Do Real Estate Agents Lie About Offers?
We know a couple who is in the process of buying a home. We were discussing bidding wars, and whether you believe “Oh there’s lots of interest” or “We just received an offer higher” comments and phone calls from the agent. It seems like real estate agents lie to get more clients. Is this really true?
Are our real estate agents able to lie about their offers? The occasional real estate agent may lie about an offer. The vast majority of agents would not lie about an offer. Real estate is a business where personal referrals and reputation are crucial to your success. The financial gain would be far more costly than the loss of a professional reputation or its subsequent effect on their business.
Even though this is the truth, potential buyers often have doubts after hearing “We have another higher offer.” Then I donned my research hat and asked Google. What did I find?
Take a look at the results of my efforts. If you’re looking to buy a house, and receive the “higher offers” call, you will find this useful information that can help you be more confident about your next steps.
According to a variety of polls, “Real estate broker or agent” was the least trusted profession in terms of trust and reliability. It came second only to politicians and lawyers when it comes down to the trustworthy stakes.
There was one saving grace to the real estate profession: even though there wasn’t any social credibility to becoming a realtor, parents encouraged their children to be one.
We are led to believe that real estate agents will lie in order to complete a transaction because we lack trust and respect.
Anyone can lie, and it is not uncommon for real estate professionals to do so. It is possible to lie, but it doesn’t necessarily mean it happens on a regular, semi-regular, or even daily basis.
An unscrupulous agent could lie to you about an offer in many ways. They don’t have to lie straight. Sometimes, a lie could be one of omission. They can also make false statements to trick you into believing that an offer is genuine.
Most buyers and sellers have encountered phrases like these before. These phrases are often vague, making it hard to tell if an agent is truthful or playing tricks on you.
People lie when they believe there are benefits to them. People lie to get something good or something bad. Consider the potential benefits that you might get from a lie if you believe a realty agent lies to you.
Most of our doubts about what real estate agents say to us stem from the assumption that they want more commission. We would be more inclined to believe what real estate agents say if they were only salaried, and didn’t have anything to gain by raising a price. Is this “commission suspicion” based on fact? Let’s have a closer look.
Consider that you’re looking at a house on the market for $200,000. In the US, an average commission is between 5% and 6%. The difference will be split and called 5.5%. It is split equally between seller’s agents and buyers’ agents.
This means that the agent must share half of the commission with their company. The average amount they will receive from this sale, in the back pocket, is approximately $2,600 This amount drops to $2,175, after-tax.
Let’s say we sell the same home and it goes for 3% more than the asking price. This represents the “over-listing percentage” of homes sold above their initial price. The final sale price is now $206,000. These are our numbers now:
There are many variables involved in this situation, but it is easy to see the point. Your real estate agent will likely take home $30 for every $1,000 more in sales prices. It’s beginning to look less lucrative to try to trick you into raising your offer.
This same principle applies to sellers who suspect that their agent may not be bringing them offers or are only offering low-ball deals. It is possible your agent may not be interested in selling, have bigger priorities, or ignore lower offers to get a better offer. It is impossible to calculate the percentage of agents that will take over a house without any plans of selling it.
A real estate agent may give the buyer the impression that there are more offers, but the potential for profit is limited. While they are required to get the best price for their clients, there is no room beyond a reasonable asking price.
You also have the possibility of a failure to sell if the appraised value is higher than the market average. The seller’s agent should avoid this situation as it could lead to a repeat of the same offer, which is bad for their client and them.
Referrals are the most important thing for a successful real estate agent. The potential for future commissions from customers or clients who are satisfied with how the home was purchased is worth any small financial gains. A real estate agent should not spend their time lying about the price of homes to increase the sale’s value.
The most important thing you should remember about any “other offers” phrase is:
Panicking without thought is not a good idea. You can jump into a transaction with a better offer without really considering what your situation is. Think about the actual words of your real estate agent. Consider: Are they using sales speak or are they vague?
Do not be afraid to speak up with your agent. Ask the agent “Can you tell us about your other offer?” You may find that the agent is not legally allowed to share information with you in certain states due to confidentiality laws. However, this doesn’t necessarily mean they can’t tell you about anything. Ask:
If the concerned real estate agent is a member of the National Association of Realtors, they will be bound by their code of ethics. This requires truthfulness from all involved in any transaction. While they are required to abide by any state laws that prohibit them from disclosing specific information, they can still answer questions if asked.
It is important to keep your budget and game plan in mind when you are presented with another offer. Don’t let anyone pressure you into making an offer that is too high-priced, overpriced, or before your time.
Real estate agents are not allowed to lie about their offers. It is likely that they use vague sales language or are upfront about specific proposals. You can decide which one, and how to keep control of your buying.