The Impact of Range Pricing on Marketing Time and
Transaction Price: A Better Mousetrap for the
Existing Home Market?
MARCUS T. ALLEN
College of Business, Florida Atlantic University, 2912 College Ave, Fort Lauderdale, FL 33314, USA
E-mail: mallen@ fau.edu
University of Nevada, Reno, NV, USA
RONALD C. RUTHERFORD
University of Texas, San Antonio, TX, USA
In various markets around the country, some real estate professionals are employing a new pricing strategy that
involves marketing homes for sale with a price range rather than a single asking price. This strategy is often
touted as a mechanism that will attract more potential buyers to look at a house and thus result in reduced
marketing times for existing homes, with prices determined by competitive forces. The purpose of this study is to
empirically examine whether houses using range pricing, often referred to as value range marketing, sell in the
same amount of time and sell for similar prices as those marketed in the traditional manner. Two staged least
squares with a correction for sample selection and Weibull duration models are used to test the hypotheses,
employing a sample of 5,852 residential houses that were sold during the period January 1999 to December 2000.
In contrast to claims of the strategy’s proponents, the results indicate that houses take longer to sell when using
the range pricing strategy after controlling for physical characteristics and market conditions. Furthermore, there
is no evidence that this strategy has any signiﬁcant impact on transaction prices.
Key Words: value range marketing, listing price strategy, time on market, residential brokerage
At a time when many dealers in the oft-maligned new and used car industry are
moving toward a ﬁxed, no-haggle pricing policy in their business models, some
individuals in the residential real estate brokerage industry are curiously toying with
a pricing strategy that appears to be at the opposite end of the customer-friendly
spectrum. One national residential brokerage ﬁrm in markets across the United States,
from Sacramento, CA to West Orange, NJ, is encouraging potential sellers to esta-
blish a price range for their house’s marketing program rather than setting a single
ﬁxed asking or listing price.
Proponents claim that the range pricing strategy, some-
The Journal of Real Estate Finance and Economics, 31:1, 71–82, 2005
2005 Springer Science + Business Media, Inc. Manufactured in The Netherlands.