Realtor Buddy wants to list my home at an inflated price to meet potential clients

[CarlsbadMtnBiker]

Ok, so I purchased a new large home in coastal north county in Feb, 2005 with the intent to live in it for 2 years and make $100k+ on the sell. I had done this 2 times in 2002 and 2004 on other new homes making a significant tax free gain on both. Now, we all know that game is over and now I am looking at breaking even on a sell right now (if lucky.) I can afford to stay put for awhile but the mortgage is stretching my budget. It is also a home much larger than I need. I also would not mind renting a nice smaller pad right near the beach for less.

I was ready to list with a realtor buddy of mine very recently but have since taken on a couple of roomies (4K sq ft 5 BR house w/ plenty of room) which has improved my cash flow substantially. So I decided to hold off on selling for now. However, my realtor buddy still wants me to list the house at a now higher price (that way it is less likely I get an offer) so he can get potential buyers that he can then show other properties to knowing I really do not want to sell.

The way he puts it, is that this would help him a lot, and if I do get an offer at the inflated price, I would go ahead and sell and rent for awhile. Which brings the reason for my post, does anybody see any problem with this? Is this unethical? I would truly sell for the inflated price, but doubt I would get any real offers at this price. Although there is a chance somebody would fall in love with the house as it does has a lot of desirable features very similar to a custom home in a very nice neighborhood, distant ocean views, good schools, etc.
1st post to Piggington by the way and would like to say that I enjoy and respect the insight you all (at least most of you all) bring to this site.

Thanks .. CarlsbadMtnBiker

[PerryChase]

Sounds like your buddy has no listings right now. Yes, it would help him out because he could point to your listing as an example of how he’s able to “help” buyers and sellers.

I think it’s unethical and reflects badly on Realtors. It’s almost like lying on your resume.

If I were to sell my house, I’d investigate the work history of my Realtor to make sure that he’s not bull-shitting me. A Realtor that shows me a house at a pie-in-the-sky price would loose my business and any future referrals immediately.

In the short term you might do your friend a favor, but in the long term you’d be doing him a disservice by participating in that sham listing.

You might even do yourself a disservice because your house would then have a history of listings and non-sales.

[Anonymous]

This is not unethical for one reason – it sounds like you are open to selling the home at the inflated price if you get an offer. Were you to list with no intention of selling, that would be unethical. How is this any different from the thousands of realtors out there who are representing sellers with inflated prices? Based on the definition of unethical below, I’d say you are in the clear so long as it is a widely accepted practice for realtors to 1)Represent sellers who want to sell at inflated prices and 2)Benefit from the traffic at open houses and phone calls to drum up additional business.

unethical = not conforming to approved standards of social or professional behavior; “unethical business practices”

[housingbear]

Unethical maybe, in poor character, certainly.

Realtors have effectively created a dead cat bounce in certain communities by placing homes on the market at inflated prices. Theydo this to scare people into thinking the market is turning. Sure this benefits the realtors, but it also perpetuates the bubble and will utlimatley make the landing much harder. I have family in the real estate business and they are all appalled at the dirty tactics being used by reraltors in todays market. Another game being played, is to take a hoem off the market (that has been out there for say more than 90 days) and put it back up as a “NEW” listing a week or two later at a higher price.

Doing what is right and doing what is allowed are very different. Those of us who are trying to become knowledgable about this market should see through these tactics and hopefully stay clear of poor character realtors.

[ucodegen]

I tend to agree with PC, the other thing that your Realtor friend may be doing is trying to make it look like houses are going for more than they actually are.. (ie: see, this is what houses like this are really listing for.. and here is another house that is more in your price range). Yes, I also believe that this reflects badly on Realtors too..

[SD Realtor]

This behavior is EXACTLY why so many people are down on Realtors. In my opinion, no this is not ethical in any way but note that this is simply accepting and even contributing to the problems people have with the entire real estate process. Furthermore it will give a false “potential” pricing level to neighbors who are considering selling thier homes as well.

If your friend wants to drum up business then I am sure he can poll the other agents in his office and hold open houses for thier listings.

I am not trying to be sour on you per say mtnbiker but the industry professionals that don’t behave like this pay the price when others do this sort of stuff.

SD Realtor

[Critter]

What do your roommates have to say about opening up the home for walk-throughs and perhaps open houses?

If it were me, I would be looking for either a major rent discount or a different living situation entirely if I knew that the house was up for “sale” even if it were a sham “sale.”

You wouldn’t be posting this question if you didn’t have some integrity so I admire you for bringing this out in the open.

[CarlsbadMtnBiker]

Thanks Perry, Juice, Bear, uco, Sd Realtor, Critter,

I appreciate the feedback. good point Sd R and Critter on the negative effects on my neighbors and my roommates, (which I do not want to lose right now by the way ..) I did not think of those things. Actually, I am not sure I want alot of people coming in my house now that I think about it.

Wow, I am glad I did not pull the trigger with by buddy on this.

This is enough for me to make the right decision and put this place on the market only when I truly intend to sell for the reasonably expected price. I just wanted to help my friend as he is pressing me hard for this but I now know I need to tell him this is not a good idea.

thx. again for your time all.

[uncle_git]

I’ve got a better idea –

I’d like you to list it at $1.3 billion.

I’ll buy it from you this month and next month you buy it from me for $1.6 Bn.

That way we keep the stats looking good for the papers and we can get this market rolling again.

We have to list it that high to effect the stats sufficently to recover the precieved 7% loss YOY – which as we all know must be complete nonsense as housing always goes up.

Love and hugs,
Mr D Lereah.

[LookoutBelow]

I say go for it…Realtors have been doing this type of crap for years and years in "up" markets…There are VERY few of them out there that dont pull this type of shenanigans ….look at tract housing developments by the biggest builders (crooks) ….they are famous for stunts like this.

It is unethical in my opinion and it most certainly is devoid of "moral character" but what the hell ? I would try to catch one more fish for you, before this whole thing implodes…..When it does, and its gonna..then NOTHING will stop the downhill slide. ABSOLUTELY nothing.

 

Remember the old economics saying….."A buyer is someone more foolish than I"…Now your job is to find that fool….let him hold the bag,  let em make offers if they will…but be prepared to say "SOLD..the nice man in the camel hair jacket"…But make no mistake about where you stand, get the hell out NOW.

[Anonymous]

Good decision, but if you did do the deal IMO it doesn’t appear unethical because it does conform to the current professionally accepted industry standards. It is in fact ethical to ask more than market value for a home, and if you are overpriced you simply will not sell the home. The fact that there are ‘greater fools’ willing to buy, yet unwilling to do their own research, is an indication to me that this is a buyers problem and not an ethical dilemma for the seller. You are not manipulating the final sales price, and are not offering incentives outside of the purchase price that skew the true value of the sale. All you are doing is listing at a high price, and you could potentially get a sale. Nobody is forcing people to tour the home, and 30 minutes on the internet, perhaps with a realtor’s help, will tell you approximately what the property is worth.

Artificially created dead cat bounces, scaring people into buying, false potential pricing – these are all issues that a properly informed buyer should notice, especially in a down market like this where there is plently of time to investigate a purchase and sift through the BS. And besides, as he stated, maybe someone will fall in love with this custom home and pay the premium. And how is it unethical for the realtor to simply tell the seller the obvious – that he will benefit from the traffic that comes through the home. This happens at virtually every single open house and is a widely accepted industry practice.

For those that disagree (almost everyone), what action would be required on the part of the seller and realtor to make this proposal ethical?

[PerryChase]

After reading the comments, I too would say that if it’s within standard industry practices, then it’s perfectly fine.

Do you guys think that once a house has been on the market, sits and doesn’t sell, it may have a harder sell in the future because of history? A good realtor, would do a thorough search and inform his client of the true DOM.

[SD Realtor]

I am just cutting and pasting what mtnbiker wrote:

“However, my realtor buddy still wants me to list the house at a now higher price (that way it is less likely I get an offer) so he can get potential buyers that he can then show other properties to knowing I really do not want to sell.”

Taken in this exact context I have a problem with this sort of behavior. The main reason for listing the home is not to sell the home, rather, for the realtor to get buyers.

For all of the complaining on this post about pricing of homes, unrealistic sellers, and poor behavior by realtors, I find it interesting those same posters didn’t come down and lower the boom on a suggestion like this.

IMO no this behavior is not common practice in the real estate industry, and it is yet another example that reflects poorly on us all.

[Anonymous]

Based on the wording of that paragraph his intent does seem to be to not sell the home and instead refer people to other homes. Even though the seller would possibly agree to a high enough offer, I can now see that hiring a realtor who is planning to intentionally not sell your house could be an ethical problem for the seller and also the realtor!

[Author]

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