Multiple Offers - Do Real Estate Agent Secretly Share Info?

25 Replies

I've read many posts here and via Google about losing out on a house due to "multiple offers". As someone who comes from a software/data background, I simply to do not believe that multiple offers "just happen" on homes that have sat for weeks/months AND there was no price drop to trigger interest. 

I've purchase 3 rental homes in the past year or so, and I've missed out on 3 during the process. All 3 were houses that were doing nothing. And the last one, the listing agent literally said NO ONE ELSE is looking at this house at this time. I look at it, make offer within 24 hours, and agent says multiple offers are coming in "make your best". WE LOST THE HOUSE. The odds of this RANDOMLY happening aren't zero, but darn close.

So, MY QUESTION IS, when a sitting house gets ANY interest, do agents have some secret MLS list that blasts out houses with "new interest"? There's something nefarious going on here, and it's starting to drive me crazy. Different agents keep telling me "it just happens", but I'm sorry, it's not possible.

Also, off some of my Google searches, I've come across the term "pocket buyer" where it said agents would tell these buyers what the highest offer is/was so they could outbid. This does not seem legal, but maybe it is. I know agents have relationships with buyers where they simply tell them every "good deal"? For example, I've I'm putting in a offer that 20% below listing, and it's sat for 6 months, do agents email/call investors and say "hey, this house is about to go for 20% below asking price, you might want to look at it"?

Is there anything else going on here that I'm missing?

Thanks!

Hey @Jeff Rodgers - I can unequivocally state that listing agents share info. They’re people, and people do that sort of thing sometimes. One example I saw involved a broker talking about bids - and the lowest amount her client would accept - openly in the office. Other agents heard the conversation, which definitely could have cost the seller a good deal of money if any of those agents ALSO happened to know the buyer 😉.

That’s just one example. What you’re referring to could happen like this- an agent gets an offer on a house that’s sat for 6 months, for example. Then at dinner, they tell their friends, “wow, I just got a lousy offer at 20% below ask on that house that’s sat for 6 months!”

Maybe one of the agent’s friends goes online to look at the agent’s listings, figures out which one it is, then passes that info to another one of their friends. There are many ways this sort of thing can(and does!) happen.

Congrats on the 3 deals you closed! MG

The only thing you can do is determine your criteria, try to understand the sellers needs, establish rapport with the seller and their agent, and let the chips fall where they may.  Life is too short to go crazy over stuff you can't control.

You normally do not have a fiduciary relationship with the listing agent, so what your observing might be both ethical and legal. When your looking at investment properties there are often multiple potential buyers. One of those potential buyers may have stopped negotiations with the seller hoping that no else, in this case you made an offer, once you made the offer, likely they went back to the prior offer attempting to gin it up using your offer as bait, so to speak.  Frustrating, I know..

I also believe this happens. Happened on a house I bid on years ago. No action, no price drop, no lookers. We made an offer and sure enough "multiple offers, best and final". Assuming it was a bluff i went a little higher (about my max) and sure enough another buyer won.

I found out a year later when it was related, the wife of the flipper was also an agent and I believe might have worked for the same company as the listing agent. They overpriced the house, it sat for months, they took it off the market... moved in, then sold it later for $20-30k less than they originally wanted...

I have put offers or called to say I was about to place an offer on 3 houses that had been languishing on the market and they each “just had an offer accepted” (although one I am pretty sure had not been actually signed off by the bank yet). It was years ago in a down market. So it does happen, but multiple and highest and best would seem suspicious...but I can believe it happens.

@Jeff Rodgers Yeah, multiple offers do happen occasionally on properties that have been sitting on the market for a while. It's not illegal for a listing agent to lie about multiple offer situations when there's none but it's certainly unethical. This happens more frequently on REO properties. For example, property is on the market for 6+ months. You make an offer and it goes into a multiple offer situation. You ask 80 % of asking but someone else offered 85 % of asking and you lose.

My clients made an offer a couple days ago on a property thats been on the market for 103 days. We came in about 8% below list (not my recommendation but cant blame them for taking a shot with a lower offer when its been on market awhile)..  Listing agent calls me and tells me she has a few very strong offers and they have a multiple counter offer out to them..  We raised our offer quickly to near list price and didn't get it..  In this market, if a house lasts 7 days, thats a LONG time..  103 days is absolutely absurd..   Somehow this same situation happens all the time..   Inventory is so low that we're all looking at the same 10 houses and eventually they all will sell, just ran into the buzz saw this time.  

Ive never personally lied about multiples, but I'm sure some agents do..  I will call potential interested buyers or past agents that showed a property, once I receive an offer, to try to give them incentive to act quick if interested..   This market sucks period, soo tough for buyers..  

Happens all the time wether you believe it or not. Many people simply wont submit an offer until there is interest in a property. When we receive an offer we will then call everyone who has viewed the property to tell them we have an offer, so if you are interested to get your offers in. This prompts people who were sitting and thinking to get offers in.

Originally posted by @Russell Brazil :

Happens all the time wether you believe it or not. Many people simply wont submit an offer until there is interest in a property. When we receive an offer we will then call everyone who has viewed the property to tell them we have an offer, so if you are interested to get your offers in. This prompts people who were sitting and thinking to get offers in.

 This. It is the listing agents duty to maximize their clients’ bottom line, so damn right I’m going to let everyone know who has showed interest there is an offer before it sells at a discount. 

@Russell Brazil is exactly right. It is realtors doing their job. They get an offer an call everyone that looked at it recently to drum up better offers. I have had my agent call me to let me know that a house I recently looked at just had an offer and asked if I wanted to put an offer in. So I can attest this does happen. Nothing illegal or unethical about it. If you want the property bad enough, increase your offer.

First, thank you for all the replies. This was my first post to BP.

Next, some of you are missing the point of my question. MY realtors keep telling me "it's just happens". No it doesn't "just happen". It happened because you or the selling realtor prompted others to make bids.

Understand, I do NOT have a problem with the realtor doing this. I have a problem with MY realtor saying "it just happens". That was my point (and based on my background in data analysis and probability). It doesn't "just happen". Realtors talk. 

You can say "well that's common sense". No, it's not when you are told over and over "it just happens". Understand? The proper response that a realtor should say is "even though this hasn't been getting any action for 60 days -- if you low ball an offer, the selling realtor will let everyone know so it doesn't sell too low". That's the true answer.  

I asked this question specifically so I could get others to confirm it doesn't "just happen". Thank you.

Originally posted by @Jeff Rodgers :

First, thank you for all the replies. This was my first post to BP.

Next, some of you are missing the point of my question. MY realtors keep telling me "it's just happens". No it doesn't "just happen". It happened because you or the selling realtor prompted others to make bids.

Understand, I do NOT have a problem with the realtor doing this. I have a problem with MY realtor saying "it just happens". That was my point (and based on my background in data analysis and probability). It doesn't "just happen". Realtors talk. 

You can say "well that's common sense". No, it's not when you are told over and over "it just happens". Understand? The proper response that a realtor should say is "even though this hasn't been getting any action for 60 days -- if you low ball an offer, the selling realtor will let everyone know so it doesn't sell too low". That's the true answer.  

I asked this question specifically so I could get others to confirm it doesn't "just happen". Thank you.

 Get a new realtor if you are unhappy with the responses. Or get licensed. I got licensed partially because I wanted to have more information on the purchasing process for the properties I was buying 

Originally posted by @Jeff Rodgers :

First, thank you for all the replies. This was my first post to BP.

Next, some of you are missing the point of my question. MY realtors keep telling me "it's just happens". No it doesn't "just happen". It happened because you or the selling realtor prompted others to make bids.

Understand, I do NOT have a problem with the realtor doing this. I have a problem with MY realtor saying "it just happens". That was my point (and based on my background in data analysis and probability). It doesn't "just happen". Realtors talk. 

You can say "well that's common sense". No, it's not when you are told over and over "it just happens". Understand? The proper response that a realtor should say is "even though this hasn't been getting any action for 60 days -- if you low ball an offer, the selling realtor will let everyone know so it doesn't sell too low". That's the true answer.  

I asked this question specifically so I could get others to confirm it doesn't "just happen". Thank you.

 I provided an example of one way it happens....it also does just happen randomly. I have a background in statistical analysis, that having been my first job out of school working at Harvard Med School doing statistical analysis on research studies for them. My background in the field tells me that that will happen randomly and often actually.

Lets say my market has 35,000 transactions per month. This is what I come up with from 3 million housing units being sold on the average of every 7 years.  Lets say 20% are over priced, which seems to be a reasonable amount from my experience. Thats 7,000. If 97.5% do not have this happen, and 2.5% have a randomness of multiple offers coming in at the same time randomly that is 175 times per month or 2100 times per year this phenomina would happen.

The law of large numbers tells me not only will it happen, it will happen often.

So yes, it just happening happens pretty often, especially if you combine that 2.5% with other percentages of ither possible outcomes that have the same essential outcome.

@Jeff Rodgers the listing agent's job is to get the most possible for their client, the seller. They shouldn't be telling what the least amount the seller would take, that is not helpful to the seller. I have experienced the same thing with multiple offers, which means at least one other person. I think some agents use it as a technique to increase your offer. I especially see it with bank owned properties. As an investor, you must know your max price in order to make money on the deal. So, if you are out-bid on a property, then the other guy may have over-paid. In which case, good for you.

@Jeff Rodgers ,

If you are unhappy with your agent do what you have to do. If you don't feel they are working in your best interest just find someone else. I 100% agree with the other agents. Once I get action on a listing, I start my phone calling campaign to try and get more so my client gets the best price for their house.

It also does "Just happen", but if you want another explanation. Sometimes houses are overpriced and people wait until they have been on the market for a certain length of time to make a play. 30 days/60 days/45 days. In the first week it will sell over asking, after 2 weeks the numbers start to come down. Days On Market are pretty well advertised and many people are looking at that number to find a deal. Once it hits 160 days the lowball offers come out of the woodwork like ticks on a firelog. 

Now if you are offering "asking price" 6 months later and losing out, then I would be completely confused. That doesn't "just happen". 

My Illinois attorney told me that there is some interest in making it illegal to lie about there being multiple offers.  I personally do not appreciate being lied to.  In the end of the recession this happened twice to us, when the properties had languished for more than six months.  (We got the properties after raising our offer and truly doubt the existence of other offers. ) The  proposed law would require that the successful bidder get to see the other offers before signing the contract.  I don't have an issue with trying to drum up interest,  but the outright lying pisses me off. 

@Nancy P. ,

It is against our code of ethics to lie about there being other offers if there is not. Trying to get other offers is a completely different animal. I would go as far as to say an agent that doesn't shop your offer around is doing a disservice to their client. 

They obviously were not lying to the OP because he lost 3 times. If there were no offers he would have won or been countered. 

Originally posted by @Mike Cumbie :

@Nancy Pults,

It is against our code of ethics to lie about there being other offers if there is not. Trying to get other offers is a completely different animal. I would go as far as to say an agent that doesn't shop your offer around is doing a disservice to their client. 

They obviously were not lying to the OP because he lost 3 times. If there were no offers he would have won or been countered. 

True.  I was speaking more to my own experience.    If there is a movement to write a law,  clearly in my area there are Realtors willing to violate the Code of Ethics.  But the law idea runs into privacy issues,  I personally doubt it will happen.

Originally posted by @Jeff Rodgers :

First, thank you for all the replies. This was my first post to BP.

Next, some of you are missing the point of my question. MY realtors keep telling me "it's just happens". No it doesn't "just happen". It happened because you or the selling realtor prompted others to make bids.

Understand, I do NOT have a problem with the realtor doing this. I have a problem with MY realtor saying "it just happens". That was my point (and based on my background in data analysis and probability). It doesn't "just happen". Realtors talk. 

You can say "well that's common sense". No, it's not when you are told over and over "it just happens". Understand? The proper response that a realtor should say is "even though this hasn't been getting any action for 60 days -- if you low ball an offer, the selling realtor will let everyone know so it doesn't sell too low". That's the true answer.  

I asked this question specifically so I could get others to confirm it doesn't "just happen". Thank you.

turn the tables lets say your seller .. what are your goals.. ???  these are agents doing simply going their jobs.... which is as a listing agent to maximize your sellers selling price nothing more nothing less. 

Originally posted by @Nancy P. :
Originally posted by @Mike Cumbie:

@Nancy Pults,

It is against our code of ethics to lie about there being other offers if there is not. Trying to get other offers is a completely different animal. I would go as far as to say an agent that doesn't shop your offer around is doing a disservice to their client. 

They obviously were not lying to the OP because he lost 3 times. If there were no offers he would have won or been countered. 

True.  I was speaking more to my own experience.    If there is a movement to write a law,  clearly in my area there are Realtors willing to violate the Code of Ethics.  But the law idea runs into privacy issues,  I personally doubt it will happen.

With all due respect Nancy, you have no proof anyone lied to you. If you truly believe that in these two situations, then why did you increase your offer in both cases? When people ask me for best and final offer, I don't increase my offer. I have lost all those bids, so obviously there were other offers. Bottom line is you should never pay more than you think a place is worth just because there are other bids. If you believe you are being lied to, my recommendation is to LOWER your offer. 

You mentioned the properties you bid on had sat for months. Most likely there were price decreases along the way. Other investors were watching and waiting for a deal, just like you were. It is completely possible that you both put offers in at the same time. Or it is possible after your offer was submitted, the seller reached out to others who had previously shown interest, soliciting an offer. Lots of explanations beyond assuming you were lied to. Also keep in mind that even if there were other bids, your bid may have been higher from get go.

One final thought is what motivation is there to lie? If it is a bank employee, why would they risk their career over to get a couple thousand more for a property? If it is a realtor, as Mike pointed out, a realtor is bound by code of ethics. Of course they could still lie, but there is little incentive. Even if they get the offer up $5000 more, their cut is 3% so that is $150. Why risk losing your career over a couple hundred bucks? I am sure it happens, but I don't think it is as wide spread as some people seem to believe.

I would think some, if not most agents would share information. 

I'm no dummy, I had a few unfortunate events with previous ones:

-My first RE agent referred me to a loan officer, both of them were sharing information behind my back without me knowing. And working together to try and steer me in the direction they wanted me to go. I found this out because I contacted the loan officer about a house, and I received a call from the RE agent minutes later saying it had an accepted offer when it in fact didn't. 

-My second RE agent just wanted me to buy, she knew what my spending limit was and she would always try and get me to purchase at my max budget. There was no negotiating involved and would get frustrated because I would make offers that she "felt" were too low. Long story short, she ended up firing me.

Then I found a remarkable agent. I ended up being her last client before she gave up her license. She was an older lady, but she went to bat for me. She was honest, and had my best interest at heart. Sure enough we ended up finding a house and if she didn't retire I would still be using her today. 

Joe, you are right,  I have no proof.  But it's easy to cheat,  as I have no right to ask for proof.  These deals were in 2010-2011,  when the Chicago Tribune couldn't go three days without another story about real estate fraud being committed in the wake of the recession.  I know when we bought our first house in 1988 our Realtor --the MOM of a coworker--acted unethically.   But we didn't know it at the time,  we were 26 and 27 and naive  even though I had a gut feeling.  (She asked how high we could go...surprise surprise, guess how much the counter was?)   Also had Realtors attempt to manipulate the inspections over the years.  Just this year walked away from a deal when the seller would not remediate radon.  BY LAW the seller then had to disclose to the next buyer.   I already own a condo in that development.  MY tenant  met the new owner while walking the grounds.  I am friends with this tenant (she used to be my neighbor until her husband's health meant they had to downsize.)  She mentioned the radon and asked how it got remediated  (because in condos there is the association to deal with.)  Guess who didn't know jack **** about any radon?  Who then asked ME for my radon report and is going to sue the seller? That's right, the eventual buyer of that property.  But is anything going to happen to the listing Realtor?  Doubt it.   Reality is every group of humans has some bad actors.  

 The fact that a group of real estate attorneys have asked the state to consider such a law makes me think they know something I don't.  He volunteered this information to me after I said it was strange that these foreclosures which had been on the market for over six months suddenly had multiple offers.  We didn't pay more than we were willing to pay.  When I buy a property or  even something on Ebay,  I know in advance the most I'm willing to pay.    I hope to get it for less.

And to your argument  that it is risk vs small reward..I think it's small risk if I have no right to ask for verification.  We walked away from the same multi-offer scenario in December 2016.  Guess who was back on the market 6 days later?  Hard for ME to believe there was really another offer that fell apart in six days.  Right now,  the market is hot.  I am far more likely to believe there are multiple offers.  If I really thought I was being lied to again,  and bought it anyway,  I would ask the Real Estate Commission to look into it.  Not sure if anything would be done but that Realtor would know people were suspicious.

Originally posted by @Nancy P. :

And to your argument  that it is risk vs small reward..I think it's small risk if I have no right to ask for verification.  We walked away from the same multi-offer scenario in December 2016.  Guess who was back on the market 6 days later?  Hard for ME to believe there was really another offer that fell apart in six days.  Right now,  the market is hot.  I am far more likely to believe there are multiple offers.  If I really thought I was being lied to again,  and bought it anyway,  I would ask the Real Estate Commission to look into it.  Not sure if anything would be done but that Realtor would know people were suspicious.

 You are making the assumption here that bank has to sell to someone who makes the highest offer, and this is categorically wrong.  There could be 20 offers on the property, and if it does not meet the minimum the asset manager has deemed they will take for the property, they will not sell that property.

Further....in almost all REO situations these days, the listing agent doesnt even see these offers. They are inputed into an electronic system that goes straight to the asset manager. The listing agent is merely acting as a pass through and a de facto property manager. And what the modus operendi for REOs is to wait until there is multiple offers, then send notice there is multiples and ask for highest and best. They might receive the first offer on day 1, and the 2nd offer comes in on day 60, and they will merely wait as a matter of standard practice for that 2nd offer to then enter into their multiple offer protocol. And just because there are multiples, like I said earlier does not mean any of them are at an acceptable price.