A real estate agent told us a home was going to be sold and it wasn't. Is this sales tactic unethical?

May 23, 2016

Most every business uses sales tactics that can be harmful. In real estate the consequences can be very expensive. Here are some tips that may help.

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Reader Question: An agent told us at the time we looked at a house that another party was buying the house later that day, so we had to act quickly. We did not like the house that much at the time. That was over two months ago, and the house is still on the market. Was this behavior unethical? Rob and Karen C.

Monty’s Answer: Situations like the one you describe are not uncommon. It does not sound like you showed interest, but it can be a bit ticklish when two or more parties show interest in a home at the same time. The agent did not handle the situation correctly, but there are several possibilities here that impact on the question of ethics. Here are the most likely buyer circumstances:

  • Had made an appointment to write a contract but later canceled the meeting.
  • Did make an offer that was accepted, but the transaction then failed for some reason.
  • Did make an offer but could not come to terms with the seller.
  • Did come in to make an offer but changed their mind at the meeting.
  • Told the agent they would call for an appointment, but did not.

Here are the most likely agent circumstances:

  • Misunderstood the buyer who never said they were coming in to write a contract.
  • Had no one coming in to buy the house.

Only the last circumstance is unethical and dishonest. Mathematically, the chances are small that the agent told an outright lie. However, to avoid someone ever thinking they were unethical, the agent should have clearly qualified the statement. “A party is coming in to write an offer, but a lot can happen between now and a closing. If you are interested, we can still get your hat in the ring, or I can update you with what happens.” You would not be thinking about ethics now if the agent had included some words to that effect in the conversation.

When the customer calls back to buy the house a day later and learn it is under contract, they will complain, “ Why didn’t you tell me someone else was interested? ” It is a common occurrence.

The fear of loss factor

Salespeople in most jobs are well acquainted with the impact fear of loss can create in a sales environment, and real estate is no exception. According to Ori and Rom Brafman in their book: Sway: The irresistible pull of irrational behavior, fear of loss (they call it fear aversion) and other psychological impulses lead to illogical decisions that can be very expensive.

Was the agent hoping fear of loss would cause you to react? You will never know for certain. The agent may have believed they had a sale, even though it was only a conversation.

How to spot a fear of loss agent

In evaluating real estate agents, there are strategies some agents pick up about how to use the fear of loss factor to make a sale. Agents garner ideas from other agents, convention speakers and real estate coaches who want to impress them with strategies that justify the investment the agent made to listen to them. If you know what some of these strategies are, encountering them in the field, or not, can help you decide with whom you want to put your trust. Here are a few examples:

  1. Staged appointments so another prospect is just leaving a private showing when you arrive, or just coming when you depart. It may be hard to know if it is spontaneous or not.
  1. The “open house huddle” is when the agent will lead an attendee aside, off the typical route, for what could be taken by an observer, as a sign of interest in the house. Is it possible the attendee initiated the discussion? Yes, it is. But this can also be a clue.
  1. When calling the agent for the appointment, you are told there is an offer coming in later today, but ” I will show you the house .”
  1. Some time after you view the property, the agent calls just to “tip you off” another agent is writing an offer. There may be another offer, but they may be testing your level of interest.
  1. At the listing appointment, the agent confides they are working with a motivated buyer that will love your house, and if they haven’t bought one by the time you list, the agent will show them your house. No one wants to lose a motivated buyer.