Real Estate

Multiple Offer / Bidding War scheme - buyer beware!

  • Last Updated:
  • Oct 21st, 2020 6:55 am
[OP]
Newbie
Oct 17, 2020
6 posts
8 upvotes
Toronto

Multiple Offer / Bidding War scheme - buyer beware!

Let me preface by stating there are always a few bad ones in every bunch. Most of the realtors I have had the pleasure of working with are great and very knowledgeable. But as you will see in my experience below, there are bad ones too...

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!

Caveat emptor.
Last edited by anon4sale on Oct 20th, 2020 5:44 pm, edited 8 times in total.
26 replies
Deal Addict
Mar 27, 2004
4933 posts
2893 upvotes
Toronto
form801 addresses what you are speaking about.
Full-time Realtor
Jr. Member
User avatar
Jun 3, 2019
173 posts
138 upvotes
GTA
anon4sale wrote:
I assume he wants this 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.
These agents have no place in our industry. Get their business card and report them to RECO (Real Estate Council of Ontario). In fact, prior to working with an agent you can look up to see if they have previously been disciplined by our governing body - https://www.reco.on.ca/RegistrantSearch

I'm sure other provinces have something similar. Here is link for BC - https://www.recbc.ca/public-protection/ ... ons-search
Realtor® & Mortgage Agent
Sr. Member
Mar 2, 2017
776 posts
1370 upvotes
Toronto
Thanks for sharing OP, that's scummy at the very least, but it's not surprising in the least bit.

The broker that the agent works for is most likely unaware of this, these people generally operate as groups, meaning a couple of acquaintances from different brokerages creates enough distance not to raise every red flag. Like mentioned Form 801 (Bill 55) was put in there as a safeguard, but because enforcement (lack there of) and penalties, some people still feel the cheating and reward is worth the risk of penalty.

You also have to remember that it takes two to tango, in many cases it's also the seller's expectation for the agent to go 'above and beyond' to get the listing and they turn a blind eye to these 'strategies' in many cases they encourage them. If you think about it from the agent's perspective, 50k more through a fake bidding war is negligible on a commission cheque, not so for a seller. The responsibility still falls squarely and 100% on the agent, but it's something worth understanding for context.

More people should come forward with these experiences.
Last edited by RichmondCA on Oct 19th, 2020 9:37 am, edited 1 time in total.
Realtor, Investor, CPA
[OP]
Newbie
Oct 17, 2020
6 posts
8 upvotes
Toronto
oasis100 wrote: form801 addresses what you are speaking about.
It attempts to address but some still proceed to violate the rules believing they won't get caught or the risk is worth it.
Deal Expert
User avatar
Apr 21, 2004
54414 posts
19267 upvotes
I always said even with that register, phantom bids still persist.

I can have a friend pose as a buyer with the highest bid with ridiculous terms and conditions that his offer would never be accepted. Agents will only mention the highest bid, not the terms and conditions on which the offers are made.

There's something wrong here. In Australia, it works so much better:
https://www.domain.com.au/news/the-rule ... 13-go4hoe/
Sr. Member
Jan 15, 2010
925 posts
1035 upvotes
Toronto
I'm sure this type of garbage happens all the time. Offer what you're comfortable with and if the seller agent says your in competition who cares? If you lose you lose, but at least you didn't get played.
Deal Addict
User avatar
Nov 5, 2018
2789 posts
4941 upvotes
Toronto
This is corrupt as hell.
Called the bottom.
Newbie
Oct 28, 2018
40 posts
74 upvotes
CondoMan98 wrote: This is corrupt as hell.
Easy, fast, and cheap money these days. Are you surprised?
Jr. Member
Jul 23, 2020
189 posts
128 upvotes
This is a lot of hearsay, the agent probably wanted to get the sale from you and told you such things for you to sign with them, in reality there is a lot of doubt that this can actually be pulled off without repercussions.
Sr. Member
Jan 20, 2012
738 posts
362 upvotes
Toronto
Encountered a few times in the past few years. 2 listings involving the same listing agent. A single car garage detached received 30+ offers and it sold $50K more than a double car garage detached house with similar size in the area. The double car garage house was actually newer. Another townhouse was sold at $800+k while all units in the complex sold under $750 at the time. It had 10+ offers.

A friend was also in a bidding war for a condo in Markham. 18 offers, unit was sold to another agent from the same brokerage. Closed to 30% over asking and 10% higher than previous sold price in the same week.
[OP]
Newbie
Oct 17, 2020
6 posts
8 upvotes
Toronto
ricodeals wrote: This is a lot of hearsay, the agent probably wanted to get the sale from you and told you such things for you to sign with them, in reality there is a lot of doubt that this can actually be pulled off without repercussions.
Do you know what hearsay is? The agent told me to my face. Sounds pretty elaborate for something he is just making up to get business.
Newbie
Jul 9, 2020
20 posts
12 upvotes
Real Estate is full of so many shady dealings...some of them are the reason why it's so expensive.
Sr. Member
Mar 10, 2004
638 posts
211 upvotes
anon4sale wrote: Do you know what hearsay is? The agent told me to my face. Sounds pretty elaborate for something he is just making up to get business.
I agree with ricodeals. Agent is just trying to get you to sign. Sounds elaborate to u but the agent has probably used this tactic before. If i was doing something illegal i am not sharing this info with everybody.
[OP]
Newbie
Oct 17, 2020
6 posts
8 upvotes
Toronto
tempperm wrote: I agree with ricodeals. Agent is just trying to get you to sign. Sounds elaborate to u but the agent has probably used this tactic before. If i was doing something illegal i am not sharing this info with everybody.
too funny, you are both entitled to your opinion and to believe what you like. I am just putting this out there for those who are not realtors so they can use their own judgement.
Sr. Member
Mar 10, 2004
638 posts
211 upvotes
anon4sale wrote: too funny, you are both entitled to your opinion and to believe what you like. I am just putting this out there for those who are not realtors so they can use their own judgement.
No doubt there are bad agents out there. Just make sure you interview multiple agents before signing. Just from recent experience i can say that all the seller agents we interviewed seemed honest. I do think it s tougher on buyers. Hard to gauge market value especially when bully bids are being accepted for an underpriced property.
Deal Expert
User avatar
Feb 11, 2009
18061 posts
5410 upvotes
Toronto
I'm not surprised to hear stuff like this. I've had a few instances where I'm told "Oh theres a higher offer...you'll need to increase your bid if you want the unit"... I always tend to get my clients to drop out of the bidding war when a price becomes too heated in my opinion...the buyers may get emotionally attached and I take it upon myself to draw the line haha.
In these cases they'll tell you theres a higher offer...but a week later and its still listed, now just at a higher price....ok...so much for the higher offer.

I've also constantly run in to situations where my clients have made offers on the property, but despite being the highest offer they don't get the unit simply because it wasn't "high enough". Those are the kind of things that get on my nerve...wastes my time, the buyers time, and i guess even the sellers own time.
Seller: Lists under market value
Buyer: Offers market value
Seller: No I want more than market value.
Real Estate Agent, MAcc, CPA, CA
Deal Addict
Nov 24, 2013
1189 posts
607 upvotes
Toronto
Not surprised this happens. Someone always finds a way to game the system.
Deal Addict
Mar 22, 2010
2945 posts
845 upvotes
Sometime I wonder, would it create a chaos if it's completely open bid with minimum price point?

Take an art auction for example
[OP]
Newbie
Oct 17, 2020
6 posts
8 upvotes
Toronto
deal_with_singh wrote: I'm not surprised to hear stuff like this. I've had a few instances where I'm told "Oh theres a higher offer...you'll need to increase your bid if you want the unit"... I always tend to get my clients to drop out of the bidding war when a price becomes too heated in my opinion...the buyers may get emotionally attached and I take it upon myself to draw the line haha.
In these cases they'll tell you theres a higher offer...but a week later and its still listed, now just at a higher price....ok...so much for the higher offer.

I've also constantly run in to situations where my clients have made offers on the property, but despite being the highest offer they don't get the unit simply because it wasn't "high enough". Those are the kind of things that get on my nerve...wastes my time, the buyers time, and i guess even the sellers own time.
Seller: Lists under market value
Buyer: Offers market value
Seller: No I want more than market value.
I like your sincerity, you are the kind of agent everyone wants to work with.

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