10 Of The Sleaziest Real Estate Practices

10 Of The Sleaziest Real Estate Practices

There was a day when Real Estate Agents were respected, had great morals, were considered ethical business people and pillars of our community. I’ve known and worked with a few agents over the years that I can say are fulfilling this very persona, but they are a dying breed.

It’s no mystery that as a Realtor® I am a part of what I call a “Negative Reputation” industry. Inman News recently came out with a comprehensive list of questionable real estate practices. It was a survey of real estate agents in which Inman questioned agents about how bad they thought these practices are and how frequently they thought they occurred…

The results  of this Inman News survey are very interesting to say the least! It reveals the low ethical standard of Realtors® by the small number of agents that find certain sneaky practices a problem.

Here are the 10 practices I have found commonplace and completely unethical…

  1. Listing agents who tell buyers that there are other people interested in the property or there are offers pending on the property when there isn’t. 94.6% of Realtors® surveyed felt this was an unacceptable practice and 31.8% thought it was a very common practice. I’ve personally seen this several times from agents I would have never suspected of such dubious practices…I have to wonder how often agents lie about this.
  2. Agents or brokers who make vague or unsubstantiated claims about market share (example: “top agent” or “No. 1 agent”). 63.5% of agents thought that this was unacceptable and 56.1% felt it was a common practice in the industry. I personally don’t think consumers should pay any attention to such claims as they are often NOT a direct reflection of the agents abilities. In fact I am often surprised at the level of professionalism brought to the table by some of the biggest players in the real estate world.
  3. Buyer agents that don’t show homes with lower-than-average co-operating commission compensation offered by the listing broker. 61.8% of agents surveyed found this unacceptable and 37% thought it was a common occurrence. I’m a little troubled that only 61.8% found this to be a problem. This number should be 100% considering that it in direct violation of fiduciary trust. I would never consider this. If a home is a fit I never look at the commission from the selling broker.
  4. Buyer agents who won’t show certain listings to their clients listed by certain brokers based on their reputation or a past experience. 52.9% thought this an unacceptable practice, but only 20.1% thought that this was a common practice. More agents should have had a problem with this and I must add that this is far more common than people think…ComFree comes top of mind. If my clients want to see a home…I don’t care who has it listed. I do my job.
  5. Buyer agents only shows their own listings, or company’s listings, preferentially to buyers.  41.3% thought that this was unacceptable and 33.1% thought it was common. This is something I see often. If an agent lists a house and sells the house to a buyer they “double end” the deal. Simply stated they get all of the commission! I have no problem with an ethical agent that can, without prejudice, represent both the buyer and the seller. It’s when agents choose to only show homes they have listed for the soul purpose of “double ending” the deal that I find fault. This practice does not look out for the best interest of the buyer. The buyers these agents represent are likely missing out on a better, more suited home for them. I’ve even heard agents bragging about this when they are trying to get a listing…list with me because I will engage in unethical practices to get your house sold! It’s crazy!
  6. Agents refers clients to other agents without knowledge of the quality of service or value the agent offers. 41.3% of agents felt this an acceptable practice and 33.1% thought it was common. It doesn’t help any that if you refer someone it is typical for the referring agent to get 20-25% of the commission. It only takes a bit of time to make a few calls and check out the top agents in the area you are referring to. I am surprised that more agents didn’t have a problem with this.
  7. Referring agents that don’t disclose to real estate consumer that there will be a referral fee payed to the referred agent. 37.6% found this unacceptable and 59.8% thought it was common. I’m all about being up front with my clients and it sucks that agents don’t take a bit of time to research the agents they refer to. I think you have a fiduciary responsibility to do all you can for your client.
  8. Buyer agents that don’t show “for sale by owner” homes.  Only 29.6% thought this was unacceptable and 50% thought it was a common practice. I can see how this one can go either way. If it’s a for sale by owner than the agent may not be aware of it. This would explain the low number of agents that thought this was a bad practice, but if the agent is aware of the home and it’s a fit for their client then they would be breaking their fiduciary responsibilities by not showing them the house.
  9. Buyer agent refuses to represent their client in purchase of for-sale-by-owner home. 46.8% thought this was unacceptable and only 27.2% thought it was common. In my opinion this would not only be unethical, it’s kind of stupid. If you refuse to work with a FSBO you will likely get cut right out when the buyer goes and deals directly with the seller. I’ve had buyers however try and cut myself out of these deals after showing them several homes. This to me is a two way street and both parties should act appropriately. It pays to be represented properly and have your best interests protected by someone with the skills and the knowledge to do so.
  10. Listing agents that accept listings with unrealistic asking prices for the marketing opportunity… just to prospect for new clients. 39.8% thought this was unacceptable and 57.3% thought it was common. Have you ever wondered why an agent would take on a listing that is obviously overpriced and likely never to sell? It’s simple…they use it to scoop up unrepresented buyers. In my opinion this is just dumb. It makes you look like an idiot that doesn’t know how to price a house properly. You may gain a few new buyers, but you will certainly scare off a few potential clients that would list with you in the process. As an agent you’re also giving the seller unreasonable expectations of  both price and a sale.

This survey highlighted many more practices, but these were the ones that stuck out to me. There are so many practices that I find intolerable amongst fellow agents in Niagara and I’ve seen my share of them in 10 years. The first one is probably the most common. Agents try to stir up a bit of urgency and it’s almost laughable.

Here’s another incident I will share with you. I recently listed a home that an agent priced before I came in. Two things happened…

  1. The first agent priced the home close to $30,000 over where it should have been listed! (I got the listing)
  2. Then the agent called my client once I listed it $20,000 below what this agent quoted (I couldn’t get my client to go lower). She was calling my client to tell her that she had a buyer for her house at the inflated price!

Oh…and that buyer. What buyer? I should have placed a call to the agent and asked her when she was bringing by her buyers since the house was now listed $20,000 less…it was a steal. It’s not my style, but it would have been fun!

My client had a ton of showings at the price we listed for, but we didn’t receive a single offer. After a few short weeks and lots of traffic I convinced my seller to lower the price to where I thought it should have been in the first place. The results? Multiple offers and sold only a few thousand from asking!

I could write a book on the many experiences I’ve had over my 10 year of real estate investing and working as a Realtor®. For years now I’ve seen the flaws in the system and the lack of professionalism in the industry as a whole. It’s no wonder it has such a “Negative Reputation”. The last couple of years as a licensed agent has only made that abundantly clearer.

I want to bring back the “good ole days” when a Realtor® was respected and treated as such, but until we stop seeing surveys from Inman and other companies like this one, it’s going to be a long road back.

It’s the very reason I became an agent. You know what they say?…”If you can’t beat ’em…join ’em!

 

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