Personal Finance

Phantom bids and double ended sales for realtors

  • Last Updated:
  • May 22nd, 2014 9:10 pm
Tags:
None
Penalty Box
Aug 11, 2005
4175 posts
1432 upvotes

Phantom bids and double ended sales for realtors

I saw this article and it got me thinking: http://www.theglobeandmail.com/globe-de ... e18506090/

What's the perception of phantom bids and double ended sales?

Should there be more transparency? Recently, my friend who is a realtor chose not to get the seller the best price, instead opting for more commission. There were two offers and instead of asking them to both bid against each other, he told the buying client the other offer's price which resulted in them winning by 1K.

Are both these practices ethical or do you see it as a tool to have buyers come with their best offer to begin with?

What do you think.
66 replies
Banned
May 7, 2014
188 posts
26 upvotes
Westmount, QC
They are unethical but the real estate agents on this site will butcher you on any topic that hurts their interests but won't say a word on this one.
I bet you that none of them will reply to this thread quoting the law, moral or ethical norms as they did with my supposedly attempt to avoid paying taxes.
That was the irony in that tread, real crooks taking you for just looking at a hypothetical scenario while their entire code of ethics and their way of working is totally perverted and unethical.
Deal Addict
Dec 21, 2010
1864 posts
1174 upvotes
GTA
Umm... I'm actually happy to reply.

Those agents that practice that way are EXTREMELY unethical. As the picture above paints us looking all like money-hungry jack-asses, I wish that there would be more transparency so that the good/ethical ones are given every opportunity to practice fairly.

I would hate for anyone to have this perception of people in this role, but there really isn't much you can do but trust your gut, ask all of the right questions, and hope to god that you're working with someone honest.

PS - MG I'm sorry you feel that Realtors are so horrible (or at least that is how I'm reading the first line of your post). I thought I was being pretty helpful with you, when knowing full well I wasn't going to benefit. I was helping just for the sake of helping as that's how I practice. If I can help, I do. I hope that you aren't jaded by all of us Realtors, but I do wish you would keep an open mind (or at least try and think of every Realtor as unique) so that we aren't all so scary-sounding. :)
Award Winning Realtor - I LOVE MY JOB!!
At the end of the day, you're the boss and need to make sure I'm worth your rate of pay!
Deal Addict
Mar 27, 2003
1542 posts
986 upvotes
Vancouver
Don't know much about the industry, but at least the realtor's acting on the best interest of their client. You should be more worried about realtors like your friend who just wants the quick sale.
Deal Addict
Dec 21, 2010
1864 posts
1174 upvotes
GTA
PS - there is also a lesson to be learned. There are two types of buyers: a client and a customer.

I don't have the time right now to get the standard fiduciary duties owed and all associated info, but that can be found on google... and many other savvy Realtors and members on this site :)

Just saying that this might not be as unethical in a similar situation if the agent was working on behalf of the seller, too. Again, I don't know the background of who was working for whom and what their contract states, but usually it is never black and white.
Award Winning Realtor - I LOVE MY JOB!!
At the end of the day, you're the boss and need to make sure I'm worth your rate of pay!
Banned
May 7, 2014
188 posts
26 upvotes
Westmount, QC
loriblum wrote: Umm... I'm actually happy to reply.

Those agents that practice that way are EXTREMELY unethical. As the picture above paints us looking all like money-hungry jack-asses, I wish that there would be more transparency so that the good/ethical ones are given every opportunity to practice fairly.

I would hate for anyone to have this perception of people in this role, but there really isn't much you can do but trust your gut, ask all of the right questions, and hope to god that you're working with someone honest.

PS - MG I'm sorry you feel that Realtors are so horrible (or at least that is how I'm reading the first line of your post). I thought I was being pretty helpful with you, when knowing full well I wasn't going to benefit. I was helping just for the sake of helping as that's how I practice. If I can help, I do. I hope that you aren't jaded by all of us Realtors, but I do wish you would keep an open mind (or at least try and think of every Realtor as unique) so that we aren't all so scary-sounding. :)
I am not going to metaphorically kill a species because half of it is degenerated
However in a natural environment the cleaning comes from inside.
Too bad that the the real estate industry has become so artificially inflated and manipulated.

Loriblum, the fact that you sent me one day of listings will not change the real estate industry.
Deal Addict
Dec 21, 2010
1864 posts
1174 upvotes
GTA
What I was trying to point out was that we aren't all that bad. I`m truly sorry if you feel that way, but I just wanted to encourage you to see that "some" of us are still decent :)
Award Winning Realtor - I LOVE MY JOB!!
At the end of the day, you're the boss and need to make sure I'm worth your rate of pay!
Deal Guru
User avatar
Mar 31, 2008
13011 posts
3095 upvotes
Toronto
There should be more transparency. And agents who get caught should be fined or put on some list.

Right now in a seller's market, this will work unfortunately as people's craziness to get the 'house of their dreams' probably doesn't care. A swing of 75k-100K is nothing. Just a few years extra on the debt amortization.
Penalty Box
Aug 11, 2005
4175 posts
1432 upvotes
at1212b wrote: There should be more transparency. And agents who get caught should be fined or put on some list.

Right now in a seller's market, this will work unfortunately as people's craziness to get the 'house of their dreams' probably doesn't care. A swing of 75k-100K is nothing. Just a few years extra on the debt amortization.

LOL my friend got caught once and the fine was minimal, a couple hundred bucks. He laughed it off
Deal Addict
Dec 21, 2010
1864 posts
1174 upvotes
GTA
If your friend laughed it off for doing something unethical, he seems like he would be the type to taint our field.

I agree, a blacklist of sorts should be implemented.

Most people want an aggressive agent who works on their behalf. They are still around and don't have the undermine others to achieve their goals in a strategic and ethical way.

And....some people just suck and deserve a dose of karma ;)
Award Winning Realtor - I LOVE MY JOB!!
At the end of the day, you're the boss and need to make sure I'm worth your rate of pay!
Penalty Box
Aug 11, 2005
4175 posts
1432 upvotes
Do you agree that double sided deals should be made illegal as there is an inherent conflict of interest?
Deal Addict
Dec 21, 2010
1864 posts
1174 upvotes
GTA
Illegal, no, however there should be more transparency and full disclosure made to keep things level and fair. Don't you agree that this would be best method of practice for all? The agent is still in a win-win situation, and the buyers/sellers will have zero doubt.
Award Winning Realtor - I LOVE MY JOB!!
At the end of the day, you're the boss and need to make sure I'm worth your rate of pay!
Banned
May 7, 2014
188 posts
26 upvotes
Westmount, QC
This is pure manure
The fees should be fixed something like

x amount for any house between 100-700K
y amount for any house between 700k-1400K

and so on

and the bidding should be open like when you sell any other goods in an auction
The seller should set a minimum price and forced to sell if that price is offered

At least this restriction might be implemented soon, that is a way to cool down the market without adjusting the interest rates. I can see it coming otherwise this market will ruin everybody
Deal Fanatic
Dec 5, 2009
5768 posts
3612 upvotes
Double ended deals typically aren't bad for the seller. They are still accepting the highest offer they get.

But on the buy side I would be more cautious.
Penalty Box
Aug 11, 2005
4175 posts
1432 upvotes
fdl wrote: Double ended deals typically aren't bad for the seller. They are still accepting the highest offer they get.

But on the buy side I would be more cautious.
That's false. Instead of asking all the interested parties to keep bidding until they have the highest bid, the realtor can just skip this entire process and tell their client to bid 1k higher than the next bid. Boom, easy commissions.
Deal Addict
Dec 21, 2010
1864 posts
1174 upvotes
GTA
MindGamer wrote: This is pure manure
The fees should be fixed something like

x amount for any house between 100-700K
y amount for any house between 700k-1400K

and so on

and the bidding should be open like when you sell any other goods in an auction
The seller should set a minimum price and forced to sell if that price is offered

At least this restriction might be implemented soon, that is a way to cool down the market without adjusting the interest rates. I can see it coming otherwise this market will ruin everybody
Except how would this be "fair" when seller of home priced at $100,000 has to pay the same as seller who's home is priced at $700,000 (as per your example). A fixed rate would not work in this type of situation as someone will obviously find fault and rightfully so. By using a percentage, they are basing the prices accordingly. You might not agree with what the percentage rate is that is industry norm, but that is better than any fixed rate.

Correct me if I'm wrong, but I feel that your issue is likely due to the industry standard rate?
Award Winning Realtor - I LOVE MY JOB!!
At the end of the day, you're the boss and need to make sure I'm worth your rate of pay!
Deal Fanatic
Jul 3, 2011
6517 posts
3798 upvotes
Thornhill
Phantom bids are not only unethical they are illegal. In Ontario, the law recently changed to bring clarity to multiple offers and will be enacted once the Ministry of Consumer Services determines what the exact regulations will be.

Also, the double-ending ratio on sales is actually very small. A few years ago it was estimated at less than 5% and probably still is.
Luckyinfil wrote: What's the perception of phantom bids and double ended sales? Should there be more transparency?
What exactly was the scenario concerning your friend with the "higher" offer that was rejected? Did s/he show that offer you say would have given the seller a higher net, to the seller?
Recently, my friend who is a realtor chose not to get the seller the best price, instead opting for more commission. There were two offers and instead of asking them to both bid against each other, he told the buying client the other offer's price which resulted in them winning by 1K.

Are both these practices ethical or do you see it as a tool to have buyers come with their best offer to begin with?

What do you think.
Some Realtors such as myself do not ever double end deals. Sellers are told this up front and in writing before they sign a listing agreement and it's explained to them that to do so it will in essence reverse the requirement to act only in their best interest which is to advise or negotiate on their behalf, as is required of a fiduciary and that if they would prefer someone who does, then someone else is best suited to list. None have ever declined to agree.
Deal Fanatic
User avatar
Apr 4, 2009
7698 posts
794 upvotes
North York
Luckyinfil wrote: That's false. Instead of asking all the interested parties to keep bidding until they have the highest bid, the realtor can just skip this entire process and tell their client to bid 1k higher than the next bid. Boom, easy commissions.
Any RE agent whom does this is STUPID, inexperienced. (And I think most beefs in RFD are with in-experienced agents ...)

With only $1K difference, it is possible that the other agent whom had the next highest offer can launch a complaint with their RE board. An experienced agent will know to ensure that there is enough of a gap between the selling price and next bid, so as to be able to say it was in the client's best interest to accept a clean offer that was $x thousands above the next bid. (Otherwise, they should ask the x highest bidders to submit better offers.)

Indeed, for their own offer to beat another by $1K, does look like a conflict of interest. Even the seller can turn around and complain to the RE board, never mind the losing selling agent.

$1K is too small. On a $1M deal, $25K would be a reasonable difference for the seller to work with the highest bidder to clear the conditions, if any.
Member
Nov 25, 2011
425 posts
63 upvotes
Toronto
Just end the incredibly silly and easy to game multiple bidding process in Canada. Make it a one bid process. Like they have done in other countries. Problem solved.
Deal Fanatic
Jul 3, 2011
6517 posts
3798 upvotes
Thornhill
Busybuyer888 wrote: Any RE agent whom does this is STUPID, inexperienced. (And I think most beefs in RFD are with in-experienced agents ...)
Exactly!
With only $1K difference, it is possible that the other agent whom had the next highest offer can launch a complaint with their RE board...Indeed, for their own offer to beat another by $1K, does look like a conflict of interest. Even the seller can turn around and complain to the RE board, never mind the losing selling agent.
Yes and any person who suspects it was unfair. I don't know where luckinfil is but in Ontario all fines are in the '000's unlike many other provinces where they are far too small to matter - perhps he resides in one of those.
michty6 wrote: Just end the incredibly silly and easy to game multiple bidding process in Canada. Make it a one bid process. Like they have done in other countries. Problem solved.
You're thinking from a buyer's point of view. The seller wants the best advantage possible and the one bid process or auctions in other democratic countries is in addition to the open process.

Top

Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)