Reader Question: This is an agent ethics question. An agent of a real estate firm gave us an estimated price they can get for our home, and we signed on with them on that basis. Now, another agent of the same firm brought a prospect through and told them our house is priced too high. Is this ethical? Myron G.
Monty’s Answer: The answer to your question is elusive because your question does not reveal a number of important details. Also, every state has their rules and statutes that vary significantly, so location contributes to complexity and misinformation. Finally, there are several components of real estate that impact on your question; valuation, agency law and ethics.
It is not clear how you came to learn the other agent told the buyer the house was overpriced. Did you hear the other agent say this to the buyer? Did your listing agent tell you? Did the other agent tell you, or did the prospect tell you? The information source can be a key ethics consideration.
For example, if the prospect shared this information with you the information should be considered suspect. The prospect has self-interest in sharing this kind of information. There is a book about real estate named “Buyers are Liars, and Sellers are too!” Unless you heard the agent make the statement to the buyer, or the other agent told you directly your home was overpriced, it may stretch the truth.
Consider home evaluation
Valuing homes is not an exact science. Unless your home is a tract home in a tract subdivision where comparables are everywhere, even experts will disagree on the value. Learn more about determining a home’s value at dearmonty.com
A real estate agent in my home state telling a prospect a home is overpriced is both illegal and unethical. The exception is an agent with a written buyer agency contract. With a buyer agency agreement in place, the agent could share their opinion of value. Without that agreement, they could share comparable sales information that pointed to a lower value, but not state their opinion.
Evaluating a home is not an exact science, but an art. Today’s real estate aggregators are notorious for inaccuracy. Real estate agents and appraisers, who have physically inspected the home can have price opinion differences of twenty percent on a home. The fewer the comparable sales and the further a home is “outside the box” is the time when opinions of value will most likely be dissimilar.
Consider agency law
Agency law is confusing for consumers and agents. Even if the agent did not know better, ignorance is no excuse in the eyes of the law. From a practical point of view, until real estate agents and consumers are required to wear body cameras, it is impossible to monitor everything they say to each other. If it is true, the other agent said the house is overpriced, what makes it a bit unusual is that it got back to you. Most real estate agents would not do it as a matter of practice, but to start a negotiation, some agents will suggest a lower price.
Consider Realtor ethics
Realtor ethics can be difficult to interpret. A link the NAR Code of Ethics http://bit.ly/1wnWixZ demonstrates the complexity of the document. One of real estate’s most difficult tasks is compiling the circumstances, chronology of events and the participants statements for an ethics hearing. Laws and rules are constantly evolving, business practices and models change and the rules are modified based on these changes. In the situation you described in your question, the other agent could be unethical or squeaky clean.
Turn a lemon into lemonade
Consider using this encounter to your advantage. Does your listing agent know this happened? An article titled “ Challenging a real estate appraisal ” on DearMonty.com demonstrates how to make calculations for determining these adjustments. Ask your agent if they can demonstrate to you, using adjustments between comparable sales, their opinion of value.
Ask the other agent to show you the comparable sales they used to determine the house is overpriced. If either agent balks call the designated broker and ask for their help.
If you have the time or inclination to do this, you may learn more about the indicated value of your home. Even though, the second agent may have used poor judgment with whom they chose to share their opinion about the value, what if they are right?