Are real estate agents allowed to mislead buyers about a 2nd bid?

[Julie Gates]

I'm in Coastal Georgia. I have friends staying with me who moved here and needed to buy a house. The husband told me that when they put an offer in on the house they want, the selling agent stated that there might be another offer, and they needed to bring their best price. He was suspicious because a friend at work got the same information when he put an offer in on a house. Just last night (Saturday night) I signed an offer on an investment property and my agent sent it over. This morning, my agent called to say that the selling agent got right back to her and stated they might have another offer on the property, so I need to give my best price. It hit me that my guest appears to be onto something. Are agents allowed to fudge on other offers? I was under the impression that they are held to a certain standard. (I am not an agent, just an investor). 

I will let you know if I lose the house to this other mystery buyer, but both my guest and his friend got the homes they were bidding on without going up. Things are slow here and I don't see how three properties would be in a bidding war, all in different areas and 2-3 weeks apart. Conspiracy Theory Alert???

[Charlie MacPherson]

@Julie Gates To answer your question directly, it depends.  If that agent is a Realtor, we subscribe to a code of ethics that prohibits dealing dishonestly.  State law here in MA prohibits unfair and deceptive trade practices, Realtor or not.

I think it depends on exactly what was said.  "We might have another offer" is very different than "we have multiple offers".

I will never say "we have multiple offers" unless I am in actual possession of multiple offers, but if another agent has said that their client might be sending an offer, I would say exactly that - "we are expecting another offer".

My practice is to assume that everything I say, text or email (and think!) is going to be read aloud in front of a jury, so I go very strictly by the book.

I can't say that everybody does the same.  Just like there are dishonest politicians, cardiac surgeons, garbage men, shopkeepers and used car salesmen, there are undoubtedly dishonest Realtors - not to mention some who are less than completely competent. 

One difference with Realtors is that we can lose our livelihood if we defraud the public.  Whether saying "we might have multiple offers" when none are in hand rises to that level is doubtful, but I suspect that enough of those complaints to the state board might result in disciplinary action.

One suggestion to deal with these situations is to use an escalation clause, i.e.:  "Buyer will increase their offer to exceed any bonafide competitive offer by $1000 to a maximum purchase price of $XXX,XXX.  Competitive offer must be presented for verification."  

That can smoke out a faker, unless they're willing to forge a fake offer to trigger your escalation.  That would be more than shading the truth - that's fraud and in my opinion would be a career ending offense with crippling fines.