Can a Broker Lie About There Being Multiple Offers?
Are there any rules preventing a real estate listing agent from lying about how many interested buyers there are for a property? Can a Realtor lie about multiple offers? Practically speaking, yes. Even though there may be various code of ethics that Realtors must follow, it’s very difficult to prove whether a Realtor was lying or not. As a result, it’s very easy for a Realtor to lie about multiple offers and to get away with it.
NY State Laws Against Real Estate Agents Lying
The NY State Agency Disclosure Form clearly states that agents should “deal honestly, fairly and in good faith” with buyers and sellers. However, this form provides little protection in the real world against unscrupulous real estate listing agents who want to exaggerate the facts and promote a bidding war for their listing.
Keep in mind that listing agents are not required to disclose anything about the offers they have or have not received. And if a listing agent chooses to disclose information about the offers they already have received, it’s entirely up to the listing agent on how much information to disclose.
As a result, the answer to can a Realtor lie about multiple offers is absolutely yes. It’s also much easier to commit a “white lie” when you aren’t required to disclose exact information. Therefore, it’s entirely plausible that a listing agent might exaggerate the amount of interest they have received.
Pro Tip: What’s the difference between a listing agent vs selling agent in NYC? Read our article to learn more about who’s actually representing your interests, and whether there’s a benefit to dual agency or not.
Realtor Association Rules Against Lying
If a real estate agent is also a Realtor member, then the Realtor technically has even more rules to follow. For example, the New York Association of Realtors says that the term Realtor is associated with “competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations.”
The word Realtor is used interchangeably these days with real estate agent, though as you can see an actual Realtor member does have more ethical guidelines to follow. While it’s still conceivable for any real estate agent, Realtor or not, to lie about having multiple offers on a property, it certainly seems harder to do so if the agent is a Realtor member. No one likes to break more rules than they have to.
Pro Tip: The equivalent to the local Realtor association in NYC is operated by REBNY, which split off from the National Association of Realtors in 1994. REBNY has its own code of ethics which members must follow, as well as its own equivalent of the MLS broker database called the REBNY RLS.
How Do Agents Typically Lie About Multiple Offers?
Real estate listing agents will typically lie about multiple offers by exaggerating the level or the amount of interest they’ve gotten on the property. For example, someone who verbally told them that they’d be interested if the price was $100,000 lower might become a highly interested buyer who’s submitted an offer that’s very close to asking.
Or, if an un-vetted potential buyer asks whether the seller would accept a hypothetical offer that’s well below asking, this random emailer might be called a potentially all cash offer that’s very interested around the asking price.rs are not so common.
All of these white lies are exaggerations and not outright lies, which make them much easier to pull off by your typical real estate agent. It’s rarer to see a truly dishonest agent who will outright make up offers completely. Fortunately for society, psychopaths and habitual liars are not so common.
Pro Tip: Whether a listing agent truly has multiple offers or not, it’s very likely that he or she will call for a highest and best offer process in NYC soon. Read our article for tips and bidding strategies for winning a bidding war in NYC.
How Can Agents Prove That They Have Multiple Offers?
Many foolhardy, first time home buyers will want to prove that the other offers they competed against really existed. This is foolish and a waste of time for a variety of reasons. For starters, the listing agent will most likely tell you that it’s against their duty to deal fairly with all parties if they outright revealed another buyer’s offer to you. Second, this type of request is fairly infrequent and never accommodated in practice.
More dangerously, a truly unethical listing agent can easily create a fake email address, send in a fake offer and then show it to foolhardy buyer. Our partner brokers have seen this happen in person before, where a truly despicable listing agent showed an interested buyer a supposed all cash offer on his cellphone.
Of course, the offer email was one sentence long and said “Dear Jacques, I’d still be interested in unit 3C at $1,700,000 if it’s still available. My offer would be all cash as discussed. Please let me know. Thank you.” How convenient that the offer was all cash so no pre-approval letter or REBNY Financial Statement was needed.
And of course, the supposed buyer never bothered to attach a proof of funds either. Unfortunately for the emotionally charged buyer who really did like the property, the buyer bought the story and ended up buying the apartment. Whether the other buyer was ever real, we’ll never know.
Pro Tip: You can never prove whether a listing agent had other bonafide offers unless you develop an ability to read minds. With that said, you can mitigate your risk by working with an experienced buyer’s agent and putting offers on multiple houses so you have option value. There’s nothing preventing you from negotiating accepted offers and contracts on multiple properties. After all, nothing is final until the ink is dry on a fully executed contract!
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Disclosure: Hauseit (https://www.hauseit.com) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. The services marketed on Hauseit.com are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).