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What's all the drama about?

By Bryant Tutas

Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

July 16, 2007 08:24 PM

While doing my daily MLS research, this morning, I noticed a new listing, that was priced very, very well. In fact it was priced "to good to be true". So I thought I best do a little more investigating on it. Well it turns out the list price was actually nothing more than a teaser. I think it's called "Drama pricing".

This is a one year old 2200 sq ft home that has a true market value of around $235,000. The listing price is $160,000! The REALTOR® only remarks disclose that this is NOT the real price but is being used to "catch your attention". Isn't that interesting? This is the first time I have seen this in my market, so I'm wondering if anyone has used this technique before?

It certainly "caught my attention" so it was effective in getting me to research the listing. I wonder how much it will sell for? Now as you may know, I use Range Pricing on my listings, so I too am looking to sell my listings for higher than the list price. But the "list price" is normally only about $10,000 less than what my properties comp out at.

I'm not sure how pricing a property 35% less than market value would work. Would it create a bidding war even though the market is so slow and Buyers are few and far between? Would it create havoc and bad will with my peers? Or would it work?

I don't know if you would get market value for it but I wonder how close you could get? One thing I do know is it did "catch my attention". I might just have to give this a try. Maybe I'll just price all my listings at $100,000 and throw them out there to see what happens. That would make a pretty good advertisement: "Come on down to Tutas Towne where ALL properties are priced at $100,000. Make us your best offer!"

I guess if nothing else it would create a buzz. And I like a good buzz. Oops...that didn't sound right. How about...I like excitement? That's better.

So what do you think? Should I give it a try? Have any of you guys used "Drama pricing" before? Inquiring minds need to know.

***Image compliments of Sally "WooHoo" Cheeseman.

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Nate Oskar

Real Estate 101, inc. - Sedona, AZ

I really don't think that actions like this will do much to improve our professional reputation. Is it clever and 'outside the box', yes - but, it's also misleading and wrong. Furthermore, would you be due a commission on a deal like that if you came in with a 'full' price no contingency offer even if it is disclosed? I guess we'll let the lawyers debate that one.

Bottom line, I wouldn't want to have to explain that one to any of my clients. Good post, it got me riled up!

Jul 17, 2007 06:44 PM

Ron Withers ----Retired Mortgage Professional

Kissimmee, FL

Bryant,

Maybe the disclaimer "catch your attention" is what makes it legal? Regardless, I believe there is good argument that it is deceptive and unethical??

Jul 17, 2007 10:13 PM

Jay McGillicuddy

Berkshire Hathaway HomeServices Verani Realty - Exeter, NH

Real Estate Broker

Late to this party...

I think it is unethical and sounds more like they are looking for an auction. Call Rich.... LOL

I would never market this way.

Easier to just auction it..

Jul 17, 2007 10:53 PM

Diane Bell, Hilton Head Real Estate, Bluffton

Charter 1 Real Estate, Hilton Head, Bluffton, SC - Hilton Head Island, SC

I would never do that and bet you don't sign on either. My integrity is paramount to me.

Jul 17, 2007 11:45 PM

Joe Manausa - Tallahassee, FL

Joe Manausa Real Estate - Tallahassee, FL

Tallahassee Real Estate

I think it is a waste of time. Most users (Realtors) of the MLS are searching for properties that fit a specific need of a client. Anything that shows up in a search that is that far off is going to create calls for the listing agent that eventually do not pan out. I think it will just waste time on both sides and leave some disgruntled agents out there.

Also, depending on your local MLS rules, this could be a violation of the rules (though not that big of a deal). I'm sure that the bad-will (opposite of good will...) created among other agents will make this agent stop doing this in the future.

Jul 18, 2007 02:37 AM

Christy Powers

Keller Williams Coastal Area Partners - Pooler, GA

Pooler, Savannah Real Estate Agent

If you are going to do that, might as well not list a price at all. Just put is as negotiable or to be determined. lol...

Jul 18, 2007 03:04 AM

Jim Lee, REALTOR, CRS, ABR

RE/MAX Shoreline - Portsmouth, NH

Buying or Selling? Ann & Jim are the local experts

Bryant,

You could become "Tutas Max", the "no haggle" real estate store ala Car Max

I wonder if there's any sybolism to the nuts we're now using to validate post??

I like Cashews.

Jul 18, 2007 04:18 AM

Rebecca Savitski

BSR Real Estate Group - Cary, NC

NC Real Estate Listings

I get it, it is very similar to HUD homes you make a bid to see if you get the offer not a bad idea and what does the seller have to lose. They do not have to accept any offers.

Jul 18, 2007 07:02 AM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Well over 100 comments and every one pretty much agrees this is unethical. Well OK then. NO drama pricing for me!!!!!

Jul 18, 2007 08:05 AM

Bob Campbell

WEICHERT, REALTORS - Yates & Associates - Lutz, FL

In Tampa, the Range Pricing rule is that the seller must be willing to consider selling any offer in that price range. I use range pricing to cover gaps in searches. For example: I currently have a house for sale in Land O Lakes, FL. We were going to price at 299,900 - but did not want to miss those who are starting their search at $300,000. (Home purchased a year ago for $365,000.) So our low price is $299,900 (which captures those who limit their search to less than $300,000), and high price is $301,000 (to capture those who start their search at $300,000).

The seller would sell it for either price, and I'm sure she'd consider anything close too!!! But I would not put in $200,000 as the low price. That would be deceptive!

Imagine getting those calls and trying to explain that to the buyers, and at the same time prospect them to work with you?? Why would they trust you?

Jul 18, 2007 01:24 PM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Bob, In your area, isn't it ONLY the list price that would show up in a search? RPing used properly shoud be more like $289,000 to $309,000 with $309,000 being a full price offer. In this scenario $289,000 would be the list price, $299,000 would be the target price. But unfortuantely some MLS have changed the rules to where pricing like this is now a violation. They don't get it.

Jul 19, 2007 12:21 AM

Daniel Bates

MCVL Realty - McClellanville, SC

McClellanville and Awendaw, SC

Bryan in my short time following your posts and comments I've found that we usually share pretty common thought processes. Can you please explain to me how a price range benefits over the traditional method of simply deciding on a price and sticking with it? I know every market is different, this doesn't make sense in my market, but maybe someone can tell me when it is beneficial. The traditional pricing method has worked for so long why'd you go and change it ;-) Thanks Daniel

PS - I'm not sure my MLS even allows ranged pricing, but I would want incorrect prices to me changed, I already hate the jerks that lists things in the incorrect towns or neighborhoods because they think they'll get more exposure and our MLS does nothing about them. Isn't there something in the REALTOR creed about being honest and ethical? maybe I'm making that up, seems like it must be in there though :-O

Jul 19, 2007 03:23 AM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Daniel, Here's my condensed explanation. Let's say a house is worth $200,000 and the sellers agree that they will sell it at that price. That is the target price. All buyers will want to negotiate so let's say a "traditional" list price would be $204,000. OK now what happens if the buyers agent does a MLS search and caps the price at $203,900? Your listing does NOT show up. No showing for you!!! Now if I were to list this property I would Range Price it from $195,000 to $205,000 with $205,000 being a full price offer. My list price would be $195,000. As long as the buyers agent is searching up to at least $195,000 my listing would show up. Showing for me!! The first thing the BA would see in the remarks is this "This property is Range Priced. The Seller will consider offers between $195,000 and $205,000 with $205,000 being a full price offer"

So the range is FULLY disclosed prior to the buyer looking at the house. And remember, it's the same house, so it's still worth $200,000 no matter how it is priced. Range pricing creates more showings, more offers and a quicker sell. I've personally sold about 300 homes using this technique. Here is an analogy I wrote for further info.

http://activerain.com/blogsview/-The-proof-is-in-the-puddin-Range-Pricing-part-1-275-?12752

Jul 19, 2007 04:03 AM

Daniel Bates

MCVL Realty - McClellanville, SC

McClellanville and Awendaw, SC

Thanks for that explanation Bryan. I guess that's how I figured it worked, but your explanation makes sense. I'm in a very small market so I know everything that is out there and don't really have to do searches that come up with thousands of results. I guess it's wishful thinking to just assume that every buyers agents with clients looking for a house in the $200k price range would bump their search up to say $225K to account for overpriced homes or something so much better that their client might be willing to stretch their budget or do some creative financing. Even if it adds another couple of hundred houses to the list, they should be able to weed out the bad ones and assist their client get the best home for their money.

Jul 19, 2007 06:39 AM

Randy L. Prothero

eXp Realty - Hollister, MO

Missouri REALTOR, (808) 384-5645

You have too many comments to read all of them, so I am probably repeating someone. If someone brought them a full price cash offer and they turned down, they would owe a commission.

Jul 19, 2007 10:33 AM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Randy, Actually that would depend 100% on how the listing agreement is written. And how it is disclosed on the MLS would also come into play. If there is no commission owed the listing broker then the selling broker would have avery difficult time sueing for a commission.

Jul 19, 2007 10:46 AM

Al Maxwell

Keller Williams - Marietta, GA

Real Estate Agent

Very strange. Sounds like bait and switch to me.

Jul 22, 2007 03:13 AM

Bill Gassett

RE/MAX Executive Realty - Hopkinton, MA

Metrowest Massachusetts Real Estate

Deception never is a good way to do business. Sure it will get some instant gratification and attention but when all is said and done the agent will have created some hard feelings both from agents and buyers alike.

Jul 22, 2007 08:58 AM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Al, I'm always open to new ideas BUT I don't like this one.

Bill, You are right of course. It gives us all a bad name.

Jul 22, 2007 10:12 AM

Patrick Canavan

Keller Williams Realty - Yorba Linda, CA

Orange County Real Estate Voice

This would not be allowed in our area. Our MLS had a good sytem that is really us to use for other agents to report inaccuracies they see in listings on the MLS. In some ways this could hurt the sellers. When I search for a client I search based on there specific search criteria the first and most being a price range. If this came up in the I would not send it to my clients. Also, if I was searching for properties in a higher price range, I might never come across the listing and the clients who could afford the house also wouldn't see it.

Jul 23, 2007 05:25 AM