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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 always prep my buyers to be ready for the fabled "Highest & Best", and I would suggest to them to go in $500 lower (and certainly not near there MAO), then be ready to make the other side feel like they won when you offer them the extra $500.
It's not about honesty or lying, its about business!
"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."
I really wish people would quit saying this.
Maybe it is different in other states.In the state of Georgia the GREC (Georgia Real Estate Commission) has NOTHING to do with ETHICS. Absolutely,positively nothing to do with it.
The commission is there for license laws and to protect the interest of the public.
The (Code of Ethics) is a mandate you agree to if you are a REALTOR which has nothing to do with licensing.
Now some states mls's are REALTOR owned and they strong arm licensees that they be a REALTOR to have access to it.The real estate commission refers to NAR,MLS as third party organizations and they could care less about them or their requirements.
NAR strong arms a head broker and makes if one agent is a REALTOR then the whole brokerage has to be.Brokers get around this by having 2 brokerages.One where the agents want to be REALTORS and another where they do not.
It's all about the MONEY and always has been for NAR.They have third party vendors at the NAR conventions and sell all their wares to new agents and drain them dry of money before they fall out of the business.NAR of course gets a big cut from these third parties all passed along to the agent as them receiving a benefit of course.
- Joel Owens
- Podcast Guest on Show #47
Joel Owens, perhaps I should have worded that differently. The real estate laws (of my state anyways) include many ethical issues, like:
(b) Making any substantial misrepresentation or failing to disclose known defects which substantially affect the value of the property:
Any licensee who fails to reveal a known defect in a property will be subject to licensure discipline. In addition, any licensee who misrepresents any facts about the transaction will be subject to discipline. This section is one of the most-cited violations in Commission cases.
(c) Making any false promises of a character likely to influence, persuade, or induce:
Any licensee who makes false promises will be subject to licensure discipline. For example, if a licensee tells a buyer that he or she will ensure that certain repairs will be done and then fails to ensure that those repairs are completed, the licensee could be in violation of this section.
(d) Pursuing a continued and flagrant course of misrepresentation or making false promises through agents or advertising or otherwise:
Any licensee who continually violates the previous sections of this statute may be cited with a violation of this provision. Once a licensee has been disciplined for misrepresentation, for example, the next charge may be accompanied by an additional charge for a violation of this section as well. Or, a licensee may be charged by several consumers for making the same types of misrepresentations. These complaints may lead to a violation of this section.
(v) Any other conduct that constitutes improper, fraudulent, or dishonest dealing:
This statute provides a catch-all for any behavior that the Commission considers wrong, fraudulent or deceitful.[FN2]
and many others. To me, those make up an ethical code that must be followed by licensed agents (not the REALTOR code of ethics). The KREC is also disciplines those who violate: .” Licensees may be disciplined by the Commission" for violations.
James I just want people on this board to understand the difference between Code of Ethics from NAR and License Laws enforced by the local commission.
State statute codes may or may not have provisions that would be seen as Ethical standards but regardless are classified as license laws. In my state the commission is given final interpretation and latitude with the statutes in issuing a ruling on an issue.
If you don't like the ruling you can do an appeal.
Another misunderstanding in my state at least is that the commission handles real estate commission disputes between a broker/agent or broker/buyer/seller or monetary issues between a buyer and a seller or contractual obligations.
Again a real estate commission at least in my state defers to the legal court system to handle those issues and instead focuses on fraud and license law issues.
- Joel Owens
- Podcast Guest on Show #47
PLEASE don't budge on your offer. If you've seen the property, calculated repairs, done your homework, and made an offer that makes sense for you, that's it. You will be competing with investors who don't do that and you may just be the back up offer when they don't perform. If you budge now, you'll always be asked to.
P.S. We had auction companies doing this as well in 2009. They'd come fishing for higher offers even though they had highest and best in front of a large audience. I think that's even more upsetting.
Joel Owens,
I guess my point was that in many cases license laws and ethics overlap (just because someone mentions ethics in real estate does not mean they are talking NAR Code of Ethics). I am an agent and not a NAR member, so I am not held to the NAR Code of Ethics...I get that. However, I still believe I am required to act ethically to the extent to the laws (and NAR members have to act ethically to the extent of the laws and the code of ethics). In KY, ethical issues that violate the laws will start as complaints to the KREC, which will discipline as required (yes you can appeal, just as you can appeal an NAR violation or a murder conviction).
We are off track though. I would reccomend sticking with your offer to see what happens next. There is always the risk that there is another offer, but that is better than the risk of overpaying for a property.
We didn't budge on our offer (:
It may be the way the game is played but I will play on my terms and if it costs me losing out on a house, so be it. There will be more. So far we have 5 houses we've purchased so I can't complain about that.
My purpose for this thread was simply to ask how often it happens and if others experienced it as well, not to get into a debate of right and wrong. I get it after reading the replies that this kind of thing is common so that is what I wanted to know and will go into future offers with that knowledge, not that it will do any good granted.
Those folks that accept and even encourage RE to do whatever they have to do to get the highest offer, including lie (bluff, whatever you want to call it), that's up to them. I will say though that knowing they give the green light for that type of business practice would make me think twice about doing business with them as well. Because there is no doubt if they encourage or approve of others bluffing, lying, etc., they themselves will do the same exact thing. It's just not the way I operate. So hopefully, we can agree to disagree.
Originally posted by Kel S:
How will you not do business with them? Are you are going to stop putting in offers on properties represented by agents who do these things? Are you going to refuse to consider offers from buyers whose agents do these things?
If so, I'm not sure you'll ever be able to buy or sell a property, as 99.9% of agents, buyers and sellers are going to be willing to lie/bluff if it helps them make more money.
If you refuse to do business with any of them, it's probably time to consider another profession. I don't say that to be obnoxious, just to point out that you honestly need to decide what's more important to you -- doing business only with honest people or building a successful real estate business.
You misunderstood what I was trying to say. What I meant was those here on the board that feel it's ok to lie/bluff and not be 100% truthful, I would think they too would do their deals like that and therefore I'd hesitate to do business with them. I get that RE agents may do these things but at least there are channels of the process. When you are dealing with someone outside of the profession that say is just an investor or looking to borrow money I would hesitate as I'm not sure I'd feel comfortable if they feel it's OK for others to practice busy by lying or bluffing to get what they want as they would do the same to me. That's all.
Kel S,
Some of those people on this board are the most honest and reputable real estate investors around, so I think that would be a mistake to not want to do deals with them because they are being honest about how the real estate business (and any business for that matter) works.
For what it is worth I understand where you are coming from and share a lot of your opinions about the dishonesty, but I have accepted that it is a fact of business.
Originally posted by Kel S:
Kel -
First, I very much respect your opinion on this matter, though I think by taking such a black-and-white stance, you're missing some very important nuances.
In my opinion, it's a stretch to assume that the way someone negotiates is indicative of their level of integrity, loyalty and honesty in non-negotiation situations. Some of the best negotiators I've ever met (and without exaggeration, I've met some of the best in the world) are fiercely loyal people with tremendous integrity.
Here's one way to think about it...
I assume you lie on occasion, right? For example, do you tell your kids that Santa and the tooth-fairy exist? Do you tell your husband how great he looks even if you're thinking about how he's put on a few pounds? Do you tell the police officer that you didn't realize you were going that fast even though you knew exactly how fast you were going? Do you tell your friend how good the dinner she made was even if you didn't really like it?
Like most people on the planet, I'm going to guess that even you lie now and again. And I'm sure every time you lie, you can justify why it was okay in that situation. Would everyone agree with your justification in every situation? Probably not. But, it doesn't necessarily make you a bad person, it doesn't necessarily mean you don't have integrity in situations that call for it, it doesn't necessarily mean you aren't loyal.
All it means is that everyone has a sliding scale by which they determine when a lie is justified and when it is not. Many (though clearly not all) people believe that lying during negotiations isn't unethical, and is justified. I am one of those people. You are not. We clearly have different viewpoints.
And by the way, I would never lie to my kids about things like Santa Clause existing...to me, that seems a far, far worse lie than what we're discussing above, as they trust I would never lie to them -- those sitting across the negotiation table from me don't have any illusions that I am always telling the truth. But again, I don't assume that everyone who tells their kids about Santa Clause doesn't have integrity -- again, we just have different viewpoints.
Now, all that said, some people don't have integrity, honesty or loyalty; but in my opinion, that's completely orthogonal to their negotiation techniques.
Just my $.02...
I am new to this site (researching buying a home) and found quite an interesting discussion about Ethics.
I've been a fan of Ethics for some time, and tend to be a kind of Kant Universal man myself . . .(apply the ethical choice universal in all situations and is it fair)
So to me the question here is "is lying during a negotiation ethical". At what point does it become unethical? second offers? house defects small? house defects large? property lien/title lien? a home inspector you know will clear the radon test, regardless. . .
There is a certain point I'm sure most (though not all) would draw a line here. And its unlikely that lying on a home offer slides to lying about radon. Yet they are all equal in the fact that they are lies, and that not all lies in all situations would lead to a acceptable result (people can be hurt).
When I purchase or sell a house my expectation would be to hide all information about me, have backup housing so I can move on, etc. If I have an indication of a lie, I would rather move on to the 2nd house (I don't want to compete with other offers, so I will go with the other house without this situation).
Just two cents. . .shout out to the man Immanuel Kant
Originally posted by Chris Graber:
I've been a fan of Ethics for some time, and tend to be a kind of Kant Universal man myself . . .(apply the ethical choice universal in all situations and is it fair)
I used to subscribe to Kant's theory of universal laws myself -- including that about lying -- until a philosophy professor posed the following question:
"If a known serial killer with a gun came up to you and said, 'Tell me a lie or I'll kill you and your whole family.' What would you do?"
Kant would say that it would be morally wrong in that situation to tell a lie to save your family. In fact, Kant would argue that -- even if you had your own gun -- it would be morally wrong in that situation to attempt to kill the serial killer in self defense, as killing is universally wrong as well.
In Kant's mind, the only "moral" thing to do would be to refuse to tell a lie and take your chances that the serial killer would follow through on his threats.
That pretty much settled my belief that Kant's theories weren't for me (I'd go the self-defense route myself :).
How about you? Would you lie to the serial to the serial killer to save your family? Would you shoot him? Even though both of those things are just as morally wrong (in Kant's estimation) as lying during a negotiation?
Personally, when it comes to lying, I'm more of a John Stewart Mill guy...as are most of the serious students of philosophy that I know (at least once they get old enough to really consider ramifications of all the philosophies).
That's what I was saying about the debate on what type or when a lie is appropriate. To answer your questions.........
Yes, I would lie to the serial killer to save my family.....long enough to pull my S&W from my back and shoot him. No moral dilemma here. Self defense of your self or others is a reason that concealed carry has gotten so "main stream" of late. But.....that is another topic for a different forum!
There are unethical people in every business. H&B is extremely common in my area. I wouldn't worry too much about what the other agent is up to because you can't control it. You can control your offer though. Submit your best offer (even if it's your original) if you get it great otherwise move on. Chances are he probably does have multiple offers but if he is playing games and you stay within whatever price range your investment model allows you can't lose. Where you get really messed up is if you start making exceptions to the model you have in place to get an offer accepted.
I think some people just struggle with the reality of the way the world is today and have a hard time accepting it.
Me I am a realist and accept it and hope it will get better but do not count on it or only do business if the world is perfect.
I have ran into some people on deals that I never want to see again.Some were racist,some were full of hatred,etc.,etc. For the point of the job as a professional I closed it and moved on.
My dad who passed away many years ago was very conservative.He held onto these strict ideals of the way things should be and when people were different struggled to wrap his mind around how others see things.
After having a bunch of tenants you can see how vast and crazy people are.When you experience this the other things mentioned here that happen on deals will seem like nothing to you.
- Joel Owens
- Podcast Guest on Show #47
Are there ethical real estate agents? Yes. I have worked with several. But in my experience they are very few and very hard to find. The dishonest, or more accurately termed "ethically-challenged," ones are much more common. I go into any transaction assuming both the buyer agent and the selling agent are in it for themselves and their commission, even if they are supposed to be representing me, and research like crazy to make sure I'm making the best deal I can make, not counting on their opinion or advice, especially about purchase price, multiple bids, or the phrase "... standard in a contract". I refuse to sign any buyer broker contract unless it is at time of contract and property specific only with no added fees, and the really good agents I've worked with are happy to do that.
Sounds like that's what you've come up with on your own, but wanted you to know there are many of us out there dealing with that problem.
If you are letting the RE agent sway you on a deal, you might as well quit now. A RE agent is out for themselves, not their client or you. The big difference is brokers get paid on having two parties reach an agreement, while investors get paid buy buying low and selling high. A broker does care how dirty a deal is as long as it closes.
Any competent investor knows their numbers and what they can spend to make money. The other party's broker is paid to run interference and distractions to take you off the ball. Think the broker is lying? Lower your highest and best and hope he wasn't.
Fax in your offer, don't give any broker a chance to get info out of you, 10% of them are skilled at that.
And do yourself a favor and don't fall in love with the building. There are likely tons just like it around and available.
Originally posted by John S.:
While unfortunately this may be true too often, it's certainly not always the case. I mostly use my RE license for the benefit of my own business, but I'll occasionally represent other investors that I know to buy and sell property. When I do so, I take that responsibility VERY seriously, and I will always put the other investor's (my client's) interest above my own.
If I don't think I can do that, I'm happy to decide not to represent or help someone.
There are a few people here on BP that I have worked with, and I have a feeling they would all happily vouch for that. If you don't feel your agent puts your interests above their own, go find another agent!
I haven't read this entire thread but it's similar to another thread I posted about a month ago about the listing agent on a short sale offer I made. Basically I agree now with Jason that attaching normative terms like "lying" to this type of behavior isn't especially helpful. This has happened to me two more times since I posted that thread and I just have come to accept that many or most REO listing agents engage in this type of behavior. There's not much point in getting annoyed about it--I just try to remember that they don't represent me and never to reveal what other offers I have out there, how high I'm willing to go, etc. unless there's a way I can turn it to my advantage.
Kel S you are a breath of fresh air! I admire your strength to hold to your principals. In the end you still have to live with yourself. Over the years I have met others like you and I go out of my way to do business with them even if I have to pay more. Always speak up so that we know who you are and you will be rewarded.
J Scott, not only would I lie to the serial killer, but I would yell, "Hey, look over there at Santa Claus and the tooth fairy!", then make some ninja move on him, and negotiate the hell out of him like John S. would do!
Originally posted by Keith Lutz:
I'm pretty sure nearly everyone would do the same thing...that was my point. It's easy to espouse ideals like "Lying is always wrong"...it's much harder to hold up those ideals when reality gets in the way.
Few things in this world are black and white...treating everything as if it is will just get you into trouble...
When I was in the business lying was very common. Some of the older agents were called "old school" which meant you couldn't believe a word they said.
Our sales trainer said if you aren't a good liar then you probably shouldn't do it.
It was comon to tell FSBO's that they had a buyer and if they listed the property they would sell it for them.
During that time all agents worked for the seller so it was believed by many that anything you could say to the buyer to get more money for the seller was the required thing to do. If it wasn't in writing it did not matter.
The top agent in one of the offices I worked in was able to sell many of her own listings (she had many and usually only showed her own) and would get full price offers. We always marveled at that. One day I asked her how she did it and she said she told the buyers the sellers would not take a penny less than full price. Her list prices were not low either. She drove a new gold Cadillac, worked 7 days a week and had a nice lifestyle. You have to watch out for those grandmotherly types that have RE licenses.