Value-Range Pricing Offers Mortgage Seekers Wiggle Room

Variable pricing, also known as “value-range marketing” or “range pricing,” has gained popularity in the San Diego housing market over the last decade, becoming an established peculiarity of the region.

• The number of homes marketed with a range in San Diego County has steadily grown since it was introduced in 1995. There were only 12 value-range sales in 1996.
• Today range-priced listings make up 50 percent of all sales in San Diego County, with 15,335 properties sold with range pricing last year out of a total of 30,831 sales, according to Ray Ewing, the president and chief executive of Sandicor, a regional multiple listing service.

Range pricing has been used in other areas of the U.S., like New York, Arizona, Michigan and Florida, but in no other place has it become as widespread as in San Diego. Mortgage brokers, though, have differing opinions about whether the strategy works best, and in what type of market.

The system was introduced by Prudential California Realty.

In a lagging market many people initially had positive experiences with the system, according to Mr. Ewing of Sandicor. It has become pervasive as the variety of property types in the Southern California housing market makes pinpointing comparable prices a challenge.

“You may have an established neighborhood, but you may have a new house” on the market, Mr. Ewing said. “How do you value that?”

He pointed out that in subdivisions inland, where views and coastline do not affect property values, finding comparable properties and setting a fixed price is much easier than in areas along the coast.

Also, value-range pricing has thrived with San Diego mortgage seekers as the multiple listings service adjusted its database to accommodate homes listed in price ranges; other listing services post at a fixed price.

The brokerage adapted the value-range strategy from an Australian sales model where it had been popular in the 1990s.

“We started range pricing in a market very similar to this,” said Carlton Lund, a California mortgage broker. “It was through necessity that we used this concept because the market was arduous and there was not a lot of activity.”

The big advantage of using value-range pricing in this market is “giving people the opportunity to think they have the chance to negotiate,” said Sharyn Crown, a broker at Napolitano GMAC Real Estate.

Continue reading this New York Times article on value-range pricing …