Today we’re going to talk about the darker side of real estate. Did you know that some agents purposefully use a Seller’s hopes and emotions against them to win listings? Many of these dishonest agents are really good at it, too.
This is called “buying a listing.” Here’s how it works and what sellers must do to protect themselves.
Sellers interview agents and are told their property will sell around some number. Let’s say the value is $500,000.00, but this example works at all price points. Five Realtors offer figures of $490k, $510k, $500k, $505k, and $495k. The seller still wants a higher sale price. A dishonest sixth agent realizes that the seller wants more and tells the seller the property is worth $545,000. That’s a complete lie, but the seller believes what they wanted to hear and hires the overpriced agent.
The overpriced property comes to market. Days, weeks, and even months pass without action. The seller gets upset and demands to know why the property hasn’t sold at that higher price point. The agent trots out one of many standard excuses; the market changed, the summer selling season is ending, or another convenient excuse. The agent suggests a price reduction to meet the market and the seller reluctantly drops their price to $515k.
More time passes but eventually the seller receives an offer around $500k. Now the seller is really frustrated. Their agent said it was worth $545,000! Why is the offer only where those other five Realtors said it would sell? The seller again questions their agent. The agent tosses out out more of the same excuses; a changing market, more problems than expected, buyers are picky, etc. Then they advise the seller to take the offer since it is the best offer they received. (That’s the only truthful thing that agent told the seller since the beginning!)
We all know that the seller was taken advantage of by an unscrupulous Realtor. This Realtor knew how to use a seller’s hopes and emotions against the seller and to the agent’s financial benefit. But what else happened?
- The seller wasted time on market, which means they unnecessarily paid additional months of property taxes, utility bills, and repair/upkeep/maintenance.
- If this seller needed to sell in order to buy another property, they probably missed out on potential properties while their overpriced property languished on market.
- The longer a property languishes on market, the more buyer perceptions of the property’s value fall. Even though a realistic value is $500k, the seller may have missed an opportunity to sell for $505k in the early days of the listing. In addition, they would have netted more because fewer days on market mean fewer months of property taxes, utility bills, repair/upkeep/maintenance, etc!
- The agent’s lies may have ruined the seller’s timeline. Perhaps it took three additional months to sell at the higher price point. What did 90 additional days do to the seller’s plans? Does it mean moving in winter? Corporate housing or an apartment? Storage unit fees? Entering a new market for the new property at the worst possible time?
Here are three things sellers can do to protect themselves against lying agents who buy listings.
- Always seek logic over emotion. Mentally remove yourself from the situation. If a friend was selling their house, had numerous Realtors estimate around the same price point with one high aberration, you would encourage your friend to be cautious and question the aberration? Do the same here! Everybody wants more money, but is more money realistic and achievable?
- If you truly want or need more money, ask those agents what you must do to earn that money. Using our example above, our seller could have asked each agent what had to happen to merit a $550,000 sale. Sometimes the answer is simple; fresh paint, new carpet, and tame the yard. Other times it’s not so simple; add a third full bathroom, finish the basement, or tear down the existing garage and build a new 3-car garage. It costs you nothing to ask, so there’s no reason to move forward blindly!
- Leave this out on the table. Buying a listing is against the Realtor Code of Ethics. Dishonest agents who know you know about buying a listing are less likely to lie with this tactic.
Agents who buy listings give sellers the price they want to hear. However, it’s not the honest truth that sellers need to hear. If you have a price point in mind but other agents aren’t helping you earn that price, give me a call. My name is Mike, I am a Broker Associate with Coldwell Banker Residential Brokerage of Brookfield WI, and I do not buy listings. We can discuss your needs, what the market is doing, and determine how to bridge that gap between what you have and what you need. My policy is to tell you whether or not I can help you up front. If I must disappoint with a low price point, I want to tell you today instead of 6+ months down the road.
Michael Kwiatkowski of Coldwell Banker Residential Brokerage of Brookfield WI can be reached via email at firstname.lastname@example.org or by phone at (414) 207-2938.