7 Ways Real Estate Agents “Lie With The Truth”
Manipulative tactics are a feature of the residential real estate system, not a bug
In the real estate industry, transparency and trust are paramount. But, the pressure to close deals and the desire for higher commissions can lead some real estate agents to “lie with the truth.” Let’s explore seven common tactics. Some agents use these to mislead clients without telling lies.
1. “We Have Multiple Offers”
Real estate agents sometimes claim to have multiple offers on a property. They do this to make buyers feel a sense of urgency and competition. This strategy goes by the name of “bidding war psychology.”” It uses FOMO to pressure buyers. It gets them to make quicker and often higher offers than they might have otherwise. There might be other real offers. But, exaggerating their number or quality can make the vagueness more pronounced. This adds to buyer anxiety. This approach can lead buyers to stretch their budgets. It can also make them rush into decisions without enough thought. This can cause buyer’s remorse or financial strain. It’s a subtle lie. It uses the existence of other offers — real or not — to exploit feelings. It does not aim to encourage rational choices.
2. “We Have A Second Showing Today”
Real estate agents might tell buyers that there is a second showing of a property later in the day. They do this to create urgency. This statement could be true. But, it’s often used to suggest that there is high interest in the property. This compels the buyer to decide quickly, increasing the bid’s value. This method exploits the buyer’s fear of losing a desired property to competition. It pushes them towards a commitment before they are ready or have had time to consider other options. The implied competition might not be as intense as suggested. This can lead buyers to overextend financially or settle for worse terms. They could do better with more time and less pressure.
3. “We Have a Backup Offer in Hand”
During the delicate inspection negotiation phase, agents may tell buyers they have a backup offer. They may threaten to go with it if the buyers do not agree to certain terms. This tactic is a strategic use of the truth. It exerts pressure on buyers to give in to the seller’s demands. They might do so by accepting fewer repairs or offering a higher price. There might be another interested party. However, one can exaggerate the urgency and seriousness of this backup offer. This exaggeration creates a sense of urgency and competition. This maneuver can corner buyers. It makes them make concessions they wouldn’t otherwise consider. They fear losing the property to an apparently ready alternative buyer. It could lead them to agree to less favorable conditions without full justification.
4. “Thank you for your offers now give us your highest and best”
Real estate agents set a deadline for offers on a property. They do this to create a controlled bidding environment. After this deadline passes, agents might return to potential buyers. They will say, “Thank you for all of your offers.” Please present your highest and best offer by a new deadline.” This strategy often stimulates competition among buyers. It suggests that the initial offers were close in value. This encouragement pushes buyers to raise their bids. It is technically truthful. All parties get another chance to submit an offer. But, this tactic implies a level of competition that may not exist, or is less intense than portrayed. The result can pressure buyers into raising their financial commitments needlessly. They do this out of fear of missing out on the property, not real market demand or the value of the home.
5. “Buyers’ agent stretch the truth about the financial strength of their clients”
In real estate transactions, buyers’ agents often state that their clients are pre-approved for financing. They do this to make them seem strong in the eyes of the seller. However, some agents stretch the truth. They submit offers with financing terms that exceed their clients’ pre-approval. For example, an agent might say the buyer is pre-approved. They might say it’s for a much higher mortgage. This would make the offer more appealing. Or, they might adjust the down payment or closing costs in the offer beyond what is actually supported by their pre-approval. This tactic can mislead sellers. It can make them think a buyer is more secure than they truly are. This can cause a deal to fall through. It happens when the real financing details are clarified or approved. This undermines trust between parties. It also delays selling. The seller might have rejected better offers for one that seemed secure.
6. “Buyers’ agents submit offers with ridiculously short acceptance deadlines”
In real estate negotiations, some buyers’ agents use a tactic. They submit offers with very short acceptance deadlines. They imply urgency and that their clients are in high demand. They also imply that their clients won’t participate in a long decision process. This strategy aims to pressure sellers. It aims to force a quick decision. Sellers won’t have time to fully evaluate the offer or consider other buyers. They imply their buyers are prepared to walk. This aims to bypass normal negotiations. It discourages counteroffers and potentially better terms. These could arise from more thoughtful deliberation. The offer and deadline are real. But, the implication is that buyers will withdraw interest if not immediately accommodated. This can manipulate sellers into acting against their own best interests. They may accept a worse deal out of a misplaced fear of losing the sale.
7. “Buyers’ agents submit inflated offers, knowing the buyers will actually only go to a certain lower price.
Buyers’ agents sometimes submit offers over the asking price. They do this to capture the seller’s attention and beat competing bids. However, these high offers may come with an appraisal gap guarantee. This guarantee only covers a fraction of the difference between the offer price and the appraised value. For instance, an agent might submit a $500,000 offer on a $450,000 listing but provide an appraisal gap guarantee of only $10,000. This means if the property appraises for less than the offer price, the buyer is only committed to covering a small part of the shortfall. This leaves the seller vulnerable to renegotiation or deal collapse. The high offer seems good for the seller at first. But, the limited gap guarantee shows the buyer’s reluctance to commit to the high price. It gives a false sense of security. This tactic can mislead sellers. It can make them accept offers that seem financially solid, but are not. This can jeopardize the sale and waste time.
Buyers and sellers need to know manipulative tactics are a feature of the residential real estate system, not a bug. The process itself is built on deception and manipulation and forces agents to work within that system — good people in a bad process.
