Nowhere in Canada is a company allowed to advertise a product at a certain price without being made to sell it for that price. That is, except when it comes to real estate. The recent practice of creating bidding wars by advertising a house for a price far below what the vendor is willing to sell, crosses the ethical line.

In bidding wars, potential buyers are not provided with details of other offers, forcing them into making high-pressure, time-limited decisions that can cause them to overpay by tens of thousands of dollars. It is purposely designed to place buyers in a vulnerable state in order to take advantage of them. Also, overpaying falsely drives up the cost of housing, especially when supply is low.

Bidding wars are the latest of what, up until now, was a gray area in the ways real estate agents can manipulate buyers and sellers. Most methods are subtle, and you may not even be aware of them. Think about it, when looking to buy a house, the agent showing the property has nothing to do with whether or not you like it and how much you are willing to pay. Sure, they can provide details of the neighborhood, and point out the house’s features, but most of this is obvious and shown on the MLS listing. Beware of agents claiming to be better at sales than all the rest, they are the ones skilled at various psychological techniques that can be used against you.

Open houses, for example, mostly benefit the agent. After all, if your house is listed on the MLS, any serious buyers know it’s for sale and can schedule a private viewing at their convenience. Nosy neighbors and people not serious about buying tend to account for most of the traffic. It is those who are not serious that agents are looking for. These are their possible future clients. They can even be used as ponds for the house they are selling. Being falsely led to believe that the seller could accept a ridiculously low offer can get a non-serious buyer engaged. Who could pass up the “deal of a lifetime”? Even though the offer doesn’t go anywhere, it softens up the seller on other future offers below asking price. The experience also changes the non-serious buyer’s mindset, making it easier for the agent to get them to look at other “deal of a lifetime properties”.

Offering free appraisals for people not serious about moving is another tactic. Some agents will overestimate the value of their current house to convince them to sell. Once listed, they come up with complex market situations as to why their house is not selling and how they need to drop the price.

The negotiation part of the sale, when the offer is going back and forth, is another stressful time to watch out for. A counter offer has a much better chance of being accepted if it is presented just before it expires. Your own agent could purposely hold off on presenting a counter offer to you for this reason.

These are only the methods I have personally noticed when buying and selling, no doubt there are many more. For most of us, buying or selling real estate is the biggest financial transaction of our life. Decisions made should be well thought out, and not while in a temporary, artificially created mental state. When buying or selling, beware of the friendly agent that brags they can do a better job than anyone else. Manipulating you is how they do it.

Dave Lister

listerlogic.com