Commentary by Walt Baczkowski
RISMEDIA, Nov. 8, 2007-In conversations with Realtors over the past several weeks, it became obvious that a key service utilized in marketing real estate is completely backward and could work against exposing a property to perspective buyers. The solution to this issue has also been around for more than 15 years, but was shelved or under-utilized during the 10-or-more-year expansion we experienced in real estate sales and prices.
In the early ’90s, while working for an association that operated an MLS, we were approached by a broker requesting the MLS to look into value range marketing (VRM).
The basic premise to VRM is that all real estate sales are basically an auction. The seller establishes a price, and based on information and advice from their Realtor, the information is published in the MLS and the bidding begins.
The most significant difference here is that the bidding goes backward as offers are received from prospective purchasers.
With current market conditions, the existing system-with setting a list price-could work against the seller. An example: A Realtor or consumer is searching property listings and enters a top purchase price of $150,000. On most sites or MLSs, they would not be provided information on a listing for $200,000. The higher-priced listing may have all the features that the buyer wants; however, he or she is not aware of its existence. Had VRM been in place, the property could have been listed in a range from, say, $150,000 to $200,000. The listing would have been exposed to the prospective buyer and negotiations could have been initiated with both parties reaching a sales price they are comfortable with.
In my opinion, implementation of VRM in all MLSs and Internet searches would be a significant value to sellers, buyers, Realtors and all parties to a real estate transaction. The market sets the price; listings obtain broader exposure; and buyers are encouraged to submit offers on properties in a true auction format: A service whose time has come again.
Walt Baczkowski is president of the Metropolitan Consolidated Association of Realtors. To contact him, please e-mail email@example.com.