How Shady Real Estate Agents Cheat

Mostly Good, Some Bad

I've had many complaints from realtors about this article! They claim that all realtors are Honest Johns and have their customers' best interests at heart.

Let me make this clear: this is not an attack on the real estate industry.

There are plenty of good, honest real estate agents. But every industry has its share of shonky practitioners—unfortunately, that's just human nature. Take any large group of people, and you'll find a percentage who are prepared to twist the rules to their own advantage. And as we all know, the most fresh-faced, charming people can also be the most crooked, so we can't assume the nice ones are really the nice ones!

For most people, their home is the single biggest investment they'll ever make in their lives, so it's worth being aware of the tricks the unprincipled can get up to.

Why Shady Realtors Want to Sell Cheap

At the root of the problem is one huge misconception: that you and the realtor have the same goal in mind, which is to sell your property for the maximum price possible. That's simply not true. You want to sell at the highest possible price. The realtor just wants to sell.

You may be wondering, why on earth would a realtor not want the best price? After all, their commission is based on the selling price, so the higher the price, the more their commission.

The answer is simple: speed. If they hold out for the highest price the market can bear, that means more advertisements and more inspections. True, they will get less commission if the price is lower, but they will also have spent much less time and will be able to move on to the next house much faster.

They can sell six under-priced houses in the same time it takes to sell three full-priced houses, and the result will be more commission!

Of course, legally, the realtor has to agree on a figure with you and stick to it: they can't sell the property if you don't agree with the price. But the shady realtor has ways they can work on you, the seller, to persuade you to accept a lower price in the end.

How a Shady Realtor Reduces Your Sell Price

When the realtor comes to see your house, they point out all the good features of your property and names an impressive price.

Once you've signed up, the agent starts showing possible buyers through your home. After every inspection, they call to tell you how it went. To your surprise, they tell you they're disappointed to be getting negative feedback (which, strangely, they either never mentioned—or dismissed as unimportant—on their first visit!).

The first week, they may say some buyers didn't like the décor and would have to repaint the whole house. The second week, they'll mention buyers who felt the kitchen would need replacing. The third week, it might be a worn carpet or a damaged piece of guttering. Alternatively, they might claim they're getting constant comments on one single major flaw, such as the lack of sunlight in the living room or the deck that needs replacing.

They may also say buyers have said what they might pay, e.g., "I'm getting some interest in the low three hundreds", which means people have said they might pay $300,000 to $350,000 for the house. Whatever the range is, it's always substantially under the figure they first quoted. If you express concern, they'll say, "well, you have to bear in mind, they didn't like . . . "(whatever the latest flaw was).

You may have guessed by now that the buyers probably said nothing of the sort, or if they did, it was a casual comment. They're making it up to create doubt in your mind, to undermine your confidence in that impressive price they originally quoted. Week by week, they drip-feed you negative feedback on the property, aiming to lower your expectations. Meanwhile, they're also working on the buyers . . .

"Hooking" the Buyer

It's illegal to quote a price the seller hasn't agreed to—but if the agent is having a private conversation with a potential buyer, and there are no witnesses, it's the agent's word against theirs—so you can't prove anything, and will probably never know anyway.

If your property is for sale at a fixed price, during the inspections, the realtor will be telling buyers you're "very negotiable" (whether you are or not). If your property is up for auction, the agent will be privately naming a price range that's well below what you're hoping to get.

I've caught more than one agent doing this because I love viewing property, so when an acquaintance puts a house up for sale, I just have to go and look. Once, it was an apartment selling for $380,000. I got talking to the agent, and he told me, "If you're interested, I'm sure they'd take an offer of $340,000".

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The next time I met my friend, I asked them how it was going. "Not good," she said glumly. "The agent is telling me they're only getting interest in the low $300s. He originally told us we'd easily get over $375,000, so we're really disappointed."

Of course, he's only getting interest in the low $300s if that's what he's telling buyers it's worth!

If you catch your agent out doing this, they'll tell you, "we quote a low price to hook the buyers' interest, then we can negotiate them up from there". I don't know why anyone ever believes this!

Clinching the Deal

Eventually, you will get an offer for the house, or auction day will arrive, and someone will bid.

Thanks to the agent, it's quite likely the offer or bid will be lower than you expect. When they present it to you, you're quite likely to say so, to which the agent will reply, "oh yes, but do bear in mind that buyers have all been put off by the lack of sunlight (or whatever the problem was)". They'll tell you how you can never be sure what a property is worth upfront, but now it's been "tested in the marketplace".

This is all utter tosh. The property hasn't been "tested in the marketplace" at its true value because the agent has been telling everyone it's worth less than it really is!

I experienced exactly these techniques when I sold my home following my divorce. Years later, I read an exposé of real estate training and dirty tricks written by Neil Jenman, who has founded a group of real estate agents committed to ethical selling practices. I thoroughly recommend his books to anyone buying or selling property. The book that helped me most was Real Estate Mistakes (both Kindle and paperback versions are available). The book was written about the Australian real estate market, but it is equally applicable in the USA. I would recommend anyone buying or selling a property buy it.

I've had several comments from realtors saying, "I'm sorry you had a bad experience", and assuring me how wonderful most real estate agents are. So I should clarify that this article isn't based on one bad experience. Since reading Jenman's books, I've bought and sold several properties, and I have come across those same techniques again and again. Luckily because of my awareness, I've been able to turn them to my advantage, especially when buying. Others are not so lucky.

I do not deny there are good real estate agents out there. But if you embark on selling your home imagining that all agents are angels, you're an idiot!

• Couple sues agent over real estate deal gone bad | Southeast Texas Record
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This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2008 Kate Swanson

Comments

Glenn Tracy on December 20, 2019:

Realtor is I breech saying buyer couldn't get financed. The buyer is another realtor. She handed me papers today for an extension from original closing date 11/22/19 and now 1/20/20. The papers she gave me aren't the originals.They are different. They talking #s we never discussed like their trying to just take house. The house needs work it's paid for I listed $30,000 and signed papers to close after $1000 $300 earnest money held plus her commission then my check would be close to $23,000. This is on nothing we signed before. What to do?

Sam Toad on September 06, 2019:

As I do my job, I see so many realtors putting so little into selling a home, and then reeps the massive fee value. Has anybody ever modified a selling listing agreement, to where seller can terminate a selling contract, for any reason but lets the selling process go thru. Thus terminating the selling contract and any rights to any big money, but then pays the seller a little amount. Cause I feel sellers get too much money for doing very little work.

So in otherwords you terminate the contract but the sale goes thru, but you pay the seller a little amount. Has this ever happened to a seller selling a house??? Has this ever happens and does the owner get sued, over a legal excuted contract?? I'd like to know.

Theresa on June 07, 2019:

I had realtor / broker state he would sell our house at 3.5% if we paid him $500.00 cash. He had the place up for 6 months and was the most negative person I met, hit on one of the tenants being it was a town house and never sold the place we closed the deal with him as a realtor/ broker and we lost the $500.00. The deal was if he sells the house , he never sold it.

Connie on May 19, 2019:

Here is the problem that I am dealing with; a price is agreed to between buyer and seller. Then, the house inspection turns up all these things that need to be fixed. Most of which we have already informed the perspective buyers about anyway. The seller’s agent then re-negotiates the house based on the inspection. Thus, “double-dipping” on the things that need to be fixed.

Jason on December 08, 2018:

There are bad seeds in all walks of life. If you don't pick your realtor wisely you can have these problems. Must do due diligence on your realtor as with anything or anyone you entrust with your money and assets.

Mr. BIG on November 27, 2018:

Love how she refers to the agent or agents as he and him.

"But the shady realtor has ways he can work on you, the seller, to persuade you to accept a lower price in the end."

As if woman are not capable of being shady. More #metoo bullshit from a bitch who was stepped on and passed around. And now that men overlook her, she shows her disdain in her articles.

Finn from San Francisco on August 19, 2018:

A difficult topic to deal with because when you hire an agent you put a lot of trust into the situation. Good advice.

troy on July 02, 2018:

i signed a listing agreement with an agent because i had 11 days til foreclosure, we were not going to list the home, we already had funding, an hour after , my friend offered to buy it directly, i requested the contract to be terminated, she said she will cancel it for 5,000 dollars, due upon close. She spent 1 hour talking to me and maybe another hour with paperwork , if that, how does that sound?

Trish White on April 13, 2018:

Six years ago, a real estate agent named Laurie came to my old house in South Orange, New Jersey to talk about selling my house. She came to check the house out, then she came into my bedroom and took a look at bedpost and said, "that looks like a baby's crib". I was like, "I can't believe she said that! I oughta bite her head off for saying that!" Two months later, three buyers came to look at the house to see if they would be interested in purchasing it, but a fourth buyer showed up unexpectedly. Turns out, it was supposed to be three people, not four, looking at the house. It is revealed that Laurie sent that fourth buyer without asking my family first. It is also revealed that she was scheming to get the house for herself, resorting to dirty tactics in the process. After that, my family decided to drop her as a result. I hope she never works in real estate again, especially if she's gonna do something illegal just to get what she wants! I wouldn't recommend her to anyone! She's nothing but a crook! I hope she ends up in the streets and never work again!

LD on March 24, 2018:

My realtor was representing me on the purchase of a house. The seller didn't have a realtor. After bidding, the seller said that he wouldn't reduce the price. Since we couldn't afford the house, our realtor swooped in for the seller and listed it as her own. Is this legit? Can she do that? Seems slimy to me....

Gabe Cabrera on December 28, 2017:

How can I spread the word the easiest way to let the world know how the idiotic realtors have ruined Phoenix, AZ with all the filthy , disgusting new comers only to make more profits.

Kate Swanson (author) from Sydney on October 27, 2017:

I'm so sorry Melanie, your comment went to my spam folder. I know it's going to cost money, but you really need to get your own legal advice on this situation.

Will on October 23, 2017:

This just happened to me the other day. My realtor came to me telling me a house he's listing for 660k can be had for 620k.

Melanie Henry on October 19, 2017:

House in contract for 7 months since March 2017. Had tenants who needed time to vacate. So a tentative closing date set for around they would vacate. Everything went as planned home vacated. Realtor kept telling me he is waiting on final confirmation for closing... 3 months passed and each time he had a story as to why closing couldnt happen in that month. He finally said buyers will pay 5k up front if closing doesnt happen by Oct 10... he emailed me later and changed the date to oct 16. I told him if it doesnt happen by the 10th the deal is off. I never heard back from him until now the 19th i recieved word that closing will be next Friday the 27th of oct.. I fell behind on my mortgage due to the prolonged wait so the mortgage company refinanced our loan and added about 10k to our mortgage. So we are not going to get as much money for the house. After the 16th passed and I did not hear from anyone we assumed nothing was happening. I emailed the attorney and the realtor who is the attorneys paralegal. [I know big mistake] and got no response. I immediately got another realtor on the case. Now i have a buyer who is offering much more. Can i walk away from this situation?

Kate Swanson (author) from Sydney on October 17, 2017:

So you're saying, you give them the higher number just to keep them happy? It's still lying.

Flo on October 16, 2017:

Sometimes sellers don't like to hear what the market is saying. It doesn't matter if you show all the numbers. They just don't like the price they ear. They expect you to be honest, and when they get it, but they don't like your honesty.

Elaina Baker from USA on July 21, 2017:

This is excellent advice on sneaky, underhanded tactics that some agents use. Anyone who is selling a home should read this.

Paul Edmondson from Burlingame, CA on January 26, 2017:

I think the stats are in Freakonomics about how much longer an agents own house stays on the market vs houses they list as well as how much they sell their own homes compared to list vs folks they list. It seems like good advice to be patient as a seller and do lots of diligence on the agent upfront.

Kate Swanson (author) from Sydney on November 25, 2016:

Your second story is a new one on me, but I can certainly see how that kind of thing could happen. A new scam to watch out for!

TruthfulDiff on November 25, 2016:

Thank you for opening this topic. Having a very long practice in the Commerical Real estate industry, I am very conscious and aware of ethical practices.

We had this very thing happen when we listed our home with a Re/Max real estate agent (that by the way claimed he was the office broker at the time of signing our listing agreement.)

What occured within a short week and 1/2 period was exactly was you describe in your article. And, our agent wanted us to drop the price of the home by more than 12% at the end of only the 2nd week of listing.

Very disturbed by this, I contacted the RE/Max office after learning that this agent was of course a broker in colorado (as licensing requires), but not at all the managing broker. The managing broker took days and numerous phone calls to receive a return call. Then dismissed our claim completely. After being so furious, we asked for our agreement to be terminated (as we did negotiate a termination clause). Not only did he refuse to agree, he knew what the requirement would have been of us...several months of negotiating with real estate panel and/or hiring an expensive attorney. And, after this occured, we would be missing the real estate market completely.

so, what did we do? the smartest choice we could make. We took it off the market and let the listing run out, making sure to provide all proper notices and negate any attempt that listing agent may try to create bringing back a potential buyer/former "looker".

I have been very unhappy at the lack of ethical behavior in this "hot" market by many agents.

Here's one to investigate...

We put our house back on the market after about 2 years and many improvements later. A Sotheby's agent brought a buyer as we were pulling off the market (due to timing and family issue). As my background began in construction, I can read an inspection report and understand what is "real". An inspection objection report came filled with numerous "issues" (eg.: the inspector said that a rug caused "discoloration" on a brand new travertine floor that does not see sunshine nor has had a rug on it. Travertine is a natural stone that will and does have obvious color variations including from the hallway into the restroom. The most obvious color variations lead into the bathroom, but he did not pick those out.. It appeared this inspector wanted to imply "water damage" near a back door. this is not even possible because the door comes from the garage which is rarely used, garage has a "clean" area where shoes are left, the door is rarely used and no water intrusions...new roof! )

The report did in fact claim mold (for which there was no test), they wanted to string out inspections and do radon and then a water line inspection as well, none of which have been a problem... Ultimately, they were racking up expenses for which they wished us to reduce the purchase price or provide monies for all kinds of things in a contract that was supposed to be "as is". When we said no, the buyer's agent wanted to know..."why are sellers doing this to us!!?" in an "as-is" contract with no home issues. (by the way, I forgot to mention that I used to work with remediation companies for unhealthy molds in medical buildings. So, I know what is mold and what isn't...our separate inspector/remediator proved no unhealthy molds...nor presence of any: - interesting, huh?)

The moral is...Beware of realtors with "friends" that own Mold remediation companies and are friendly with the inspectors! It definitely feels like a scam that is impossible for a seller to uncover. Maybe you will take this on and get to the bottom of it.

Thanks for your posts and good luck!

Kate Swanson (author) from Sydney on October 15, 2016:

That does seem outdated, Isabella. Arizona is not the only place where realtors can wield a lot of power. In Australia, it's almost impossible to sell a house without a realtor.

IsabellaInAZ on October 14, 2016:

Thank you, good information. I've lived in Arizona for a number of decades. Owned various types of properties. I've learned over the years that the Arizona Department of Real Estate (ADRE) still enforces very outdated statutes.

Arizona is a snow bird destination. As such, it draws a large number of retirees and Spring Training enthusiasts each winter. This bring billions of dollars in revenue. The vacation rental market works very well here.

I advertised with several vacation rental websites. I recently received a nasty letter from the ADRE for allowing non-brokers to "property manage" my vacation rental homes.

I have them advertised on many popular sites such as VRBO.com, RedAwning, Expedia.com, etc. I have another, local company handle guest relations, cleaning and basic maintenance. It works out fabulously for me, the guests and hopefully for the service company.

They do not collect my rent. When a guest makes a reservation, the money goes directly into my bank account. I pay the reservations company around %17 for each reservation. They handle all the calls, emails, check-in, check-out. I love it.

Apparently the ADRE expects owners to only advertise with real estate brokers. The state does not accommodate its paperwork intensive protocol to allow for short term renting. Thus brokers typically charge 30%. This is not cost effective for owners or guests.

Plus the brokers I've dealt with know nothing about the vacation rental industry. I've found from my own experience the broker-run companies have terrible customer service. Remember being a tenant and trying to get your property manager to fix something? It's a 100x worse with broker-run VRMs. I've never encountered one that has good customer service as a guest or an owner.

A lot of this is because Arizona is a realtor factory. They churn out agents by the thousands. Most of which have no real education, no business sense, many have no ethics. Allowing this gives the ADRE justification for wielding too much power. If they had some strict qualifications for new agents, perhaps they wouldn't need to have so many strangling statutes. Statutes that only hurt Arizona home owners, Arizona economy, and Arizona tax payers.

Something needs to be done about the excessive power the ADRE has over each and every home owner in Arizona. It's time to get with the century ADRE.

beta5909 on September 12, 2016:

I was in the position once, and I switched to new agent. But, the key indicator for that new agent was someone with high recommendations, experienced and aggressive.

If you're willing to do a cash offer, you are absolutely an attractive candidate for the right sales person.. Some realtors have wide personal and professional networks that can find you a house by writing directly to some home owners in that area.

Some realtors that only care about making big commissions, are trying to move you towards buying most of the homes they have listed. You've got to find a realtor that is more interested in winning for their client.

Some real estate sites are trying to democratize the selling process. I'm not sure where you're located, but sites like Redfin have some properties listed in selected areas. See if one of the places you want is listed with them. You can check this on your own without the agent. Take some time and read about the pros and cons of dealing with them directly. Some have gotten the home they want. For others not so good. But, it's worth exploring to learn more about the market. Who knows?

You asked about legalities. Salespersons aren't suppose to do "steering." Google steering and Equal Opportunity in Housing. See if this illegal practice seems to be applying to you, in any way. You'll need legal advice, if you believe this is what's going on.

Here's some things you can ask realtors: Do they specialize in Real Estate Owned properties? Properties in the area that, for whatever reason, were foreclosed on and returned back to the bank. The banks sells them for much less at auction. And they would love to get a cash buyer. It speeds up things. Often these homes are listed with realtors.

Don't get discouraged. You aren't alone in what you're experiencing. But like anything, persistence and an aggressive real estate salesperson who has a strong ethic and looks out for the buyer is what you need. They are out there.

One thing I learned from the process is that looking for real estate is a networking process.

You can learn more, than many realtors will share, just by asking questions of people in the community where you want to live:

people who live there

people at community meetings and social activities in the area

people who provide home repair services in the area

people who sell appliances in the area

people who know politicians or influential people in the area

Use google alerts to find out what's going on in that community and attend.

Tell everyone of them the reason you want a property in that area or a lead and they can probably give you some names.

For example, as a resident, I know of the realtors who are the best salespeople in my neighborhood. I also know of neighbors who might be moving. So, if someone approached me I could tell them much more than any realtor. Most realtors don't live in the areas in which they sale. That's why consumers have an advantage.

The other tool, is to look on Craigslist, Realtor.com, Zillow and keep up with what places are selling and for how much. Usually you can see patterns of the type of places that are staying on the market longer in those areas. You might want to find out why and ask your new aggressive realtor to check on those properties.

You have cash and that gives you extreme leverage. Don't give up. You never know when a person has to move because of an emergency or crisis. That home could waiting for you in between the intersection of knowledge, persistence and a professional agent.

I wish you success. Please come back to Marisa's comment area and let us know how you're doing.

Kate Swanson (author) from Sydney on September 11, 2016:

It probably is illegal but the difficulty would be proving it. If the area has become popular with investors, then you are very likely to get priced out by investors and you may just have to research other areas. I wish you luck, it is not easy finding affordable property.

jamaarten on September 10, 2016:

At age 60 and disabled, I am looking at my chances of acquiring a home this year dwindling away. I am looking into Joshua Tree, which, up until a year ago was "just a small desert community" but now has become "the Airbnb" place to go. I have been dealing with one realtor (they all seem to be under the umbrella of a large brokerage firm) who has taken me out a few times to houses I FIND, like on Zillow etc. Each time I find something in my price range and criteria, he has steered me away from that property and pushed on me houses I am

not interested in because they are financially out of my price range, in another area that is too far from town or just too small. Again, I told him I was driving to see a new listing, would make a cash offer etc. It turns out another agent he works with under the umbrella had an agent friend wanting the same place and my agent did everything possible to keep me away from that house. I went anyway and he misled me by saying that their offer was going to be really low, around $40k even though the listing price was $69k..So, per his suggestion, I came down $10k from the listing price but the other agents friend bought it at list price. This has happened twice and now, every house in my price range is being bought same day of listing and is pending in less than 24 hours. My agent didn't even show me the latest house or update his MLS page until after it went pending. Supposedly, Most of the sales have been to out of towners who fix them up, then rent them out on Airbnb or many are the real estate agents themselves cashing in on the Airbnb rental craze.

Is this at all illegal? It seems that the agents representing this community care more about helping each other than their own client. How does one buy a house on a Social Security income in Southern California when the areas I can afford seem rigged in favor of the agent?

Kate Swanson (author) from Sydney on July 27, 2016:

@beta5909, I think good realtors DO avoid hiring these types of sales people. The problem is that some companies build their whole business on these methods. I remember an exposé in Australia where they secretly filmed the training sessions of a large real estate company with branches all over the country - they were actually teaching all their new recruits to use all these tricks! Naturally, having been taught all these techniques by a large prestigious firm, very few of them questioned whether they were ethical.

beta5909 on July 27, 2016:

Excellent article. I'm enjoying perusing and reading all your articles. You're a gem on HP.

Many industries have bad apples that wreck the brand. I think that good brokers, salespeople and real estate licensing officials need to do what they can to discourage hiring these type of sales people.

If you had a bad experience with a salesperson, report them to your local real estate board and state licensing agency. Many state agencies list ratings online. Also, many people yelp out the services rendered online as well.

Thanks again Marisa.

Julie7171 on July 20, 2016:

We had THE worst experience selling our home after 13 years. We used ERA legacy realty. The realtor kept sending me emails and I should have figured she was just covering her ass. She ended up lying about information at closing and cost us thousands of dollars at closing. She didnt give a HOOT because she got her commission. I will continue to blast her and her company forever online to tell others what she did. They were so unethical and it was awful what they did to us.....Dont ever use ERA legacy Realty. They will screw you.

Kate Swanson (author) from Sydney on February 04, 2016:

So true - there are certainly reputable agents and it must be frustrating to see your profession tarnished by the bad apples.

UtahRealEstate on February 04, 2016:

It is unfortunate that you have had bad experiences. Those of us in the industry who actually DO have the best interests of our clients in mind have to fight this battle every day. You will find certain companies attract different types of people.

It makes my job twice as hard when I have to walk in to a situation where the client has been taken advantage of or lied to by an unethical agent and I have to fix an unpleasant situation.

This is why it is important to personally interview agents, not just pick someone off of the internet. True, some are masters of disguise, but you can usually get to know someone pretty well when you sit down with them.

Good luck!

John Murphy

www.johnmurphyrealty.com

Utah Real Estate

Keller Williams South Valley Realty

derong on July 17, 2015:

Hi,

I found I have been cheated by my agent in Kitchener Ontario to sell my house. Here is the story.

I signed the "List Agreement" with the original price. The house was very difficulty to sell. Later a buyer offered a very low price, which I could not accept because of the commission fee considered". Then she (agent) told me she will give up her commission to the house but I need only to pay the buyer's agent by 2%, which made me feel I would not lose money for the sell.