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Updated almost 13 years ago, 02/29/2012
Dishonest RE Agents? How common is it?
We put in an offer on a house this morning. The house had little activity on the RE sign in sheet on the counter and no offers as of this morning and has been on the market 11 days (not long, I know). But I find it ironic that we put in our offer this morning and the listing agent contacts our agent saying that at 4pm they received another offer so he's sending over a multiple offer sheet to sign.
This has happened to us a number of times and there is a part of me that wonders if RE agents do this to try and get a higher price? Now, I'm not trying to offend any RE agents on this board so please don't take it that way but in the world in general there are dishonest people and I'm sure that includes people in various professions, including RE.
Has anyone else suspected that an agent might be trying to up the offer by doing this kind of thing?
By the way, we aren't budging on our offer, that is our final and best offer as it's just not worth more than that. If there is a real, viable offer from someone else and they are an investor since the bank requires cash only, they might have an advantage over us of either a higher price and/or not asking for an inspection. I guess we'll see what happens...
I would expect this from almost every bank-owned property. Ideally, they should be asking for highest and best without explicitly saying there is another offer (if there isn't), but this lie is told so often I don't think agents feel bad about it anymore. It's simply a negotiating tool for them.
Wow, I'm not sure if I should feel relieved about that knowledge or not LOL! On the one hand if it's a common practice it's very possible there is no other offer! On the other hand it's disturbing to know there could be that much dishonesty going on.
I would think it would depend on the particulars of the deal. That said, I watched a very interesting documentary last night called Freakenomics, and they had a small bit in there about how RE agents were not always algined for sellers, but instead responded more (like everyone else) to an incentive/cost of work model. Very interesting. Having said that, there are shady people in every proffession.
Bank had a house listed at 125k on the market for over 100 days. I submitted an offer at 83k. They dropped the price to 100k that afternoon then countered me multiple offers the next day. I stood pat on my offer because I thought it was BS but stuff like that happens all the time.
Kel, this happens on half of the properties that I put an offer in on. The house could be sitting for a month then whe I put in an offer, I get the "multiple offer" response. Agents do this all the time to get you to bump your offer so they can get it sold. It has worked on me a few times as I have bidded against myself. Hold your ground and let us know the results.
The realities of the real estate business.
85% of agents do not survive the first year.Of the 20% that survive the first year 90% of those are gone by year five.
It's a brutal and unforgiving business where only the best of the best not only survive but thrive.
If you are an agent on a 70/30 split and you sold 1 house a month at 100,000 sales price it would look like this.
12 sales at 3k commission is 36,000 at 70% is 25,200 before costs to the agent.Take away all the dues,fees,gas,etc. they are making the poverty level.
The average agent yearly income is in the 30's. The problem is the numbers are skewed.You have many making nothing to 10k a year and a few doing well above the 30's in income.
So NO I am not surprised at thing agents do to stay in the business and pay their bills.I am not agreeing with it just stating reality for many of the agents.
With the failure rate of agents you have a constant churning of agents into and out of the business.So a majority of agents want to make the most out of the few sales they do a year before they fall out.
Some other brokers and agents always get mad at me when I state this but the facts are the facts.If you want to close deals we can't be in fairyland of how things are supposed to be in a perfect world. Instead you deal with reality to get the deal closed.
- Joel Owens
- Podcast Guest on Show #47
Originally posted by Kel S:
This has happened to us a number of times and there is a part of me that wonders if RE agents do this to try and get a higher price? Now, I'm not trying to offend any RE agents on this board so please don't take it that way but in the world in general there are dishonest people and I'm sure that includes people in various professions, including RE.
Has anyone else suspected that an agent might be trying to up the offer by doing this kind of thing?
You make it sound like the agent is doing a bad thing by trying to get a higher offer. It's not just the agent's job to get the highest price for their client, it's their legal/fiduciary responsibility to try to get the highest price.
I have a feeling that if you were the seller as opposed to the buyer, you'd have more appreciation for the agent's efforts and tactics. Btw, most REO agents I know are now calling for highest and best regardless of whether there are multiple offers. In many cases, they don't even mention multiple offers, as it just doesn't matter.
J Scott,
I think there is a difference between asking for highest/best up front vs. lying.
For example;
Party A puts in an offer. RE Agent says there is suddenly another offer by Party B (who doesn't exist at all) and the agent comes back to Party A and says give us your highest and best. In my opinion this is manipulation on the RE part. Creating a fictitious offer from a party that doesn't exist in order to try and get the original party to go higher on their offer is just plain wrong.
It reminds me of how some auction houses will put in a fake bidder (s) in the audience to bid against real bidders in order to jack up the price. It's just a slimy business practice IMO.
If I could prove that an agent was doing this, I'd report them to the powers that be. I think if more people did and there were reprocussions for the agents that got caught, we would possibly see less of this happening.
Also in cases where the RE is lying and saying there are multiple offers it wastes people's time and resources including the buyers agent in some cases. My fax machine is broke so my agent has to drive 20 minutes to bring me the multiple offer sheet this morning. That is her time, gas, etc., Just one more reason why RE should have consequences imposed if they get caught creating fake mulitple offer situations. Just my opinion.
Originally Posted by J Scott
You make it sound like the agent is doing a bad thing by trying to get a higher offer. It's not just the agent's job to get the highest price for their client, it's their legal/fiduciary responsibility to try to get the highest price.
I have a feeling that if you were the seller as opposed to the buyer, you'd have more appreciation for the agent's efforts and tactics. Btw, most REO agents I know are now calling for highest and best regardless of whether there are multiple offers. In many cases, they don't even mention multiple offers, as it just doesn't matter.
I usually agree with your responses, but the agent not only has a fiduciary duty to get the best deal for his client, but under the Realtor Code of Ethics, they cannot also give false information to another agent or party to the transaction. It is always ok to ask for the "highest and best" or to counter an offer. They just shouldn't say there are multiple offers if there are not.
Kel...good luck. You will find out soon enough if yours is the best (or only) offer!
As someone who lists REO properties, I can tell you that many agents do not complete the signin logs at the property. You can't use that as an indicator of interest in the property.
Is the agent lying to you? I have no clue. The bottom line is that you've made your best offer and they will either take it or not. Good luck!
It's unethical and if an agent were to do that in my office I would be dismissing them but in cases where it does happen a prudent agent would use all means possible to get the highest price for his/her clients.
"My fax machine is broke so my agent has to drive 20 minutes to bring me the multiple offer sheet this morning."
Kel do you not have a scanner?? All my faxes are electronic these days and come in my e-mail.
If your stuff is old and breaking down like that it might be time to upgrade to new technology.
As far as turning agents in the licensing commissions do not care about Ethics.If a broker or agent is licensed but not a REALTOR then you don't have a leg to stand on for an Ethics complaint.
Sure you can go to the broker and they might release the agent but that agent can simply sign up at another brokerage again with nothing on their record.
If you do have a license law broken the real estate commission will make you get sign and notarized under oath the facts you are stating.Only then will they assign an investigator to the case.
Their department is stretched thin with limited resources just like everyone else these days.They get a bunch of calls from frustrated buyers and sellers complaining about everything under the sun.Their answer is always "file a report". 90% of them do nothing and hang up.
Don't get worked up over the "multiple offer" situation.Whether you like it or not you will run into it again whether there actually is one or not.It's the cost of doing business.
- Joel Owens
- Podcast Guest on Show #47
Yes, I have a scanner but ironically the other day the 3 in 1 printer/scanner/copier decided it isn't going to work. So I've been messing with it trying to install new drivers, etc., Argg! So not for lack of technology...just technology isn't being nice to me right now.
I honestly wouldn't let it bother you that much. If someone is being a little shady and you can easily prove it, then call them out on it and teach them a lesson.
Otherwise, there should be more than enough other properties that make sense for you to pursue. Spend your time and energy on those. If you placed what you feel is the highest and best offer on this property, regardless if in fact or you just have the feeling, that the listing agent is playing games, your offer is your offer. Don't let them get into your head either way.
Like others have mentioned. If this person is in fact not playing by the rules, he won't be around that long. Don't involve yourself into his/her ultimate demise.
If the call was for H&B, period, then at a minimum I'd ask the listing agent to state (or ask through your agent) whether there are "multiple offers" at this time. At least you gain some valuable info that way. If they're honest, and won't make this affirmation because there are in fact no other offers, you may want to temper your bid as a result. Just not a lot you can do here, other than know your max offer.
The listing agent is trying to get a viable offer (few contingencies) that hits the asset manager's minimum for the property. I've been curious as to whether the LA normally knows what that minimum is, or if they're just making a highly educated guess based on DOM, knowledge of lender, premium accorded to a no-contingency offer, etc. I assume it's the latter.
That's the problem with the 3 in 1's. If one thing breaks the rest is useless.
The scanners are really slow to.The benefit to separate machines is they are easier to fix and they generally work much faster as they only do one function.
I have a 3 in 1 as well but I never update the drivers or any of that stuff.I have found by turning off the software updates it keeps my machines in perfect order.
Good luck with the drivers. Years ago I had a problem like that and spent 45 minutes on the phone with someone overseas.The English was limited and I knew more than they did about how to fix it.
I don't call anymore as it's a waste of time.I usually go on the net and find the solution right away.
- Joel Owens
- Podcast Guest on Show #47
Generally the asset manager is trying to hit 90% of the BPO value.
The listing broker/agent completes a BPO when listing and then every 15 to 45 days thereafter depending on the asset manager will be asked to do a new evaluation as to what the property price should be changed to.
Initially before listing the asset manager also gets a third party broker/agent who does not have the listing to complete an interior BPO.The asset manager puts more weight on the third party BPO as that person is simply being paid a fee (usually 50 to 90 dollars) instead of getting the listing assignment.
Sometimes the asset manager will go lower on a property.It depends on activity on the property so far,condition of the property,how much already that is non-performing on the books that they need to purge etc.
- Joel Owens
- Podcast Guest on Show #47
Originally posted by Bill Patterson:
I usually agree with your responses, but the agent not only has a fiduciary duty to get the best deal for his client, but under the Realtor Code of Ethics, they cannot also give false information to another agent or party to the transaction. It is always ok to ask for the "highest and best" or to counter an offer. They just shouldn't say there are multiple offers if there are not.
I'm not 100% sure I actually believe what I'm about to write (haven't decided yet), but I think it's important to consider either way...
First, not all agents are Realtors, so the code of ethics for Realtors doesn't necessarily come into play. That aside, I'm not convinced that lying during a negotiation is unethical.
As an example, is saying, "this is my best offer...take it or I will walk away" unethical if you have no intention of really walking away? It's clearly a lie.
What about an agent who gets asked if she has had much interest on a particular property. If she hasn't had any showings, is she obligated to tell the truth that there's been no interest? Would you want your agent telling people that?
Negotiation is about having more information than the other side, and lying is one way to achieve this. While I'm still on the fence about the ethics of this particular situation, I certainly don't believe it's clear cut. And as someone who has done negotiation on some very large M&A deals, I know for a fact that lying about circumstances is pretty common among big negotiators.
IMO no lie is justifiable. That would be an oxymoron.
You guys are too much.
When I saw the title of this thread, my first thought was that being dishonest was more of a pre-requisite for agents than some type of negative quality.
It appears we have the idealist camp represented by Kel S and the realist camp represented by J Scott. I'm going to have to side with the realists here, having been on all three sides of the negotiation ( buyer's agent, seller's agent, asset manager).
I won't ever instruct an agent to lie.
I will, however, require that they use whatever tactics are necessary to get the highest, best, offer for the property. I don't much care what those tactics are, because it doesn't matter. Will a buyer get upset because there offer isn't chosen? Almost certainly. Does anyone care? Nope. Can the buyer do anything, or prove anyone was lying? Not unless the agent is a complete moron.
Now as a buyer's agent (or in your case, as a buyer), I would do my best to gather as much information as possible out of the listing agent. If your agent can get them on the phone, then they are already not a very seasoned REO agent. Have your agent ask (as was previously pointed out) whether there are any offers. Ask about the nature of those offers. Ask on what date they came in and whether or not they have been countered. Ask if they are cash or financed. Hell, ask how much the offer is for. Now you're playing offense as a buyer as opposed to throwing darts in a dark room. You might not get actual answers to your questions, but the pauses, intonation and confidence in the REO agent's voice usually tell you more honestly what the situation is than what the actual words are anyway.
Originally posted by Kel S:
It's not a lie... it's, and J Scott will be very familiar with this, a bluff.
In the world of negotiation, there is no expectation of full disclosure, of honesty. Much like playing poker. Each side has access to unequal amounts of information and tries to leverage what they know through bluffing.
A lie is an untruth meant to hurt another. You are not hurt by the bluff that there are multiple bids. You are simply negotiating.
Originally posted by J Scott:
Originally posted by Bill Patterson:
I usually agree with your responses, but the agent not only has a fiduciary duty to get the best deal for his client, but under the Realtor Code of Ethics, they cannot also give false information to another agent or party to the transaction. It is always ok to ask for the "highest and best" or to counter an offer. They just shouldn't say there are multiple offers if there are not.
I'm not 100% sure I actually believe what I'm about to write (haven't decided yet), but I think it's important to consider either way...
First, not all agents are Realtors, so the code of ethics for Realtors doesn't necessarily come into play. That aside, I'm not convinced that lying during a negotiation is unethical.
As an example, is saying, "this is my best offer...take it or I will walk away" unethical if you have no intention of really walking away? It's clearly a lie.
What about an agent who gets asked if she has had much interest on a particular property. If she hasn't had any showings, is she obligated to tell the truth that there's been no interest? Would you want your agent telling people that?
Negotiation is about having more information than the other side, and lying is one way to achieve this. While I'm still on the fence about the ethics of this particular situation, I certainly don't believe it's clear cut. And as someone who has done negotiation on some very large M&A deals, I know for a fact that lying about circumstances is pretty common among big negotiators.
Yes, it is important to consider and be aware of. If I had a dollar for each time I have been lied to by an agent, seller, buyer, lender...you name it, I'd have a lot more time to relax! I've kept quiet on a few issues that I have known about (and the other party should have been able to obtain with normal due diligence), but I can't remember lying about a material fact. In real estate, "Puffing" has been a fact of life for at least the 30 + years I have been involved in it. There has been a lot of press on the issue of lying lately and the context of and reason for the lie is used to justify it. In some cases it may be and in some it is not.
Kel...this is how the game is played. Do your own due diligence and base your actions on it. BTW....have you purchased a new or used car lately? Did you believe everything you were told by the salesman?
Let's all agree to stop lying or bluffing during negotiations and see how well we do...I can picture it now...
I look at a house I would like to purchase for $75K but would pay as much as $85K. I put an offer in at $68K and the agent comes back with "there is another offer, highest and best"...dang....$85K!
Now you just paid much more for a property than you should have. We can flip this scenario to demonstrate an agent that is unwilling to bluff, but I do not think that is needed. The bottom line is negotiating is like playing poker (maybe that is why J Scott mentioned he used to make money playing poker). It is a game and you have to know how to play not matter which position you are playing.
That said, there are lines and ethical codes that agents are held to (by the real estate commission of the state)...but what you are describing is pretty much standard.