MoneySense has an article called Tricks Realtors Use to Sell Homes that contains a lot of misleading and unsupported information. My last blog post dealt with the rather idiotic suggestion that two realtors would conspire to arrange showings at the same time to put pressure on one of the realtor’s buyer to purchase; I explained how and why that would be unlikely to happen.
This blog post debunks what the writer describes as a “staggered bids” strategy used to pressure a seller.
But some agents will tread into unethical territory by using a staggered bids strategy. This is how it works: after the first few viewings your realtor calls to say a potential buyer has made an offer, but it’s $100,000 lower than your list price. You reject it without hesitation. A few days later, the realtor calls again: another buyer wants to put in an offer for $75,000 less than your asking price. It’s still a low-ball offer, but this time you take a little longer to reject it. Wait a few more days and your realtor will phone one last time. This time he’s holding a formal bid. Even though it’s $50,000 below your list price, it doesn’t sting because you were already psychologically massaged into lowering your expectations. There’s nothing inherently wrong with this practice—if the first two bids were real. But realtors have been known to fabricate staggered bids to convince you that a bad offer is actually a good deal.
“There’s nothing inherently wrong with this practice–if the first two bids were real” is factually incorrect. If the two bids were real, they would be in writing. We are required by law to present an offer at the first opportunity, which means we have to send it to the client or sit down with them to go over its terms.
Let’s assume a seller doesn’t know that. Could this happen? Could an agent make up a series of fictional verbal offers to try to persuade a client to accept a lowball one later? I suppose anything is possible.
But what would the realtor do if the client said “I want to see the offer” or, “Okay, we haven’t had an offer for a while, let’s counter,” or “who’s the buyer? What are the details?”
More importantly, this “massaging the client so they will accept a low offer” assumes that the listing agent has their own buyer waiting in the wings. But why would the listing agent’s buyer be prepared to wait for a week or more before putting in their own written offer while the listing agent “massages” the seller? What’s the listing agent going to do: tell that buyer to sign the offer but provide a week long irrevocable? Yeah, right, like that’s going to happen.
The underlying assumption here is that the property is worth more than the sellers will be persuaded to accept via this unethical strategy.
What’s to prevent a real buyer from stepping up with a genuine offer for more in the interim, while the unethical agent is playing things out? If that happens, the unscrupulous agent has just lost a double commission. Does that makes sense?
That’s a pretty risky strategy . The genuine buyer may get tired of waiting; the seller may ask to see the fictitious “bids.”The agent could end up losing his or her licence. Does anyone really do that?
Well, according to the writer, yes: “Realtors have been known to fabricate staggered bids.” As an old lawyer, this statement really offended me. Which realtors? When? Who’s the source for this allegation? Is there a RECO disciplinary decision, a court case, a direct quote from someone, anyone, to back this assertion up? Where’s the proof?
An unsubstantiated allegation, set forth as fact, once again, without any evidence whatsoever to support it.
Tomorrow: debunking Myth #3: That we charge marketing fees for Open Houses