Multiple Offer / Bidding War scheme - buyer beware!
My wife and I created her first RFD user account to post our experience and to raise awareness for those who may not be aware (we will not be reading any PMs). Feel free to write your comments in the open just like I have done.
Almost 3 years ago I tried to sell my home privately and posted it online. As you can imagine almost every other day I had agents coming to my door telling me they could sell it quicker than I. In the midst of all this each agent presented me with tactics to get top dollar for my home in hopes of wooing me into signing a representation agreement. Most were honest tactics, a few a little shady/dishonest, and one downright criminal in my opinion.
This thread is to discuss the later and hear your stories and whether or not you have witnessed the same.
Now let me start off by saying as well that I do not remember what brokerage this agent worked for but I do remember thinking, wow, this is a top brokerage telling me this. What was pitched by this licensed realtor; a promise of top dollar for my home by staging a bidding war. Sometimes bidding wars just don't work but 2-3 years back they were commonplace in the GTA. This agent told me he would list my home at a price that would attract multiple bidders. Without even knowing anything about me he then proceeded to tell me that he had connections with another real estate brokerage, a totally different brokerage that he would call on offer day and have them place a real bid on the home (I guess an agent at the brokerage or a family member of that agent at that brokerage would do the bid, not sure), it would be a low ball bid, and would be registered as was law at that time so that if investigated would seem on the up and up. He then told me he would get a third brokerage in the mix that would come in with a high offer, again as per law this is a registered offer. Now to ensure that this high offer also looks legit that offer would come with crazy conditions that most home sellers would probably pass on. I didn't get into too much with him on how he believed these 2 bids would help me but I can only extrapolate that his intentions were:
1) On bidding day he would let the other agents know there are 2 other bids in an attempt to drive up the bid prices
2) He would talk with each of the buyer agents via phone/or in person and explain that there is a high offer on the table (eg. from third brokerage) in hopes of driving up the bidding (*some* seller agents do tell other buyer agents the high bid or hint at what it is when they are down to just a few bidders, close to the end of the process, and close to the sellers preferred #, I have witnessed this in the past first hand)
3) I assume he wants these offers to look close to being legit as they are registered offers at the brokerage so if investigated (by whom I have no idea) they would appear like legit offers.
I am putting this out there for those of you who are looking to purchase a home, those who in today's very competitive real estate market find themselves in a multiple offer situation, do your research ahead of time, decide on what is today's fair market value and try to stick close to that. I guess with shady tactics like this lurking in the background (on some deals) some honest buyer will likely fall for it and many likely already have.
In the past we heard of ghost bidders, bids that *some* agents would tell other buyers existed when in fact they did not. The government /CREA cracked down on these ghost bids and created a registration system but I have no idea how this was supposed to curtail shady activity. I am sure a realtor on this forum will educate me, and a few will scold me and claim my accusations above to be false.
What I said above is really no secret there are probably a lot of sellers/buyers on this forum who have witnessed this for themselves. Please post your experiences good or bad; I think it only helps to level the playing field. Oh and by the way, I did not use that agent!