California, despite losing over three quarters of a million in population this year, is still among the most popular states for relocating families in the nation. While areas like San Francisco and Silicon Valley are losing three families for every one family moving in, according to the Move Management Center, other areas such as southern California are seeing bidding wars on homes.

This has caused some creative strategizing on the part of listing agents to price the home in a range that could accommodate multiple bids, and on the part of buyer's agents and their clients who want to make sure they don't miss the opportunity to get into a home.

According to John Holly, president of Sandicor MLS, variable range pricing was introduced at his MLS in 1996, while the San Diego area was still in a buyer's market that had bloated to over 25,000 listings. Since then, the market has changed and San Diego is in a seller's market. Variable range pricing is a strategy that seems to work in both situations.

Variable range pricing isn't a new concept, but it is gaining in popularity, he says, because it can broaden the pool of buyers in a given range.

"About 31 percent of our inventory of homes are range-priced," says Holly, "and in some neighborhoods, it can vary. For example, there are 73 active properties for sale in the 92026, the North Escondido zip code, and 39 of those are variable range-priced."

Holly says that while companies like Prudential California Realty have popularized the concept and have even patented a pricing system to implement it, that it is widely used by all member brokerages across the board.

"Variable range pricing is saying that the client will entertain offers from here to there within this range," explains Holly. "In the old days, we would say that the seller 'is motivated - bring all offers.' This is saying that the seller would like to entertain offers between here and there and they haven't established a set price. Does it work? Yeah. Is it for every home? No."

What is an example of a seller to try a variable range price? "It isn't a technique for every home listed," says Holly, "it would be for a home that is unique. Let's say you have a high-priced property in a nice section of town but the surrounding property may not be of the same value, so variable range pricing might entice more clients to come see the property. Once the client sees it, they get more motivated. It captures more audience to cause negotiations between the seller and buyer. You can't call the seller and ask - 'what will it take?'

What makes it work? "There is a point that has been established on both ends of a range," explains Holly. "Properties don't necessarily sell at the top or bottom of any range."

Holly's sister, he recalls, had a unique condo property with a beautiful interior. It was worth a lot of money, and she range-priced it with an agent and received four offers. The buyers competed to get the home because they got in and looked at the home, he says.

"Clients are willing to spend more to purchase a home once they see it," says Holly.

Russ Bergeron, president of Southern California MLS, says that variable range pricing has been used by his MLS members for over five years.

"The only objections we get are when people enter a price range of zero to $1,000,000," says Bergeron. "We make them enter a reasonable price range."

He says, "It does maximize results on an MLS search. For example, if the listing is entered with a price range of $150000 to $180000, and the user does a search for $140,000 to $160,000 or a search of $170,000 to $190,000, both searches will result in a match for this listing."

Bergeron offers several scenarios where variable range pricing can be useful. "I haven't done any recent statistics but when we first looked at implementing it, the selling price of range-priced properties always hit the top half of the range," he days. "In a market like we have now, where most properties sell close to or more than the asking price, I'm not sure how effective it is, but I can see it being used on high-end properties, or if you have a property that is unique to its neighborhood. It can also be effective when dealing with a client who doesn't want to put a reasonable price on their house."

For MLSs, brokers and agents who would like to try variable range pricing, is the concept easy to implement or is it a technical nightmare?

Suggests Holly, "If you want to do variable range pricing, you have to make a commitment to do it right. It isn't just a flag in the system or in the remarks section. When an agent lists a property, they are prompted in our system to give a low and a high price, and if they respond with a 'No,' they are prompted for a low and a high price and those prices are the same. When a buyer's agent performs a search, they enter search criteria - they are looking for beds and baths and looking for a low price of this and high price of that, so the system executes the search. It is running an algorithm that looks for a search routine that compares the user's range with the listing agent's range. If the range surrounds the low list, you have a match, or if it surrounds the high list, you have a match."

Not every information field allows for a range on the MLS system. In the cases of CMAs, for example, the agents are trained to simply put in the high range number. "When the agent enters a search criteria, they get a list of matches before they start looking at full listings," explains Holly. "In the price column, we only display one price - it will always be the high price. If it is a variable range listing, we put a 'V' next to it, so the agents will know it is a range price. We display the high price, but sort by the low price, so when an agent is looking down a list of property matches at $350,000, and one is shown with a price of $389,000 with a V beside it, then the low has to be between $360,000 and $365,000. On our full displays, we display the low and high range.

"If you are going to do range pricing," he advises, "lay down some rules so it can be a mechanism that can make your market stronger. It helps in slow and fast markets because you are setting these guidelines down."

Published: August 21, 2003

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