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Can real estate agents fake counter-offers?

By 16 October 2010 14

I am trying to buy my first home and am at the mercy of what i
suspect are dodgy real estate agents.

In Canberra if I make an offer, and they say someone has made a higher offer, can I ask them to prove it?

Or, are they bound by any laws to tell the truth about an offer?

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14 Responses to Can real estate agents fake counter-offers?
#1
vg2:32 pm, 16 Oct 10

If they lie about an offer its called fraud.

Ask them to prove it. They can prove it to you or to a body that can deal with them for porkies

#2
Mathman2:40 pm, 16 Oct 10

Whilst they certainly could, you would have to ask the question why would they bother?

Firstly, it is pretty safe to assume that real estate agents are working in their own best interests – that is they want to maximise the profit they make on each sale which means maximising commissions and minimising costs.

Now, the typical sales commission is around 2.5% so for every extra $10,000 they can squeeze out of the buyer means an extra $250 for them on a typical commission of $12,000 for an average property. But agents make their money through turnover, they only get paid on a sale and having properties on their books costs them money. This is why agents love auctions – they get to both squeeze the buyers and dispose of the property quickly.

So, the pay off for agents isn’t that great compared to the risk of increased costs of having the property on their books for longer.

If you think the agent is lying then call their bluff and stick to your offer – they’ll quickly drop the higher offer rather than risk losing a certain sale.

One trick I have used in the past to keep agents honest is to negotiate with the vendor directly. This takes a fair amount of tact as some sellers don’t want to deal with buyers, and it really pisses of the agents. However, I’ve found that in negotiating without the middleman, both parties are much more flexible and honest with each other and it results in an outcome that both parties are happy with.

#3
26042:44 pm, 16 Oct 10

I assume you have a copy of the contract for sale, with the owner’s name and address on it. Why not give him/her/them a call and check whether there really is/was a higher offer?

That’s what I did in a similar situation and was able to have quite a nice chat to the owner. The higher offer was genuine, but the owner sold to us anyway – I really emphasised that our finance was 100% approved and ready to go, which I think helped.

Good luck!

#4
georgesgenitals3:34 pm, 16 Oct 10

Use the usual rules when dealing with real estate agents:

1) No emotion. You don’t ‘love the place’.
2) Work out what you want to pay for the place, and what you can afford to pay for the place (ie what you think it’s max value is). Start just below your ideal price and work up from there.
3) Don’t muck around wasting time. Don’t look through the place 8 times. Have one (2 tops) good look, and then put in your offer, and ask the agent to get back to you. The longer the process runs, the less leverage you have.

Ideally, tell the agent you are in a hurry and looking at several places, all of which are suitable. This will get the agent to hurry the vendor’s decision.

At the end of the day, there may simply be another party willing to pay more than you.

#5
Deano3:59 pm, 16 Oct 10

Are they bound by any laws to tell the truth about an offer?

Yes. See Criminal Deception In Real Estate for a run down on everything real estate agents do that is dodgy. However, as the lawyer writing explains, breaking the law is one thing, having it detected, prosecuted and punished is an entirely different matter.

#6
Roadrage777:12 pm, 16 Oct 10

There is a certain Canberra agent, let’s call her “no relation to Tom” who wrote the book on bogus counter-offers.

#7
Beserk Keyboard Warr7:18 pm, 16 Oct 10

This “by negotiation” method of selling houses is a real worry. It’s basically a silent auction with zero transparency. In other words, it’s a perfect scenario for grubby real estate agents to take the pi$$.

#8
screaming banshee12:26 am, 17 Oct 10

Then if you get past this stage and your offer is accepted you can still be gazumped…the joys of ACT real estate!

#9
smpc1:28 pm, 18 Oct 10

smpc said :

Can real estate agents fake counter-offers?

They certainly cannot, as that would be making a misrepresentation to induce a contract.

screaming banshee said :

Then if you get past this stage and your offer is accepted you can still be gazumped…the joys of ACT real estate!

Not if you caveat based on the equitable interest that a specifically enforceable contract creates.

#10
smpc1:33 pm, 18 Oct 10

Further, from the Agents Regulation 2003 (ACT),

smpc said :

8.4 Honesty, fairness and professionalism

(1) An agent must act honestly, fairly and professionally with all parties in a transaction.

(2) An agent must not mislead or deceive any parties in negotiations or a transaction

#11
Red Robin11:26 pm, 24 Oct 10

Earlier in the year, my partner made an offer of $540.000.00 on a property which came on the market at approx $600,000.00
The young Real Estate Agent said he had received 5 higher offers. My Partner knocked on the door one evening and asked the owner if she had received his offer. She replied “I have received an offer of $540,000″ This confirmed that there was only one offer received and he he had lied about the other four.
The next townhouse in the Development came on the market a couple of weeks later at $560,000.00
The original one, he made the offer on, eventually sold for $577,500.00
This is possibly the only way to know whether a Real Estate Agent has lied about an offer.

#12
Die Lefty Scum11:21 am, 29 Oct 10

Red Robin said :

Earlier in the year, my partner made an offer of $540.000.00 on a property which came on the market at approx $600,000.00
The young Real Estate Agent said he had received 5 higher offers. My Partner knocked on the door one evening and asked the owner if she had received his offer. She replied “I have received an offer of $540,000″ This confirmed that there was only one offer received and he he had lied about the other four.
The next townhouse in the Development came on the market a couple of weeks later at $560,000.00
The original one, he made the offer on, eventually sold for $577,500.00
This is possibly the only way to know whether a Real Estate Agent has lied about an offer.

So Red Robin, are there any consequences for the agent who lied? Or is he free to go on ripping people off?

I have three friends who have recently purchased houses “by negotiation”. All three were told their offer had been accepted, only to be called back at the eleventh hour (literally – 11pm the night before they were to exchange!) saying that they had been outbid and that they would need to find another XXXXX amount of dollars. Two of the three begrudgingly paid the extra amount while the third friend called their bluff and got the house for their original offer. What does that tell you? They’re lying 100% of the time. By coincidence or not, all three bought their houses through the same agent who is no doubt adored by sellers! I felt like spitting out my morning bowl of Nutri-grain when I saw she had won (yet another) real-estate award in the paper today.

I don’t know much about the legalities in the process of “by negotiation”, but I know in my gut that what she is doing is wrong. My question is – isn’t the whole idea of a silent auction is that you only put in one offer and the property goes to the highest bidder? By asking people for a second bid, surely the whole process loses it’s integrity?

Can someone in the know please shed some light on this? I feel like this cow is free to run rampant in a paddock with no fences.

#13
georgesgenitals12:11 pm, 29 Oct 10

It’s about holding your ground, and using the right sort of language.

When buying a place it is unwise to fall in love with a single property. The reality is that there are many properties out there that are just as good.

If an agent called me at the last second and told me that I needed to add more money, I would simply inform them (politely and calmly) that I needed to discuss my legal options with my solicitor, and give them no information at all as to whether I was intending to proceed or not. Then, I’d contact my solicitor ASAP and tell them exactly what’s happened, and ask them to contact to seller’s solicitor to find out if the deal was going ahead. Remember, the seller’s solicitor deals directly with the seller – the agent doesn’t get a look in. Ignore the agent’s increasingly desperate phone messages, and don’t talk to them during this time.

If there is indeed an alternative and legitimate offer, you can then work out what you want to do. If not, instruct your solicitor to exchange at the previously agreed price. When this is done, you can then rev the agent up a bit with some threats if you want (although personally I wouldn’t bother).

Selling real estate is, frankly, a bit of a dodgy business. I have met some very dodgy agents (and a few that were OK) when buying in Canberra. Unfortunately, a lot of the psychology of selling (not just real estate) is based on triggering responses and then using this to advance the process. It’s not nice, but once you understand what they are doing it’s pretty easy to not be folled by it.

#14
georgesgenitals10:15 pm, 29 Oct 10

To the OP: how’s the search for a home going?

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