Earlier, I read an article by Kenneth Harney about ‘setup’ properties or ‘pinball’ homes that I felt compelled to write a response to. I found the article through Barry Cunningham, who posted a link to it over on Google+ (thanks Barry). The original article I read can be found here on the LA times site, and here if you prefer the Boston Herald. Although I promptly shared the article I still don’t feel that I said enough about this practice, there’s more to get off my chest.
Along with all the talk about what’s happening with property prices, and when values will start to go up again, there’s a real need to infuse some confidence in the industry in order for it to properly recover. IF the industry is to kick off again, we need people to buy houses – and not just investors and other businesses either – but actual home owners, owner occupiers. These buyers are the real key to the housing market, and they are the true barometer of where the industry is in terms of its recovery or otherwise.
So when I read about agents who have a property listed at an unrealistic price, and then use it to make the prices of other homes in the area seem reasonable (or even low), it smacks of bad business practice. It’s bad because it’s dishonest. It’s dishonest to the owner of the ‘setup’ property, to the prospective buyers, and the owners of other properties in the area. For the industry to regain its reputation and success, this practice must stop.
What matters here is the conduct of the agent. It’s the need for real estate professionals to look beyond the immediate sale, and take a longer term view of their profession, of their industry. They need to be prepared to do the morally correct thing and assign the correct price to start with. Naturally there will always be difficult clients who will insist on an over-inflated listing price – but that is their issue, not the agent’s. Why accept the listing to begin with if you are not going to try and sell it? If the plan is to use the property to hold up as a property not to buy, are you really fulfilling your obligations to the owner of that property?
I would really like to see listing agents be more careful in what properties they list – and the prices at which they are listed. Consumer confidence is a fickle thing, and is what will drive any recovery in the future. Using one over-priced property as a ‘pinball’ property in order to sell others in the neighbourhood at a similar price is not only unprofessional – it may also go against your obligations as an agent, depending on the jurisdiction. This practice is most certainly morally wrong – and is damaging to the industry as a whole.