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What Is Value Range Pricing? (And Why It's a Bad Idea)

Pricing your home competitively can be difficult. While some sellers think using value range pricing can make the process easier and attract more buyers, this pricing method leads to more problems than it’s worth.
Pricing your home competitively can be difficult. While some sellers think using value range pricing can make the process easier and attract more buyers, this pricing method leads to more problems than it’s worth.

Choosing the price for your home is one of the most important decisions you will make in the home selling process. Your home’s listing price can both attract and repel buyers, so you need to make sure you get it right: price your home too high, and you’ll miss out on a buyer who was willing to make a purchase for less. Price it too low and you’ll lower your profits significantly.

To make pricing easier, some sellers price their homes using value range pricing. This means that instead of giving a fixed figure, say, $500,000, they’ll give a range they’re willing to sell within — $450,000 to $500,000, for example. The idea behind this pricing is that sellers will attract the largest number of buyers possible and increase their chances of closing a deal quickly.

In reality, this strategy doesn’t play out so well. Instead, it often leads to angry buyers and buyers’ agents and disappointed sellers who can’t get their house off the market.

So, what makes value range pricing such a bad idea? And are there any situations where it works out? Let’s look.

The Problem With Value Range Pricing

The biggest problem with value range pricing is that it violates the most fundamental ground rules of negotiating. If someone tells you they’ll sell you a house for anywhere between $450,000 and $500,000, what are you going to offer the seller? $450,000 or $500,000?

If you’re like most people, and you’re not in the business of giving away money to home sellers, you will make your offer at the lower price. Considering the seller said they’ll accept prices starting at $450,000, you’d expect them to accept your offer, right?

Wrong — most times, at least. While sellers price their homes within a range to attract buyers, they almost never want to sell for the lower end of the range. This means that buyers often go through the work of contacting the seller, researching the neighborhood, and attending the open house just to find out that the seller won’t sell you the house for the price it’s listed at. Now imagine your budget won’t even permit you to go as high as they’re asking, and you’ll see just how much of a waste of time this is.

However, even if your budget would allow you to go higher than the lowest price they offered, after having that low price in your head it will be mighty hard to get you to go any higher. In this way, sellers end up frustrated as well — they thought they’d attract more buyers and get a better deal, but now they’re stuck dealing with a buyer who won’t budge on a price they don’t want to accept.

Both the buyer and seller can walk away before they sign a purchase agreement, but the experience rubs both parties the wrong way. In the end, the seller starts to earn a reputation as someone who employs deceptive pricing methods to lure in unassuming buyers. Eventually, this can make it difficult to sell the home, as more and more buyers get turned away after refusing to raise their offer.

Are There Any Situations In Which Value Range Pricing Is Beneficial?

The main benefit to value range pricing is that it will get your home in front of more buyers. When house hunters go online or check the MLS to look for a home, they’ll search within a specified price range. If that range is $450,000 to $500,000 and your home is priced at $510,000, they won’t see your listing even though they may be willing to pay the extra $10,000 or you may be willing to accept an offer that’s $10,000 lower.

This is where value range pricing makes sense: sellers think by providing a range, they’ll attract buyers that wouldn’t have seen the listing otherwise and who may go a little higher than the price floor. When viewed in this context, value range pricing can work, but sellers need to be prepared to accept offers that fall at the bottom of their price range — otherwise, they should raise their minimum.

In some markets, value range pricing is the standard pricing method. If this is the case in your local real estate market, then despite its drawbacks, default to the local custom. The residents will be more accustomed to this pricing strategy and will be less likely to take issue with it.

The best way to price your home is to have an experienced real estate agent perform a comparative market analysis on it. This means that the agent will look at the sale prices of recently sold houses similar to your own and try to come up with a price for your home based on this data. They will use their years of experience to come up with a competitive price and is most likely to get you a good deal on your home with no accusations of being deceptive.

If you’d like to learn more about how a Clever Partner Agent can help you price your home accurately and sell for top dollar, fill out our form and schedule a no-obligation consultation with a qualified real estate agent near you.

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Jamie Ayers

Jamie is the Director of Content at Clever Real Estate, the free online service that connects you with top real estate agents and helps you save thousands on commission. In the past, Jamie has managed columns for clients in a variety of leading business publications, including Forbes, Inc., CEO World, Entrepreneur, and more. At Clever, Jamie's primary goal is to provide home sellers, buyers, and investors with the information they need to successfully navigate the ins and outs of the real estate industry.

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