Christopher R. Dunn writes:
A questionable practice?It would appear that numerious RE firms here in the Bay are making it
a practice to List, market with open houses, advertise properties at a below market number with no intentions of selling at that number.The listing broker will take offers and hold them until a later date, usually two weeks or so to generate “competitive” offers.
Are Real Estate Firms practicing this in other areas?
To my knowledge, not in our area. If it is as you describe it, I don’t see it as “questionable” but intentionally deceitful. It is in direct violation of the Realtor Code of Ethics (download a copy of the code here) Article 1 (treat all parties fairly), Article 2 (avoid exaggeration, misrepresentation, or concealment of pertinent facts) and Article 12 (shall be careful at all times to present a true picture in their advertising and representations to the public). It would also likely be actionable by the California Attorney General’s office, as well.
If some Realtors are doing this sort of thing I believe it should be stamped out and stamped out hard.
John L. Wake says:
I saw a lot of that during the boom. It seemed like a lot anyway because those low-ball list prices attracted a huge amount of interest.
These poor buyers would get all excited about this great price they saw in the listings I sent them. Then I would have to be the bad guy and explain to them that the Seller is definitely not going to sell at that low list price.
The low ball list price will generate lots of offers. Then when the Seller opens all the offers on X date, the agent will call each one and try to get them all to raise their offer. When someone raises his offer, repeat all phone calls.
I believe the technique was effective for the Sellers for several months in 2005. In the last year I may have seen it once at most.
I always assumed that the agents running those schemes, and wasting my time, were originally from California.
May 7, 2007 — 10:58 pm
Brian Brady says:
A Classic Bait and Switch.
May 7, 2007 — 11:16 pm
CJ, Broker in L A, CA says:
My business partner’s son has been looking for property in San Francisco. He found one home he liked priced at $849,000. He made an offer of $880,000. Turned out the least the seller would take was $925,000. So, yes, it does appear to be a fairly common practice in the Bay Area.
May 8, 2007 — 3:53 am
Athol Kay says:
Not seeing here, but agree it’s a bad practice.
May 8, 2007 — 6:30 am
FSBO Louisville says:
I would steer clear of an agent promising all these multiple offers if ” I only reduce my price by 20-30,000 dollars…” What a gamble!FSBO Louisville
May 8, 2007 — 7:20 am
Austin Realtor's Wife says:
I’m not aware of that happening in Austin… that practice is so clearly a violation of the Code of Ethics that they really should have their licenses revoked. THOSE practices are what gives the industry a bad name- it SHOULD be stamped out as you said.
Thanks for exposing this, Russell!
May 8, 2007 — 7:56 am
Kris Berg says:
This is new to me, although a few years ago it was common to see a new listing with the remark that “all offers to be presented at sundown three days after the full moon”. In our then-frenzied environment, many agents found great sport in seeing how many offers they could amass, thereby driving the perceived desirability of the property, and the price, north.
May 8, 2007 — 8:04 am
Robert Kerr says:
The practice is alive and well and being marketed under the title: “How To Sell Your Home In 5 Days.”
I’m have no data regarding efficacy.
http://tinyurl.com/2m7pv5
May 8, 2007 — 11:00 am
Stephen Nestel says:
Competitive bids are unfair to WHOM? The seller or buyer?
This form of pricing/selling is perfectly fair to all parties concerned if the terms are disclosed to everyone in advance. It is an auction.
Of course, I am biased, I am an auctioneer as well as a real estate broker.
The real ethics issue arises when the auction terms are not announced. I believe in markets. Open competitive bidding is the best way to achieve market price.
May 8, 2007 — 2:25 pm
Thomas Johnson says:
In Texas, if the listing agent has an exclusive right to sell agreement, the seller has just obligated himself to pay a commission when a full price offer comes in. I wouldn’t know about the land of fruits and nuts.
May 8, 2007 — 5:06 pm
Russell Shaw says:
>This form of pricing/selling is perfectly fair to all parties concerned if the terms are disclosed to everyone in advance. It is an auction.
I agree. It is totally fair when the terms are disclosed – it is when they are not disclosed and the seller and agent are “having an auction” that the buyers didn’t know about that it becomes deceitful.
May 8, 2007 — 5:25 pm
James Hsu says:
This is a popular practice in Seattle right now, well..mainly Bellevue/Redmond (microsoft land). Almost every listing will have the “Seller to review offers on …X …date” and it’s usually at least a week. Just bid on a house that was holding offers for about 5 days that had 14 offers. We came in at $10k over and wasn’t even in the top half of the offers!!
I haven’t seen any listing come out and say it’s up for auction. Sometimes they go out of their way to make an excuse why the seller can’t review offers sooner.
May 8, 2007 — 9:19 pm
Chris says:
Its not happening in my area, at least I have not seen it.
We are still getting some bidding on homes in the $700k and up range. But thats just the listing agent playing a couple of buyers off eachother.
May 9, 2007 — 6:42 pm
Keith Jeppson says:
The only thing I’ve seen close to that is agents putting remarks in the MLS that all offers will be presented to the seller at an appointed day and time. Obviously pushing for competitive bids. It worked ok when homes were on the market less than a week and sellers could name their price.
But, we’re in a different world now and the practice has pretty much disappeared in our market.
May 9, 2007 — 7:49 pm