Is Redfin’s ‘whisperer’ the next Value Range Marketing?
Nearly a decade ago, when homes were selling faster than agents could list them, a national real estate company introduced a marketing campaign that set a dollar range that sellers would “entertain” or consider when selling their home.
Critics of Value Range Marketing said it was merely a way for agents to avoid submitting a listing price that would need to be adjusted upward in a few weeks or days. It also perplexed buyers who thought if they made an offer “within the range” it would be accepted by the seller. Typically the range had a 10-12 percent deferential.
Proponents of VRM said the concept encouraged offers and quickly brought the buying camp and selling camp closer together and “got them talking.” That’s because with any “range” program, the buyer typically enters at the low end while the buyer’s expectations are at the high end of the spectrum.
When VRM was first introduced, some multiple listing services were confused about how to handle the actual listing price on association forms. In a case where the input form only allowed the agent to put in a fixed price, some agents began using “876” which spells out VRM on a telephone keypad to denote that the house is being sold using value range marketing.
For those agents and consumers in the know, the “876” indicated that a lower range can be found in the MLS remarks section of the Multiple Listing Service. A majority of agents, however, never really caught on to the numerical code.
I thought about VRM the other day when real estate brokerage Redfin launched a new service called the “price whisperer” that lets homeowners get feedback on a price for their home before actually listing it for sale. Think housing focus group. Redfin’s new price whisperer tool allows potential sellers to gauge the pricing of their home from potential buyers while giving buyers a “sneak peek” at homes not yet on the market.
“The most important decision when selling a home is what price to charge,” said Redfin CEO Glenn Kelman in a press release. “The traditional process often amounts to a high-stakes guessing game with tens of thousands of dollars at stake for the owner.”
Here’s how it works: Homeowners provide the price they want for their home, the receive feedback from an agent. The agent then takes photos of the property and e-mails up to 250 active buyers with a question whether they would pay that price for this home. The address is not disclosed. Buyers are also asked if they’d like to tour the home.
Redfin says the service is not intended to generate pocket listings. If there is interest in the property, the agent will recommend that the homeowner list the property on the Multiple Listing Service before selling.
“Selling directly to a buyer without listing the home on the MLS is called a ‘pocket listing,’ and generally does not benefit the seller,” according to a release from Redfin.
It will be interesting to see how the price whisperer is received. Since entering the real estate brokerage space in 2004, Redfin has targeted computer-oriented professionals who know how to search their desired neighborhoods online and have an idea of the type of home they would like to own. Those whispers could rapidly become shouts via social media.
Whatever happened to Value Range Marketing? The concept disappeared rather quietly after a 2005 article in the Journal of Real Estate Finance and Economics that stated homes marketed under VRM took longer to sell. The authors also found the concept had no significant impact on pricing.
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