – it looks like the MLS is using the top-end of the range for their statistics:
| Sept. 2013 | ||
| Number of Sales | ||
| Average SP:LP | ||
| Avg. SP/sf | ||
| Avg DOM |
Those who use the value-range pricing can expect buyers to gravitate to the bottom of the range. The listings with the extra-large ranges have trouble trying to bridge the gap – the recommended gap is 6% to 8%.
Many buyers see the bottom of the range and want to go down from there, and others are turned off altogether. Furthermore, the main listing websites use the top end of the range only. Sellers beware – use the value range with caution!
Thanks Jim. I suspected as most probably did that the lower end of the range was where the SP’s typically hit. I’m not a fan of range pricing but it wouldn’t stop me from bidding.
I will say it again. Whenever I see range pricing all I imagine is a listing agent too incompetent to work up a BPO.
That may not be the case but I doubt I am alone in the opinion.
You’re not alone – it is the easy way out for lazy agents who don’t want to be proficient with their craft.
It is also a great way to steal a listing too.
When an agent is competing with others for a listing, and the comps point to an obvious price, say $899,000, the range agent will suggest $899,000 to $999,000 to give the seller the impression that they might make an extra $100,000 if they list with the ranger.
The district attorney should take a whack at it.