Approach has worked in N.Y., Calif. markets
Rick Grosvenor dealt with value-range marketing before co-founding Prudential Prime Properties office in Newport and before the approach began taking hold in other states.
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Nearly 15 years ago, Grosvenor was the real estate agent for a condominium competing to be sold with properties that had been foreclosed on by financial institutions. The Middletown property had sat on the market, generating little interest from buyers who quickly jumped on the lower-priced condominiums being sold by the banks.
But the introduction of value-range marketing, which advertises a home within a price range extending below the asking price, as opposed to a fixed price, drew interest from a new set of buyers, which led to an offer and eventually, a sale.
“[The offer] didn’t come in at the bottom of the range, which is what a lot of people expect,” he said. “It came in about two-thirds up in the range. … I found it very effective [at marketing the property].”
Now, roughly 10 years after it was introduced as a sales approach in states such as California and New York, the concept is being formally introduced to Rhode Island.
Under the Prudential Value Range Marketing program, the traditional fixed-price approached to selling homes is replaced by a predetermined price range. While the property is generally advertised for a specific sale price, it is placed into the Multiple Listing Service with a price range, alerting brokers and buyers that the seller is willing to entertain offers within the range.
Grosvenor said the range of prices attracts a larger population of buyers than a simple fixed price, which is rarely the actual offer by a potential buyer anyway. By letting the consumer know that the seller will look at offers below the asking price, buyers are more likely to try to purchase the property.
And “once you’ve started offering,” said Grosvenor, “then it’s a process of negotiating to a price that the seller’s willing to sell for and the buyer’s willing to buy for.” Just like a standard sale/purchase situation.
Under Prudential’s program, sellers can choose from any of the company’s 80 predetermined price ranges, which go from $17,900 to $11,994,876. All of the firm’s prices at the top end of the ranges end in “876” – digits that correspond with the letters V, R and M on a telephone – to alert brokers, and their buyers, to the value-range marketing approach to the property.
One benefit of the system, according to Prudential’s fact sheet on the program, is that sellers don’t have to go through the process of dropping their price – the range has been set.
While critics have argued that value-range marketing has the potential to confuse and upset consumers when an offer made within the price range is rejected, Grosvenor said he hasn’t found any buyer put off by the idea.
Michele Caprio, president of the R.I. Association of Realtors, said the group does not take stances on individual sales approaches because it is considered an anti-trust issue. As long as a program benefits consumers, the group is supportive of its membership.
However, Caprio, who said she is not highly familiar with the approach because it is new to the state, said that as the real estate market in Rhode Island normalizes itself, consumers are likely to see the introduction of new sales approaches. After several years of rapid escalation, prices and sales have recently looked more like they did before the sudden swell.
The current climate has created the potential for approaches such as value-range marketing, Caprio said.
“We’re going to see trends coming into the real estate industry that have not necessarily been in place before,” she said. “We are competitive with each other as a nature of the business, but I think we are going to have to stay on the cutting edge. Range marketing, and other types of marketing tools as well, are going to be used.” n
