I was recently searching for an investment property. I came across a very nice 3 family that was updated. The owner had listed with an agent and had no real offers for over 2 months. They had lowered the price by $40k. We immediately put in an offer. The selling agent immediately told us that there were "4 offers near asking" and to come with best and last. I immediately thought that this is highly unlikely since we saw the house one day after the price reduction and put our bid in immediately following. Since as most of you know, it is fairly tough to prove that a selling agent is lying. Since this agent owned his own agency, he also was the owner calling the shots with no large organization having oversight. I requested with my broker to see the house again. The first time we had seen the property the owner had been there and showed us the house (The selling agent was too lazy to show the property). I hoped this would be the case the second time around, and it was. My agent and I asked the owner if he had been shown our offer and if he was considering any other offers. Not only had he not been shown our offer, he was not aware of any other offers. So all unscrupulous agents you have been put on notice. It's not that hard to find out if you are lying. We could have easily also dropped by unannounced if clever agents are thinking that the buyers will never meet the sellers. Now unfortunately, since all communication was verbal there is not that much recourse to report this agent, but it did save me thousands of dollars in extra costs. In the end, we were outbid by another investor, but I was happy not to have to overbid on the property. I hate this classic ploy by listing agents to drive up prices for their clients and commissions for themselves. Unfortunately,with the exception of the buyer, all parties including both agents' economic incentives are to not report this deception. If you sense either agent is lying, feel free to use this method to call BS.

How to call BS on the listing agents "Multiple Offers"

Investor · NW Indiana · Member since 2012 · 833 posts · 197 votes

10y

@Joseph Chan. I know I always wonder if they really have multiple offers, but like you said it is difficult to prove that sometimes, like on vacant houses.

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Kyle Godbout

Investor · Omaha, NE · Member since 2015 · 366 posts · 184 votes

10y

This just happened to me. I put an offer on a homepath home for a personal residence. I was told that there were multiple offers and to put in my highest and best offer. I offered the same amount. Then I received a counter offer, after I just have my highest and best. So, I just offered the same amount again. Then they accepted it:)

6 Reply

Russell BrazilBusiness Member

Moderator

Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

10y

What's funny is you think you caught the agent in a lie, yet clearly there was other offers since someone else won the bid. He merely hadn't presented them to the seller yet. In a multiple offer situation you gather all the offers and present them together.

An agent has ZERO incentive to lie about multiple offers. An agent wants the property sold so they can get a commission. They do not want to scare away potential offers if there are none.

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Joseph Chan

OP

Jersey City, NJ · Member since 2016 · 23 posts · 13 votes

10y

@Carolina E. You can always put an escalating clause where you will pay $X dollars higher than highest bid subject to a ceiling price. However, this also doesn't prevent shady brokers from producing phantom bids from mystery buyers. Usually you can ask to see the next highest bid in this case. If you have this doc you could always contact the person making the offer to see if they are a real person with a real bid.

4 Reply

Darren Budahn

Investor · Milwaukee, WI · Member since 2014 · 811 posts · 420 votes

10y

I don't think you proved at all that the agent was lying. He may or may not have. It's more likely that he had not presented the offers when you talked to the seller.

2 Reply

Kelly Crone

Investor · Littleton, CO · Member since 2016 · 47 posts · 9 votes

10y

@Joseph Chan There are dishonest people in every profession. I see no real incentive for real estate agents to lie to prospective buyers. On the contrary, the buyer could turn out to be a future customer for the agent.

0 Reply

Joseph Chan

OP

Jersey City, NJ · Member since 2016 · 23 posts · 13 votes

10y

@Russell Brazil it is possible that there were offers. But here is the time sequence. I put in my offer on Monday and the time I saw the seller the second time was Friday. He still not heard about my offer. Doesn't the selling agent have a duty to present the offer in a timely fashion (it only takes a call)? Then the following Monday we were told our offer was rejected. Did another offer come in? Yes it's possible from Friday to Monday another offer came in. The selling agent likely used the same line, or stalled and used our bid to get a higher offer. This is a very hot market in NJ and agents know that for good properties, that if they wait they will likely get an offer near or above asking. I just find it very hard to believe that there were 4 offers near asking one day (first Monday) after the price dropped (no offers in 2 months) , and that a week later the seller had not heard about one offer when I asked him directly. Could it be possible that the selling agent was holding all these offers for over a week? Yes but why? Like you said, he wants the property to get sold and he has the home owner's phone number.

1 Reply

Wayne Brooks

Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes

10y

Don't know if the agent was lying or not, or did anything wrong or not, but he did do one thing right for his seller......he got a higher price than your offer.

10 Reply

Mark Gallagher

Flipper/Rehabber · Allentown, PA · Member since 2011 · 1k+ posts · 701 votes

10y

@Joseph Chan

You leave out some details regarding how much the property was listed for, but a $40K price reduction is really going to generate a lot of interest. There had to be other legitimate interest since someone bought it, and it wasn't you.

It doesn't just "take a call" to present an offer. Especially if the seller is older, lacks technology, etc. The agent was most likely going to meet with the seller in person to go over the offers, explain things etc.

You even quoted the agent, but I'm sure you didn't speak directly to him. He could have said something like "I'm expecting 4 offers" and your agent then relayed it to you as "he has 4 offers near ask."

You then go on to say this whole thing saved you money, which is a good thing.

Going on BP and putting agents on "notice" accomplishes nothing. Go buy a property and generate income.

8 Reply

Brandt Smith

Cypress, TX · Member since 2016 · 132 posts · 49 votes

10y

@Joseph Chan the agent has no incentive to lie. He just cares about his commission. Say he lies and bumps the price by $10k. That means he is making an extra $150. It isn't worth the extra work. He wants to sell it quickly.

Sellers may lie to you or use "multiple offers" to bump your price.

3 Reply

Robert Lorenz

Phoenix, AZ · Member since 2016 · 208 posts · 76 votes

10y

The 40k reduction may have also been the spread between what the agent wanted to list it at and what he was told it at. Sellers (and buyers) can sometimes have unrealistic opinions of worth.

If I were in the agents shoes, I wouldn't want to bug my client with even a phone call every time someone tossed an offer. I believe he was doing his duty to collect "highest and best" before a prescribed date and present them together during a single sit-down with the client. The seller is obviously going to act in their own self-interest, which may include a soft fib here or there to avoid an uncomfortable situation with you walking through their home.

0 Reply

Chris MasonPro Member

Moderator

Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes

10y

I asked a RE agent I frequently work with for a blank copy of the single counter offer form. She didn't even know that such a form existed, much less have the blank PDF of it. She just uses the multiple counter offer form in all circumstances. Listing agents don't even have to turn their brains on in order to start drumming up mythical bidding wars; if they are talking about multiple offers then go ahead and assume that they are saying the exact same thing regardless of what is going on in reality.

So, yeah, just leave emotion out of it. The listing agent isn't your friend if you are the buyer, no matter what the little disclosure form about the listing agent double ending the deal says. So go ahead and assume there will always be alleged other offers, no matter what.

Don't offer more than what you are comfy offering, and just consider the talky talk about other offers to be white noise, even if it's the hottest house in the hottest zip code. I've actually had listing agents, after the contract is signed, straight up join me in laughter when I mention the "other offers that were on the table" and imply that it's a bunch of BS and I'm playing like I'm on their team, and the buyer is a sucker, etc, or whatever.

Then immediately after hanging up the phone, I'll go ahead and tell my buyer and buyer's agent to be total dicks about negotiating inspection results because I'm pretty damned sure based on that laughter and "moment" that we shared that the other offers were mythical, muahahhahaah. :P

5 Reply

Joseph Chan

OP

Jersey City, NJ · Member since 2016 · 23 posts · 13 votes

10y

@Wayne Brooks yes the selling agent did get a higher price but the question is that the true market clearing price? My original points with the post is that 1) the incentive/broker compensation system is broken and 2) "unscrupulous" agents beware 3) show other BP members that as a buyer you have options in an often opaque market where there are little checks and balances on the agents with the exception of self policing. Imagine if you went to buy a share of MSFT. There is only one share currently available. You think it's worth $100. Your broker says somebody just bid $125. You want to own the share, and since that is the last market bid price you bid $125 or slightly higher. Yes you win, but was the price you paid a fair price? Thankfully, we have stock market ticker prices, liquidity, SEC regulators, and an incentive system not predicated on the dollar value of shares you buy but simply the number of shares you buy. I do love the fact that RE is opaque and not every house is the same. This affords opportunity. What I don't need is a broker jacking up the price.

@Russell Brazil I love how agents say they have zero incentive to cheat. You have 2 million agents in the US and you are telling me that zero have ever fudged numbers? It's the law of large numbers and there are going to be a few bad apples. I'm not saying all are bad. I'm just saying that RE agents who have acted poorly in the past should think twice in this age of the internet where information is readily available. Furthermore, who pays the selling commission of both the buying and selling agent usually? The seller, and it's predicated on the final sale price. As a seller if you get me another $100k price higher, I'll gladly pay you 6% all day, but is that fair to the buyer if there are no other buyers (Note: I realize that this is not the case here and there are other buyers)? Here's the economics of the deal. $40k is real money but represents less than 6% of original sale price of $699k. Price was lowered to $660k. Comps provided by my agent were $600-610k. It's no wonder why it sat for 2 months. I bid low 580k as a starting bid figuring we should end up somewhere in the middle. Some might say it's a low number, but the property had sat for 2 months and the comps supported my bid. I did come up to $640k in the end. Now let's do some math for the selling agent. 660-580=80k difference. He owns his own brokerage so he makes 3% if he gets a full price offer or $2.4k more. Now some would argue that's not much. But for doing very little work and sitting on an offer for a week it's not bad money. Let's say he uses this same tactic once a month conservatively. That's another 28.8k a year in his pocket. That is starting to look like real money. What's his chances of getting caught? As most of the forums I've read, there is little chance. Even if he does, he probably gets a slap on the wrist.

@Kelly Crone There are 2 million agents in the US. There are 3007 counties in the US. Hudson County NJ happens to be one of the more densely populated counties in the US but for simple math's sake I divide 2mm/3007 and get 665 agents per county. The likelihood that this particular selling agent now reps me as a seller is extremely low so I really don't think that's the first thing that crosses his mind.

@Mark Gallagher what my post does is that it's simply a resource for other buyers. If you are an upstanding agent you have nothing to worry about. I'm not saying that the house wasn't priced right nor that we are not in a white hot market. My point is that the selling agent sat on my offer and two there are games that some selling agents do to artificially raise the price by artificially demand that may or may not be there. You could be right that he was gathering bids but it goes contrary to what some people have said that all an agent wants to do is sell the house as quickly as possible. I'm pretty sure that my agent relayed what was heard from the selling agent correctly. Another shady thing was the selling agent said he was authorized to counter on behalf of the seller. He countered at the same list price. We said we want to see the counter in writing (which would have required the seller's signature). He did not produce this counter. I'm trying to buy property but I'm not willing to overpay. I'm an investor not a lemming. I did save money because I didn't overpay for the property, but now I'm out time for the search and I'm still sitting on a ton of cash to deploy earning zero in the bank.

I'd like to see an incentive system where the buying agent has more incentive to fight for better pricing for their clients. Perhaps a tiered flat fee for every $100k in sales price they get X. Additionally, if they save the home owner say a delta of $25k between the sale price and the bank appraised price they get some percentage kicker. Finally, a slightly more transparent system where selling agents have to show any and all bids after close as a checks and balance system. Buyer names can be redacted. Unfortunately, most of the players (agents, sellers) in this game have little incentive to push for change.

You are not supposed to spoof prices in the Stock Market (although it happens. Read Michael Lewis' Flash Boys). Why should you be allowed to do so in the housing market? Also the fact is that in today's rising market agents can sit on offers. Let's say I would give you $100 today. If you wait until tomorrow I'll give you $101 and if you wait a week I'll give you $110. Which offer do you think you would take for very little effort involved?

1 Reply

Chris MasonPro Member

Moderator

Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes

10y

Repeat business is the incentive structure, @Joseph Chan.

On a deal that we just closed (I literally am at home right now from sipping fancy Irish whiskey at the subject property that my folks now own), the buyer's agent surprised the buyers with a SURPRISE!!! $5,000 seller credit at the last minute.

The buyers were expecting a contract addendum that contained standard release of all contingencies stuff. What they got was just that, with a bonus five grand that they did not ask for, expect, see coming, or even know to hope for. Signed by the seller.

The agent basically busted his *** to go above and beyond. Who knows what ******** posturing he had been doing in the last week or two to line that up (like the BS posturing the listing agent is doing on the deal you reference). And who cares. The point is, it worked and there'd $5k of magic money from nowhere for the buyers.

If that's your agent, are you going to call him again next time you've got a RE transaction you want to put together, or a random idiot advertising on zillow.com? I'm pretty sure you're going to call the fellow that made five grand appear out of thin air by negotiating on your behalf, probably with a bit of sales, manipulation, and lying, built in (I wasn't part of his posturing and those conversations, so I actually have no idea how that part of it went and for all I know he told 100% the truth 100% of the time... I just find it unlikely).

0 Reply

Ronald PerichPro Member

Investor · Granite City, IL · Member since 2014 · 658 posts · 301 votes

10y

@Chris Mason I could honestly hear your evil laugh in my head!

1 Reply

Mark Sirianni

Residential Real Estate Broker · Washington, DC · Member since 2016 · 8 posts · 2 votes

10y

I would definitely use an escalation clause that way you don't lose out on the property. good properties tend to draw multiple offers but also often times Agents get one contract that there clients don't want and then they use that offer to shop for additional offers. Its always good to put an expiration on an offer as well.

0 Reply

Brian Erlich

Investor · Roswell, GA · Member since 2016 · 73 posts · 38 votes

10y

@Joseph Chan, I am curious why you would want to try and catch the agent lying about multiple offers. An agents job is to get the best price for their client and some agents lie all the time (Some are also very honest, so no disrespect intended).

I have also had the feeling that the agent wasn't communicating with their client, but I cannot control this, so I don't worry about it. I worry about what I can control.

My process is to make an offer that I am comfortable with and be willing to lose the deal if someone outbids me. If the agent asks for my highest and best offer, I have the choice of re-evaluating and raising my offer or not.

If I feel the client hasn't been informed of my offer, I can send the property owner a letter or stop by, but I am not sure that this is really helpful. Over time I may even get to know who the unscrupulous agents are and consider their request for a highest and best offer in that light.

It is my understanding that this is a numbers game and that it can be frustrating at times, but adding the frustration of fighting with the agent or trying to catch them lying just doesn't seem worth the effort.

1 Reply

Wayne Brooks

Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes

10y

As @Chris Mason and others pointed out, it depends on which side of the fence you're on. I had friends who were buyers, who after negotiations had the perfect house for their needs under contract for $720k. I insisted they get an appraisal, even though it was a cash offer. I knew the comps would be tough since this was a 9 year old house, 14' ceilings, barrel tile, etc. in a neighborhood of 30-40 year old houses, 8' ceilings, etc., all 5-10 acres. They were happy enough at $720k that they told me "if you do anything to make us lose this house, you'll have to leave the state". A few days later I had the written revision lowering the price to $700k. Now, do you think the sellers had the same opinion of me as my buyers did?

1 Reply

John Thedford

Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes

10y

You got outbid so obviously there was at least one other offer. I have found myself in highest and best situations quite a few times. I have stood firm and was not the winner. Agents lie...gotta agree. Sellers lie. Buyers lie. It seems to be acceptable practice these days.

1 Reply

Luka Milicevic

Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes

10y

Sounds like a really bad agent and there are MANY bad agents out there that do not represent their clients the way they are supposed to.

If you write an offer on a used piece of toilet paper the agent is required to present it to their clients. This agent is NOT fulfilling their duty to their client and that infuriates me!

2 Reply

Russell BrazilBusiness Member

Moderator

Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

10y

It sounds like you need a new agent yourself frankly. He obviously doesn't know how to value property if the comps he provided are off by $50k. Also if he can't simply explain to you, and provide proof of a multiple offer situation and know how to guard against a fake bid, then he doesn't know what he's doing. Say the property closes at $650k, (which seems reasonable since it's more than $640k which didn't win it), if your agent is letting his clients bid $70k under market value in a hot market, that's just more proof he has no idea what he is doing.

Agents have plenty of incentive to lie...but just not about multiple offers. You think an agent is going to walk away from a guaranteed $17k commission for the slight possibility that he could get $19k. You have clearly never worked in a commission based job nor understand the economic incentives of one.

The chances of getting caught in this kind of lie are incredibly high since the listing agent would need to provide the other offers to the winning bidder if requested. Combine that with audits from the real estate commission (with him being a broker he is audited more), and there is like a 95% chance he would get caught. Possibile penalties for this would go far beyond the slap on a wrist you think would happen. We would be talking immense fines, loss of license and possible jail for fraud. For these reasons there is just very little chance an agent lies about multiple offers. There is almost nothing to be gained, but a ton to lose.

And in this case we know, at least from the details you've told us that there were other offers because someone else bought the property. You could have created any narrative you wanted to support your assertion, but you've provided us with a narrative that does the opposite

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Mike CumbieBusiness Member

REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes

10y

If you feel there are no other offers then say "That is our highest and best offer".

When I go to present offers I tell them they have the opportunity to do one of the 4 following things (Accept/Deny/Ignore/Counter). So if there are multiple offers they have to either decline or ignore the others unless of course they decide to go to them all and ask for "Highest and best".

So if you present an offer and I talk to my client and there are other ones that are better (Terms/price/contingencies/better odds of closing) most of the time we will start countering that other offer. If we start countering the other offer, we are most likely going to ignore you and your offer while we are trying to come together with the other one.

Why? you ask

Why not just tell me you are in the middle of something else?

Because it does not put my client in the best position. It looks a whole lot better (for my client) if 5 days later I come to your agent and say "Hey sorry my client is really hard to get a hold of, he is a busy man/I didn't get the email/my dog ate the offer, but if you were interested still... he/she said to offer XYZ". Than it does for me to say "We couldn't come to an agreement with the other group so we are crawling back to you asking if maybe you could possibly offer us XYZ"...

On the same token one of the reasons you get in the multiple offer situation is because the minute your offer came in, the selling agent called everyone who looked at the house and said "Hey I know you showed the house last Tuesday...Just to let you know we just got an offer and if your clients are interested I am presenting tomorrow morning at 10:30.... I am just too busy today to get over there tonight".

I understand how as a person trying to buy a property cheap it is no fair to have an agent doing these things to you. However if you are the person selling it is what you want and we are legally required.... "Legally Required" to work in their best interest. Is it because we are mean and dishonest agents? No it is because we are representing the seller and working in their best interest. If the seller wanted "The most money", "The fastest close", "The least amount of personal items", "The best chance of closing" I am going to work to get them whatever is number one.

On a side note, if you write $150,000 on a piece of used toilet paper (for a house listed at $320,000) and hand it to me, I'm going to go through the long and slow process of asking you for things that the client wants....... one by one. When I listed it and spoke with the owner I asked if they wanted me to reject offers without POF? I also asked if they wanted offers only on our standard GRAR contract? I also asked if there was a number they did not want to be bothered below? (funny note, this is normally of a scratch piece of paper). When your used TP comes in guess what I am doing with it? That's right calling everyone that ever looked at the property and trying to get offers because "I have an offer, it kind of stinks, but my client will be considering it tomorrow at 10:30 ".

Best of luck in your investing

4 Reply

Account ClosedBusiness Member

Real Estate Broker · Ben Lomond, CA · Member since 2014 · 62 posts · 47 votes

10y

For the sake of elevating our profession I need to correct the terminology of @Joseph Chan. The "Listing Agent" is the one selling the property and the "Selling Agent" is the one representing the buyer. Here is an example for clarity:

Traditionally, all agents involved in a real estate transaction legally represent the Seller (both the "Listing Agent" and the "Selling Agent.") When a Buyer's Agent is involved, the person buying the property is represented by the "Selling Agent," who is known as the "Buyer's Agent."

0 Reply

George P.

Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes

10y

Originally posted by @Kyle Godbout:

This just happened to me. I put an offer on a homepath home for a personal residence. I was told that there were multiple offers and to put in my highest and best offer. I offered the same amount. Then I received a counter offer, after I just have my highest and best. So, I just offered the same amount again. Then they accepted it:)

i have done that 2 dozen times. worked on about 5 houses.

and yes, i share the same paint as you all....i hate paying more than i want to, i hate it when they IMMEDIATELY tell me that there are other offers, so i simply tell them, "i dont care, so no need to try to bump my offer.

2 Reply

Caroline Widjaja

Rental Property Investor · Los Angeles, CA · Member since 2018 · 84 posts · 54 votes

6y

@Joseph Chan Honestly, there are some good & bad agents out there! It could be the selling agent has his/her own buyer (to get DOUBLE commissions) and tell the other buyer to match with your offer, so your offer basically won't be presented to the Seller. I don't know if you state allow Double Comms? My suggestion is to put whatever amount that you feel comfortable in paying and if you don't get it, just move on, no need to get emotional. Buying a property is always harder than selling it. Even if you put the highest, it doesn't mean your offer will get accepted. A good agent can tell the difference if the buyer's offer makes sense or not. Be prepare to make an offer as many as you can, just to get your ONE offer finally gets accepted. In my case, I went through at least 30 properties just to get 1 accepted offer, and I'm always happy with my decision. Thanks to the advanced technology now, you can easily "docusign" your offer in 1-2 mins!

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How to call BS on the listing agents "Multiple Offers"

How to call BS on the listing agents "Multiple Offers"

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