Is real estate like bridge?

October 17, 2015 9:46 PM

I was chatting with a friend, and we were wondering whether experienced buyers and sellers of real estate sometimes use special numbers when bidding, the way it's done in bridge. Or really, whether there's anything besides bridge that does this.
posted by aniola to Grab Bag (13 answers total)

Explaining what "special numbers, like in bridge" means would probably be more helpful to those of us who don't play bridge.

The first thing that comes to mind, for me, is car sticker/dealership pricing. My car was listed for $8995. Which just sounds so much cheaper than $9000. Which, in turn, sounds way better than $10,000.

I imagine that -- especially in competitive markets -- real estate works similarly. If I see a 1500 square foot 2 bedroom 2 bath house listed for $195,000, I'm thinking "Oooh, what a sweet little starter house!" But for $225,000 it seems like a ripoff. Despite the fact that $30,000 is a fairly small difference in such a large purchase. There have got to be strategies to what asking price to put down.
posted by Sara C. at 9:51 PM on October 17, 2015 [1 favorite]

Best answer: Costco?

(Like Sara C., I don't know anything about bridge, so I'm not sure this is really what you mean.)
posted by likedoomsday at 9:54 PM on October 17, 2015 [1 favorite]

I think aniola's getting at the idea of bidding as a communication method. In bridge, you have a partner but it's against the rules to directly tell them what cards you have in your hand, so they develop systems of what to bid under what circumstances and how your partner should interpret that.
posted by RobotHero at 10:05 PM on October 17, 2015

It seems to me you're asking if there's any sort of 'secret communication' going on in the form of the numbers? I would guess not, since the realtors are allowed to actually talk - and in fact buyers and sellers talking is common! - and so there's not really any need for the kind of code that arises in something like bridge (where you can't just say, "I have five spades, you?")

The place where something like this might arise would be in an environment where 1. there is an opportunity for collusion and 2. actually talking is not an option.
posted by Lady Li at 10:06 PM on October 17, 2015

Anything besides bridge? as far as bidding as communication goes, this occurs in double-deck Pinochle, likely for the same reasons as bridge.
posted by namewithoutwords at 1:23 AM on October 18, 2015

I'm not going to say that it never works that way (though I'm with the majority of answerers in they im not sure exactly what you're asking). In my limited experience with real estate markets in SF and NYC at least a fair amount of the time the "special numbers" used are just lower than reasonable under the assumption that a bidding war will start. None of my Bay Area friends who have, say 600 or 800k as their actual upper end budget can possibly put offers on houses listed for more than 450-650 under the usually-correct assumption that competition for places at the lower/entry levels is extra fierce and there will be a six figure bidding war in most cases. I don't know about bridge but I'm pretty sure it doesn't work like that.
posted by Exceptional_Hubris at 4:53 AM on October 18, 2015

Best answer: you can describe bridge in a couple of ways.

from one point of view, the conventions are public, and so everyone "understands" what is meant by a bid. the problem is that the number of possible bids is restricted and so (even when taking into account the history of bids in a hand) you don't have the freedom to be exact - there's always ambiguity. from this point of view, bridge bidding is like lossy compression. think of compressing an image to the point where it's a fuzzy blob - it's up to the "receiver" to interpret that fuzzy blob correctly.

from another point of view, the players on one side are trying to communicate secrets in public, using an "open channel". you can think of this as steganography (eg hiding messages in images) or using "side channels" (eg breaking a code using the timing of the messages, rather than their content).

so from those two views you can construct comparisons with other activities. but none i can find seem particularly useful or rewarding, i'm afraid.

(am i the only one round here that's played bridge? get off my damn lawn.)
posted by andrewcooke at 5:08 AM on October 18, 2015 [4 favorites]

Best answer: good god. i found an example:

The Federal Communications Commission (FCC) spectrum auctions use a simultaneous ascending auction design. Bidders bid on numerous communication licenses simultaneously, with bidding remaining open on all licenses until no bidder is willing to bid higher on any license. With full revelation of bidding information, simultaneous open bidding allows bidders to send messages to their rivals, telling them on which licenses to bid and which to avoid. These strategies can help bidders coordinate a division of the licenses, and enforce the proposed division by directed punishments.

Collusive Bidding: Lessons from the FCC Spectrum Auctions
posted by andrewcooke at 5:14 AM on October 18, 2015 [4 favorites]

Here's a bit about bridge bidding conventions for people who haven't played. Basically, you want to convey information to your partner across the table about what's in your hand, so they can decide (or vice versa) what the best joint bid will be for your combined hands. So for example, you might bid in a suit you're not strong in (never intending to win the contract in that suit), and you and your partner (and the other team too) will both know your bid is actually describing the number of aces in your hand.

The obvious difference here is that in bridge you're working with a partner you can't communicate with directly, against another partnership. So I'm not sure what the analogy would be for who's communicating with whom in real estate - like, the buyer and the seller are antagonists, so wouldn't be trying to communicate in this way.
posted by LobsterMitten at 7:42 AM on October 18, 2015

Best answer: There might be a little of this, but it's for much different reasons when you're competing.

True story, numbers changed: Say I saw a house priced at 245k and I want to buy it for 235k. I'm not going to offer 235k because a counteroffer is de rigeur. So I'll offer 230 or 225, communicating that I think we should meet somewhere in the middle. They then know that I don't expect them to accept our offer flat-out (probably) and have a good sense of what we actually want to pay. Now when they counter-offer 239 I know they really don't want to let it go for less than that, knowing how much we have in mind (235), so another counteroffer is creeping into the zone of diminishing returns.

Then the bank's appraisal happens and I end up getting it for 230.
posted by supercres at 10:32 AM on October 18, 2015

Best answer: Many retail stores change the last penny value as they discount items as a way of enabling staff (and customers in the know) to grasp whether further price reductions lie ahead. Quite common: ending the full price with a nine and then stepping down through the reductions. So if the discount pattern is: Full price->20% off->30% off->50% off->70% off->back to the warehouse for liquidation, the pattern might be to end the full price with a 9, then 8 at the 20 percent discount point, then 7 at the 30 percent discount point, etc. This way a stock clerk can see that,say, a price ending in 6 has been reduced 50 percent already.
posted by carmicha at 3:21 PM on October 18, 2015 [3 favorites]

I have experience with this. I was selling a property and told my agent what I was comfortable with. Anything below the thousands digit doesn't matter that much, but he listed it with the hundreds, tens and ones as a mirror image of the thousand, 10 thousand and 100 thousand digits. i.e. 178,871

I thought this was some sort of 'signal' but he told me that he just liked playing with numbers. I had it listed somewhat higher than I expected and it sold within 3 days for the listing price. I'm not complaining, but if it had lots of lower offers, I would have been more skeptical (that's just how I am).
posted by kookywon at 9:08 AM on October 19, 2015

Like carmicha, I was reminded of the descending penny-digit in clearance prices at Target and other retailers.

Snopes says it's not that cut-and-dried, but is partly true. By doing the math on various percentage discounts from rpices which almost always end in a 9, you can see here why so many tags end in a 4 or 8 in the cents digit.
posted by wenestvedt at 11:05 AM on October 19, 2015