What’s the Deal With Value-Range Pricing?

The Palm Beach Post’s real estate blog has an interesting take on a new concept known as value-range pricing, and how many think it can stimulate sales even in a sagging market.

Take the case of Victor DeFrisco, who listed his suburban Lake Worth home earlier this year at $469,900. No interest. Then he dropped the price to $459,900. Still no offers.

So DeFrisco decided to try a pricing strategy that brokers in some parts of the country swear by: He listed the house not at a single price but at a range of $439,900-469,900. Within two weeks, the eager seller had himself a contract for $450,000.

The success sold DeFrisco, owner of Exit Realty Premier Properties, on the strategy known as value-range pricing. The current climate has buyers stretching to their limits to find Florida home mortgages they can afford. This just might get more of them in the door.

It’s a concept that has been around for years but remains a novelty in most of the nation, despite this sudden surge in popularity within the Florida housing market. In San Diego, the majority of listings are sold through value-range pricing, with agents believing that the tactic helps a home sell faster and for more money.

But not everyone is sold.

Tim Allen, a real estate professor at Florida Atlantic University, recently co-authored a study on value-range pricing and concluded that the tactic has no effect on how quickly a home sells. Or for how much.

“The property is the property, no matter how it’s marketed,” Allen said.

But DeFrisco is sold on value-range pricing. The tactic lets those selling in a buyer’s market cast a wider net and potentially yield far greater results. The buyer who bought DeFrisco’s home was looking for properties under $450,000, which meant DeFrisco’s house never hit his radar screen when it was listed at $459,900 and 469,900.

Without value-range pricing, DeFrisco says, “He never would have even seen that house.”

For an area in which Florida mortgage costs are already sky-high, even a tactic that seems small and insignificant can end up making a huge impact.