from the sheeple's guide to buying a house
Value Range Marketing
Here is a marketing method that is used by many Realtors to get buyers in the door; it was originally started with Prudential and is now being widely used with many Realtors. Recently it has gotten very popular; which usually happens when
inventories build to extreme levels (like now). It's basically a desperate attempt to push a house that has been sitting for way too long and according to statistics, it has worked well in the past.
The idea here is to stimulate interest by widening the price range which causes people who are looking in the upper price range to be interested as well as those looking in the lower price range. It's also used as a psychological deterrent to discourage what they interpret to be extreme
low ball offer. They know that people fall in love with a house when they enter it and by getting more people to enter it will increase the chances of this happening.
The way it works is this: The Realtor will create a range of prices that the seller will accept as an offer; from let's say $359k - $389k. They are basically telling you,
"We would like to get $389k, but we know there is no way anyone is going to pay that amount, but we will accept a low-ball offer of no less than $359k."
The logic behind this is silly if you think about it. When we negotiate a price on an asset, whether it be a Car, a Boat or a House, we do not tell the interested party our bottom line until we are done negotiating. Here, they are telling you (or at least making you believe) that their bottom line is $359k before they even encounter you. Why would they tell you what their bottom line is so fast? The answer is that it isn't their bottom line; they just want you to think that, for now; thus discouraging you from
low balling and getting you interested.
This idea goes against the free market and their own rule that states,
"A Realtor must accept all offers" and assumes that if you want to make an offer that is lower than the lower value ($359k in this case), they will not accept it. Don't let this stop you from offering a price that you logically think it is worth.
The fact is, no offer is too low. This is just an act of trickery to convince those inexperienced house buyers that if they really want the house, they BETTER offer at least the lower of the range.
The way too interpret these Value Range asking prices is to assume the lower value to be what the asking price is; which means, make your offer lower than what their lower range ($359k in this case) is; ignore the upper range, it means nothing.
Value range marketing is really just saying,
"In the very unlikely scenario that you offer the higher value, we will be more than happy to take your money (and run), if you offer the lower value or above, we will either take it or hold on to your offer until we are absolutely certain their isn't anyone dumber than you that will offer more; and if in the most likely case, you offer less than the minimum, we will reduce our lower price hoping we might attract more fools".
Like I have mentioned before, buy with your head, not with your heart; you can change the look of any house to make it more appealing to your tastes and the costs can be significantly less than buying it already done.
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