'Drama Pricing' Gets Tough Markets Moving

Realtors in slow markets are learning how to use a strategy, often referred to as "drama pricing" or "energy pricing," which attract buyers by pricing a home at the low end of what similar properties in the area.

Drama pricing focuses on what buyers see on the market, forcing sellers to look at the prices of active listings.

In Massachusetts', Coldwell Banker Residential Brokerage is coaching its more than 3,500 practitioners on how to use the pricing strategy. Why? Buyers are overloaded with options and "only respond when they see a perception of value," says Angela Stamoulos, who teaches Coldwell Banker's course on this pricing technique.

Coldwell Banker's efforts reflect a sea change in the market's psychology. During years of record house-price gains in Massachusetts, a prospective seller would examine comparable houses that have sold in the prior six to 12 months and then determine how much more he could get for his home.

Janice Hoffman created a buzz in Cambridge by using drama pricing to sell an eight-room Victorian for $185,000 above the $1.1 million asking price. She attracted 130 people to the April 9 open house because the asking price was at the low end of similar houses in the Cambridge market. Her client received nine offers that ignited a bidding war.

Prices should be set "so that people who can afford it will step up," says Hoffman, a practitioner with William Raveis Real Estate in Newton, Mass.

Source: The Boston Globe, Kimberly Blanton (07/17/2006)