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Unethical practices that affect buyers:   1  ●  3  ●  4   ●  5   ●  6   ●   7  ●  8   ●  9  ●  10 
Unethical practices that affect sellers:   1  ●  2  ●  3   ●  5   ●  6   ●   7  ●  8   ●  9 

Unethical Practice #3:  Sellers’ agents who favor certain buyers over others.

In a slow market, agents are usually thrilled to get any offers they can.   But if multiple offers are expected on a property—say because the market is hot or the property is especially attractive—agents sometimes tip the scales in favor of certain buyers. 

Sellers' agents have an especially strong incentive to help their own buyers come up with the winning offer--this allows them to "double-end" the deal and get a much larger commission.  (Note that some states don't allow agents to represent both sides.)  Agents may also favor the buyers of other agents in their brokerages, in hopes that the favors will be returned someday.  Agents may also try to sabotage offers by out-of-area brokerages to prevent them from elbowing in on their territories, or by non-traditional brokerages who break ranks by offering buyer rebates to their clients. 

Unfortunately, discriminating against certain buyers is fairly easy for agents to pull off.  If your listing agent is discouraging offers from other agents, you’ll probably never know about it—it’s a licensing violation in many states for a buyers’ agent to communicate directly with you to complain about being shut out. 

Here’s what to watch for:

Pocket listings

The most effective way for a brokerage to represent both the seller and the buyer is create a so-called pocket listing by not putting the property on the Multiple Listing Service (MLS).

Brokerages sometimes get sellers to agree to pocket listings by offering them special commission breaks.   Perhaps the seller need pay only a 5% commission if the brokerage finds a buyer while it’s a pocket listing, but a 6% commission if it’s sold while listed on the MLS. 

Hidden listings

Most sellers won’t stand for pocket listings, and wisely insist that their properties be posted on the MLS.  But there are other tricks agents can use to hide their listings from other agents:

  • An agent can put the property on an out-of-area MLS.  This makes it hard for local agents to find it.

  • An agent can prevent a listing from populating to other websites, like the websites of other brokerages, or Zillow.com, Realtor.com, Yahoo.com, Oodle.com, and so forth. 

  • An agent can suppress the address of the property on the MLS. A suppressed address has the added advantage of turning a listing into a “buyer magnet” that generates phone calls from curious buyers (read "prospects")—especially if the home is unique or attractively priced.  This practice also frustrates buyers who wish to use discount brokers to buy their homes.  Discounters usually expect buyers to do some searching on their own and come up with a short list of properties to investigate.  Buyers can’t do this as easily if addresses are suppressed. 

  • An agent can “forget” to put a key in the lockbox.

  • An agent can put unflattering photos on the listing.

  • An agent can downplay the home’s best features.

  • An agent can insist on being contacted before any showings, then not return phone calls.


Meanwhile, the agent gets on the phone and calls her own buyers to tip them off about her hot new listing. 

Sabotage and misinformation

If multiple offers come in for a property, here's how an agent can put a favored buyer’s offer on top of the pile:

  • An agent can tell the favored buyer about the other offers, so the buyer can win with just a minimal overbid.

  • An agent might tell other agents that the seller has only received only “low-ball” offers.  This will likely keep the rival offers low.

  • An agent can sabotage other agents by telling them that the seller “will likely” respond to all offers with a “multiple counter” asking for a highest and best offer.  This will likely elicit low offers, since the buyers won’t want to reveal their highest offer until the second round.  But if the agent’s favored buyer is on top in the first round, there is no second round. 

  • Agents can tell other agents that another offer has already been accepted and that they haven’t gotten around yet to changing the property’s status on the MLS.

  • Agents can turn off their fax machines so that offers can't come in.

Discouraging out-of-area agents

MLSs, local associations, and brokerages sometimes go out of their way to keep out-of-area agents and discounters from elbowing in on their territory.  Here’s how agents do their part:

  • Some agents may not return calls from agents with out-of-area phone numbers.

  • Some brokerages insist that agents come to their offices to pick up disclosures and present offers, even though the standard practice is to transmit this information by email or fax.

  • Some MLSs are very small, which means an agent must be a member of a small club in order to gain access to homes through Realtor lockboxes. 

  • Listing agents sometimes refuse to unlock doors for buyers represented by out-of-area agents, or they refuse to put out more commonly used lockboxes, or they refuse to allow buyers who are represented by discounters or out-of-area agents to attend their open houses.

How to protect yourself

  • If you're a seller and you expect multiple offers, ask that all offers be sent to you and only you.

    In a world of emails and faxes, there’s no longer any good reason for offers to be funneled through sellers’ agents.  Ask your listing agent to instruct buyers’ agents to submit their offers directly to you and only to you by either email or fax.  After the offer deadline, you can sit down with your agent and go over the offers.

    Controlling your agent’s access to offers not only ensures against the agent having loose lips, it can also give you a strategic advantage in negotiations.  

    The reason is that in multiple-offer situations, agents often get phone calls from other agents asking about the other offers.  I find that agents often share more information than they should, and I suspect that most sellers would be better off keeping their agents in the dark.

    Consider these scenarios:

    • You get no offers.   If another agent calls to ask if you’ve received any offers, your agent can honestly say, “I don’t know—the seller is collecting all offers.”

    • You get a low offer.  Call your agent and say you’ve gotten an offer, but don't disclose the amount.  The agent can then call other agents to say there’s an offer on the table.  If they ask what the offer is, the agent can say “I don’t know—the seller is collecting all the offers.”

    • You get an offer that’s at or above asking price.  Here, you might want to tell your agent more information about the offer, so the agent can tease out higher bids.

    Important:  It's fine to keep your agent in the dark about offers, but it's never okay to lie to your agent about them.  Lying about offers is a material misrepresentation that can result in a lawsuit. It's also the wrong thing to do.

  • Buyers:  If you suspect that the listing agent is suppressing your offer, contact the seller directly--but be careful. 

Licensing rules won't let your agent contact the seller directly, but there's nothing to prevent an unlicensed buyer from doing so.  But be very careful--any claim you make against the listing agent can expose you to a very costly lawsuit.  I would simply leave a gift of a small potted plant on the front porch with this kind of message:  "Thanks again for letting us see your lovely home.  Hope we're the winning bidders! -- The Smiths."  Don't do anything, though, if another offer has already been accepted, since that could invite yet another lawsuit for tortious interference in a contractual relationship.  Instead, wait until escrow has closed and see if your offer was substantially higher than the sales price.  If it was, file a complaint with your state's real estate licensing board.

  • Don’t let your agent suppress your address from the MLS.

    I’ve always been mystified as to why sellers would want to conceal the address of the properties they’re trying to sell, so I once called a listing agent to ask why many of his listings weren’t displaying addresses on public websites.  He said that his clients were worried about identity theft and privacy. 

    Unless you're a celebrity or in a witness-protection program, I still don't see why you'd want to suppress your property's address.  It makes it much harder for buyers to find you and your home, and could cost you a lot of exposure. 

  • Insist on getting as much online exposure for your property as possible.

Verify that your property is being listed on the appropriate local Multiple Listing Service (MLS) and, if that MLS is small, any neighboring MLSs to which your agent belongs.  Check to make sure it’s also on Realtor.com  and other secondary websites, like Zillow.com, Oodle.com, etc.

  • Insist on at least one open house per month. 

    When asked about hosting open houses, sellers’ agents sometimes let their clients in on a “dirty little secret.” Open houses don’t benefit sellers, it turns out, just agents—who use them to drum up new business.   Your agent, of course, will be reluctant to exploit you in this way.

    Agents, though, have other reasons for objecting to open houses.  First, they require that agents sacrifice valuable family time on Sunday afternoons.  Second, buyers who are able to search online for properties and visit them during open houses are better able to make offers through discount brokers and get buyer rebates, thereby cutting out full-service buyers agents.   Brokerages have a strong incentive to object to this trend.

    You can judge for yourself whether open houses work by visiting a few in your neighborhood.  If they're well attended, they're probably worthwhile, even if many of the visitors are "lookie-loos" and neighbors.  Open houses not only give homes exposure, but big turnouts can prod buyers into acting quickly.  I've had buyers buckle during price negotiations when the sellers' agents announced upcoming open houses--my buyers wanted to get their deals into escrow before too many other people had a chance to see the homes. 

    Even if your open houses are poorly attended, they can give your agent valuable feedback about the strengths and weaknesses of your home, and about whether it's appropriately priced.


©Lori Alden, 2010.  All rights reserved.