Homes on the "Range"

[30A Skunkape]

I guess that depends on your lender and the price variation in the range.

You guys are killing me. As I said, presently, I think the trouble with VRM in this area is that most buyers are just going to laugh and call the seller crazy. I think I hear some of the choir , above, singing.

Well, yeah. I am a buyer and pretty ignorant as to how real estate really works. My understanding is so naive;I thought a property was offered at a certain price, then the buyer and seller negotied from there. Man, you start throwing-in concepts like "ranges" and "Mercedes-Benz with the purchase of this house floor: )" , you will really turn me off. That is just me though.

 

[Garner]

I don't get it. If it is a strategy to get sellers out of denial about what is happening to their property value, that's one thing. But you can't honestly believe that in this market a buyer will not consider the low end of the range the new asking price ... heck, I'd assume the "negotiation starting point" was the low end less 20+%.

And there's nothing saying that you couldn't submit an offer for 20% less than the low range. The seller may or may not choose to work with that offer. An offer at the low end of the range obligates the seller to respond - either to counter or to accept it.

In any market, sellers believe that their property is worth more, and buyers that it is worth less. Pricing using a value range says - yes, we know that there's a gap - let's price the property in a range as a starting point, and go from there.

 

[Garner]

So I could just start at the lower end of the selling range and then negotiate in the 30-50 percent off range?

Generally, that's about how it works - buyer and seller meet somewhere in the middle.

A variety of terms and conditions accompany any offer, and they often have an impact on the final price - these terms include days or months until closing, contingencies and allocation of closing expense. A lower cash, no contingency, quick close offer will almost always beat out an offer for more money, contingent upon selling another property, with the seller paying all expenses and closing in several months.

 

[Garner]

Can I get a new Mercedes-Benz if I make an offer in the mid-range :funn:

We're selling real estate, not cars.

 

[Garner]

As I said, presently, I think the trouble with VRM in this area is that most buyers are just going to laugh and call the seller crazy.

I don't know how it's any different than not using VRM - most buyers are laughing and calling the sellers crazy anyway!

The concept is new to this area but is proven in other parts of the country, particularly Hawaii and Southern California. This message board is one way that we're trying to explain the concept to people interested in our local real estate market.

 

[John]

VRM seems at first a little wacky. But upon refelection, it's not as insulting as offering a "free" car with purchase. Giving away cars, if anyone is ignorant enough to fall for it, and they're really ignorant if they finance it for 30-years, keeps comparable sales at an artificially high level, furthering confusion in the market.

If VRM gets a potential buyer to make a written offer, any offer, it's better than nothing. Maybe it will bring the seller "down to earth". How is that a bad thing?

With 50-months of inventory in our market, and the national average of inventory at an "alarming" 7.3-months (NYT article 8/23/06), this may be a concept that can bridge the gap between buyers and sellers. Sure there may be some initial confusion, but I think it's an interesting approach to what otherwise is a pretty dead market here. The traditional approach doesn't seem to be generating much buyer interest these days.

I think it may work.

 

[Garner]

Well, yeah. I am a buyer and pretty ignorant as to how real estate really works. My understanding is so naive;I thought a property was offered at a certain price, then the buyer and seller negotied from there. Man, you start throwing-in concepts like "ranges" and "Mercedes-Benz with the purchase of this house floor: )" , you will really turn me off. That is just me though.

When you (any buyer, not you in particular) are looking at property, are you thinking of looking at properties within a certain price range, or do you think "I only want to look at houses that are $645,000"?

This is not that different - our VRM listings state a range on the front end, letting potential buyers know that it probably isn't a waste of their time to look at a home where the seller's low range is within the buyer's top range. Again, price, terms and conditions all factor into the final contract.

Thank you for your comments!

 

[Garner]

VRM seems at first a little wacky. But upon refelection, it's not as insulting as offering a "free" car with purchase. Giving away cars, if anyone is ignorant enough to fall for it, and they're really ignorant if they finance it for 30-years, keeps comparable sales at an artificially high level, furthering confusion in the market.

If VRM gets a potential buyer to make a written offer, any offer, it's better than nothing. Maybe it will bring the seller "down to earth". How is that a bad thing?

With 50-months of inventory in our market, and the national average of inventory at an "alarming" 7.3-months (NYT article 8/23/06), this may be a concept that can bridge the gap between buyers and sellers. Sure there may be some initial confusion, but I think it's an interesting approach to what otherwise is a pretty dead market here. The traditional approach doesn't seem to be generating much buyer interest these days.

I think it may work.

Thank you John!

 

[SHELLY]

The way I view VRM is a marketing tool specifically designed to keep the Realtor(tm) from having to play the "bad guy" in the eyes of the seller and an attempt to get more people through the door. (Balloons and open house banners just doesn't work any more.)

Using VRM, the Realtor(tm) will be able to say to the seller, "Look I know you want $900,000 for this condo you paid $600,000 for last year, and it is certainly worth every penny <piercing eye contact while slamming fist into palm--while his mind screams, "You're nuts!!">...but the market is soft now, and if we list for $900,000 we won't get many people in the door. If we get no lookers, we'll have to start dropping the price lower and lower until someone finally bites. Hey! <snapping fingers and turning on his heel>...I have a great idea! Let's say we put a range of $975,000 to, ah, say, $650,000. That way when someone is Googling condos for $650,000 your condo pops up and we'll have a fish on the line...we reel him in the door and once he sees the wonderful stainless steel appliances and these lovely granite countertops <sliding his hand gracefully over the GCT> he'll absolutely fall in love with it. Then he'll place a bid for $650,000, you counter with $950,000, then he'll say $800,000 and you say $900,000 and he'll jump for joy and pay $900,000--everyone wins!!"

I don't blame the Realtors(tm) for trying every trick in the book in this market, the price range thing may get a few more bodies past the doorstep. I wouldn't expect many to get into a heated bidding war...but it may bring in at least a few lowball bids; and a lowball bid is better than a no-ball bid. It may also prove the realtors(tm) point to their client that they really are nuts to think the place is worth $900,000 in today's market.

The other "trick" used with sellers offering a car, TV, jetski, or opera tickets in order to keep the price of houses up--now THAT'S pretty tacky.

 

[Santiago]

The expert has spoken