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Smiling JOe

SoWal Expert
Nov 18, 2004
31,644
1,773
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!!"
...

Not true, because as Davis Properties explained earlier, there is only one price listed in the MLS price box, and it is the higher of the two range numbers. I could see this working if it were the lower end of the range, but that would be telling the buyers that this property is priced at the lower price. I almost made the mistake of saying car, rather than property. That is exactly what the auto industry does. The ... car starting at $....
 

bdc63

Beach Fanatic
Jun 12, 2006
303
22
Md for now, but dreaming of SoWal
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.

Can you give me one example, in the current market environment, where I as a potential buyer (which I am) would ever offer more than the bottom of the range?

You want to get lots of contracts written against properties? Put some code in the MLS that indicates that this seller is REALLY motivated and will consider ANY offers ... maybe none of the offers will be any good (and most will probably be absurd), but then atleast you'll have a list of potential clients for when things really start to turn ugly.
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,644
1,773
I have only heard of it being used in CA, but it may be used elsewhere. I believe the CA movement came when it was a Seller's market.
 

SHELLY

SoWal Insider
Jun 13, 2005
5,763
803
Not true, because as Davis Properties explained earlier, there is only one price listed in the MLS price box, and it is the higher of the two range numbers. ..

That's not such a bright idea, considering an overwhelming number of home buyers begin their house search on the internet.

Trying to persuade sellers to come down from the roof with their overly optimistic sale price will be cakewalk compared to trying to sell the concept to buyers that the "low price" in the MLS isn't really the price at all, it's just a starting point for negotiations. (Some may even say this is a "bait and switch" tactic if they offer the low "advertised" price and the seller tells them "no deal!")

Being a Realtor(tm) just got more difficult. I can hear newbie Realtors(tm) saying, "This isn't what I signed up for." :nono1:
 
Last edited:

Garner

Beach Fanatic
Here's some information to further clarify things.
  • When VRM was introduced in the San Diego in the late 90's it was a "down market" and has proven to be effective in both buyer's and seller's markets over time . VRM has become widely successful, and last year over half the property sold in San Diego County used VRM as a marketing strategy.
  • VRM intitally started in Australia but over the last 11-12 years it has been used in Hawaii, California, Washington, Colorado, Florida and numerous smaller markets throughout the U.S.
  • Realtor.com supports the use of range pricing as a search option for buyers.
  • Our local MLS system currently does not have the option for a "price range" so in the meantime properties are displayed in MLS at the high end of the range: i.e $599,000 - $698,876 - the price displayed is $698,876. "876" is the cue to indicate a VRM listing. In customer and agent comments the price range is clearly stated followed by: Seller will entertain offers within the range based on price, terms and conditions.
  • The full price range is shown in all other media of advertising.
  • Buyers and Sellers are going to be negotiating anyway, offering a property in price range defines the parameters to jump start the process.
  • VRM "opens the door" for dialog between buyers and sellers. While price is obviously the primary factor in negotiating a sale or purchase it is not the only factor that should be considered.
  • Buyers are already thinking in ranges when looking for property and meeting with Realtors to search for properties. They communicate in price ranges.
  • Lenders communicate in price ranges when pre-approving buyers for loans. They pre-approve buyers "up to" $xxx amount.
  • VRM allows consideration of properties in a range that buyers may not have considered, had that property been listed at a fixed price.
We hope this clears up some of the questions and look forward to more discussion.
 
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