Why Do Real Estate Agents Lie?

10 Examples with the Best Response of Lies Real Estate Agents Tell in 2020

It is not uncommon for a real estate agent to be tempted into bending the truth to make a sale. This tendency toward dishonesty is perhaps the key reason that the real estate industry has had a tough time dealing with a negative reputation. This blog post is designed to help buyers turn the tables. By compiling a list of what we believe to be the most common lies that real estate agents tell, Burwood Real Estate Agent Cooper Newman Real Estate will give you the proper firepower to respond and fight back.

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Why We Are Sharing This

At Cooper Newman Real Estate, we believe in being transparent and delivering results through the talent and merit of our agents. As such, we want to go beyond merely warning you about the lies that agents tell. Indeed, we want to help you recognise these instances of dishonesty so that you can protect yourself and future buyers or sellers like you.

Lies Real Estate Agents Tell When Selling

1. The Lie: Overquoting

• What it is:
  Advise owners that their property is worth more than it actually is.
• Why they tell it:
  Sales are based on commissions, so it’s technically in the interest of a real estate agent to sell a property for as much money as possible. Most agents balance this interest with the ethics of their job and the equally powerful benefits of pricing a property correctly. However, some agents do try to “game the system” by selling properties for more than they are worth.
• What to do:
  Any time a real estate agent advises you on sale price, he or she should have research to back up their recommendations. Usually, this research takes the form of comparable homes or properties. If your agent does not provide evidence of properties they consider to be a similar value, you should be suspicious. Once they provide a list of comp homes, ask the agent to guarantee the sale price range they’ve recommended. If the property sells below that range, you should be under no obligation to pay a fee or advertising costs. Real estate agents who know how this kind of guarantee works will think twice before pushing you to overprice your property.

2. The Lie: Underquoting

• What it is: A listing agent advertises a property for less than the sale price, in hopes of attracting a larger number of potential buyers.
• Why they tell it:
  Agents will sometimes quote deliberately low to attract as many buyers as possible to a property. When the sale price ends up being higher than quoted, sellers often assume that the elevated pricing is due to a hot market or a bidding war.
• What to do:
  You might do some homework on comparable homes to see if the quoted sale price falls within the expected lines. Alternatively, you might consult with real estate agents not involved in the sale—including your own—to get their opinion on the sale. If you are genuinely interested in a property, submit an offer in writing at or around the original quoted price. If the listing agent counters at a higher number than you were originally quoted, consider filing a complaint with the local real estate authority to report the unethical practice.

3. The Lie: The “We have other offers” line

• What is it:
  Listing agents will often tell potential buyers that they have “multiple offers.” This line can come after a potential buyer sees a house and shows interest, or after a potential buyer submits an initial offer.
• Why they tell it:
  Look, sometimes this claim is entirely truthful. Even a house that has been on the market for months can suddenly get three offers in a weekend. Market fluctuations, advertising pushes, and other factors can make the multiple offers thing a very real occurrence. In some cases, though, real estate agents use this line as bait, either to push a hesitant prospect into submitting an offer or to push a potential buyer to raise their offer.
• What to do:
  Because this “lie” is not always a lie, it can be tough to figure out what the best strategy is. Simply put, it’s tough to know if the “multiple offers” line is the truth or just a marketing ploy. However, you should try to query or test the claim. Ask the agent something along the lines of “Would there be any point in me submitting an offer of $xxx?” or “May I see the receipt for the deposit?” In most cases, the listing agent won’t show you the other offers—something that is well within their rights. Testing the waters won’t hurt, but your smartest bet is usually to figure out your best offer and submit it. Whether the “we have other offers” claim is valid or not, you shouldn’t feel pressured to pay more for a house than you think is reasonable.

4. The Lie: “We have someone who wants to buy your home.”

• What is it:
  A real estate agent may approach a homeowner who is not currently selling their home and use this line to encourage them to list it.
• Why they tell it:
  This line is a strategy that real estate agents sometimes use to fish for clients. If an agent gets in touch with you and then uses this line, it’s because they are hoping you will put your house up for sale—with them as the listing agent!
• What to do:
  Take this line with a gigantic-sized grain of salt. Frequently, real estate agents don’t have someone who wants to buy your house. They are hoping to generate interest in the property once you list. However, if they did have interest from buyers, they wouldn’t need to advertise your home at all, which they almost always do. If you want to test the validity of this statement, ask the real estate agent for an offer—or at least ask when they want to set up a showing. After all, almost no one buys a house sight unseen.

5. The Lie: “You should always stage your property.”

• What is it:
  Staging—the art of using furniture arrangement and décor to make a home seem more appealing to buyers—can be a powerful mechanism for a seller. Studies show that it can decrease the amount of time your home spends on the market and increase your likely sale price. Staging is so effective that experts can make a living doing it professionally. Some real estate agents will also stage your home for an added fee.
• Why they tell it:
  Agents who tell you that staging is essential are often fishing for that extra fee. They want to get as much money out of you as possible and are willing to pad your bill with unnecessary services if it means they walk away with a fatter check.
• What to do:
  Frequently, it’s debatable whether a home will be retained or redeveloped. As such, expensive staging will often have no bearing on a buyer’s attraction to your property or their willingness to pay above asking price. Again, staging can be a potent tool at a seller’s disposal, but it isn’t always necessary and certainly isn’t worthwhile if you’ve already moved out of the house. If an agent tries to present staging as a “make or break” tactic—instead of as a potential option you could consider—think about getting a different agent.

6. The Lie: “You can’t sell a secret.”

• What is it:
  The general philosophy here is simple: “If no one knows about a house, it can’t sell.”
• Why they tell it:
  Technically, this statement is true—at least in most cases. If no one knows that a house is on the market, then no one can come to showings. If no one comes to showings, you can’t get offers. If you don’t get offers, you can’t sell your house. Where this statement drifts into lie territory is when agents try to use it to justify substantial advertising budgets—budgets that net the agents extra benefits.
• What to do:
  Ask questions like, “So, if I spend more, I should expect to get more?” or “On that basis, if I don’t sell, will I still have to pay the advertising bill?” In real estate advertising, you can rack up an extraordinary bill without getting a result. If your agent is pressuring you to spend big on advertising, ask for a guarantee that if you can’t sell for within the agent’s range, the agent will cover the ad costs. This tactic will either push the agent to sharpen their quoting skills or back off.

7. The Lie: “Now is a great time to buy.”

• What is it:
  Agents try to get their clients to make offers on homes by talking about how rosy the market is for buyers.
• Why they tell it:
  Again, this line is used either to win over new clients or to encourage sales of properties that the agent represents. Either way, the agent is acting in his or her own interest—not yours.
• What to do:
  There are times when it is right to buy! Maybe interest rates are terrific right now, or perhaps the cost per square metre is lower in your area than it has been in years. However, the truth is that the only “great” time to buy is when you are ready. As such, you should consider your own situation before everything else. If you are open to buying, ask the agent a few tough questions—stuff like “Would you advise your children or your Mum to buy now?” or “Do you expect values to be higher in 12 months?” to see if they can back up their statement.

8. The Lie: “Our commission is not negotiable.”

• What is it:
  The real estate agent tells the client that everything is negotiable, from the price of a property to the perks included in the sales contract. The only thing that isn’t negotiable is the real estate agent’s commission.
• Why they tell it:
  No real estate agent wants to accept a lower commission. After all, commissions are how agents make their livings! As such, agents will often tell clients that their commissions are not negotiable.
• What to do:
  With a good real estate agent, you probably won’t feel any need to question the commission. A good agent knows how to set a fee that offers genuine value for the money. However, the fact is that everything is negotiable. Sometimes, you might just encounter someone who is unwilling to negotiate. To test their statement, ask a question like “If I agree to appoint you providing you include your advertising in your fee, can we sign now?” Technically, this question is a negotiation. If the answer is no, you might just want to walk away.

9. “If you don’t put an offer in now, you’ll miss out.”

• What is it:
  Your real estate agent might urge you to make an offer on a home or property, using the concept of “fear of loss” (e.g., “It’s now or never”) to push you into pulling the trigger.
• Why they tell it:
  The more time a real estate agent spends with one client, they less money they make per hour. As such, it’s not uncommon for listing agents to dangle the “fear of loss” carrot when potential buyers start showing interest.
• What to do:
  Test the agent by asking something like “Wouldn’t it be in your owner’s best interests to let me make my due diligence first, since mine might be the best offer?” If you are seriously interested in buying the property, submit a written offer to the agent subject to the necessary conditions that you wish to cover. If your offer is the best price, but the agent proceeds without you because they don’t want to deal with your conditions, they are not acting in the owner’s best interest. This grave error leaves the agent open to forfeiting their fees or worse.

10. The Lie: Non-disclosure of a death related to the property in question.

• What is it:
  Listing agents will sometimes opt not to disclose whether a property is being sold because the owner passed away.
• Why they tell it:
  There are two reasons this ‘lie’—or, more properly, this withholding of facts—is common. First, death isn’t exactly a marketing tactic. Many buyers will be significantly less interested in a property if they learn someone recently died there. Second, deaths of property owners usually mean that there is a semi-urgent need for a sale. To disclose information about a death, therefore, can hurt a listing agent’s negotiating position.
• What to do:
  Ask the listing agent about the circumstances of the sale. Who is the buyer, what is their timeline to sell, and why are they selling? If the agent is cagey about the details, then there may be something you’re not hearing.

Lies are told not just to win business, but also to help deals go through. Real estate agents who excuse themselves for “white lies” gradually formulate habit of regular deceit—one they justify as working in the best interests of the client. Unfortunately, these lies are usually told solely for personal gain and can be damaging to both the client (be it a buyer or a seller) and any other parties involved in the transaction. Hopefully, the information you learned from this blog post will help you identify and deal with lies from real estate agents in the future.

So Do Real Estate Agents Lie? Our Conclusion:

1. Over Quoting: Advising owners the property is worth more to win a contract
2. Under quoting: False advertising costs to drive interest
3. ‘We Have Other Offers’: Often used to increase a sales offer
4. “There is a Buyer Interested In Your House’: A means of ‘tricking’ someone into putting their house on the market.
5. ‘You Need Property Staging’: This usually means a larger fee for the agent
6. ‘We need more Advertising’: This can increase the seller fee for the agent
7. ‘It is a great time to buy’: For a real estate agent now is always a great time to buy
8. ‘Non-Negotiable Commissions’: No real estate agent wants to lose their cut
9. ‘We need an offer now’: Close a sale faster so they can move on
10. Non-Disclosure of Death: This deceit is to avoid having to sell at a lower price if the true facts were known.

Do Real Estate Agents Lie?

Primarily, the reason that real estate agents lie (or at least stretch the truth) is to try to win business. Real estate is a tough, highly competitive business that requires a strong and confident personality. When an agent is not performing well financially, they may convince themselves that honesty is the cause of their problem.

On the surface, this conclusion is easier than accepting that the opposition has better sales skills. In the long run, though, it puts real estate agents in a dangerous place. Rather than focus on developing their professional skills and strategies, they fall into a trap: lying to make sales.

Once an agent falls into this habit, it is doubtful they will break the cycle. In most cases, it leads to the inevitable: the agent losing his or her job. In some situations, the agent might even receive a fine or face a prison sentence. In any case, dishonesty causes enormous problems for real estate agents.