Pricing is an art, not a science. One of the keys to successful pricing is to understand that the value or market appeal of a property varies constantly. Supply and demand, interest rates and loan programs available, property condition and location all contribute to the value of a particular property. Add to that the exposure a property receives and the negotiating skill of the agents involved, and the result is a wide range of possible sale prices.
So if value is a moving target, how can we ever expect to find it? The answer lies in the fact that a home is not worth one specific price. Rather, there is always a range of value within which the buyer and seller each have a "fair" result.
In the correct price range, buyers will find the property and are encouraged to make whatever offer they feel is fair. The seller has the option to accept it or make a counteroffer.
Buyers benefit by having access to properties which they might not even notice if a fixed asking price was higher--or lower--than the range buyers are searching. For example, if a buyer searches 600-650K, a home priced at 599,900 essentially doesn't exist--and it's a property that might be perfect for them.
Sellers like the idea that more buyers will know about their home, but they are afraid they'll receive "tons of" low offers. In a marketplace where a multitude of homes fail to sell, receiving offers is a good thing, and buyers will also make low offers on fixed-price properties!
The point is that a sale can't occur if an offer isn't made. When a buyer accepts the seller's invitation to offer within the range, a buyer who wants the home and a seller who wants to sell will often reach agreement, and do so in a less adversarial manner than if the buyer lowballed a fixed asking price.
Range Pricing, used correctly, dramatically reduces market time due to the increased exposure the property receives, and can make the difference in some cases between a property selling or not selling at all. Everyone wins!