A “pinball property,” “pinball listing” or “setup listing,” as it’s also called, can be a real estate agent’s best friend – just as long as they’re not the ones listing the property.
It’s not a new term, but the strategy behind pinball listings still inspires surprise: Agents show their clients a property that is unrealistically high in its price, creating the perception that homes in the area are priced higher than they actually are; then, after showing that high priced property, the agent shows the clients a different property in the same area, one with a lower asking price that now seems extremely appealing compared to its pricier brethren.
Ken Harney, a syndicated columnist who focuses on real estate, referenced in one of his columns a perfect hypothetical from Joe Manausa, the broker/owner of Century 21 First Realty in Tallahassee, Fla.
“If two very similar homes,” Harney wrote, “are near each other, with one priced at $250,000, and the other at $280,000, the higher-priced home is often shown first. Then the real estate agent says, ‘If you like this home at $280,000, you are going to love the home down the street at $250,000!’”
But when these situations happen to an agent, it’s even worse; some sellers in the mid-to-upper price brackets are so excited that the U.S. is finally out of the recession, they are tempted to disregard agents’ more sobering recommendations on pricing. And because of these listings and how they help other agents, unless an agent walks away from the listing from the get-go, after helping the neighbors sell their homes, an agent probably will walk away and not show the home.
Clearly, having one of your listings achieve “pinball” status can be quite detrimental to its chances in the marketplace, but how do you avoid such a nasty distinction? Here are three suggestions:
1. Avoid the Listing Altogether – If the seller refuses to list with a price that’s a better fit for the market, given what the CMA says, don’t take on the listing. It may not be worth your time and effort, especially if the seller is unwilling to negotiate on the price. But if the seller is willing to listen to the facts, then it won’t become a pinball listing with a too-high price.
2. Don’t Believe the Hype – There’s a good chance that pinball listings will get lots of traffic with their high price, but remember what we just wrote about agents using the listing to their advantage? It may seem like people are interested in the property, but it actually benefits nearby, lesser-priced residences, so you may want to reevaluate your pricing strategy if you notice a pattern of several showings, but no offers.
3. Contractual Obligations – Another agent quoted in Harney’s piece had a good recommendation – take the listing, but bind the seller to a contractual agreement that if the home does not sell in a specified time (two or three weeks is a good measure), the asking price must be automatically reduced.