Home Buying in 94110>Question Details

Alan Pursell, Real Estate Pro in 94110

Is it ethical to suggest a higher price for a listing than you think the market will bare, just to get the listing?

Asked by Alan Pursell, 94110 Mon Sep 10, 2012

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27
Maria Cipollone’s answer
Code of Ethics: Standard of practice prohibit us from deliverated "misleading the owner as to market value" when trying to get a listing. But if the owner knows exactly what that price is and still want to proceed with the listing at different price, you are doing what your client had instructed to do.

Best of Luck,

Maria Cipollone
http://www.Flahomespecialist.com
1 vote Thank Flag Link Tue Sep 11, 2012
OMG! this is my situation right now as a client. I purchased an investment property a year ago. My realtor gave me a list price of 20,000 over even what I had suggested to her. She was confident that she could get it sold and quickly. The first offer I received was within 30days of listing and she was very excited. I couldn't understand why she was so happy as I was pissed that she even presented me with an offer 50% of the list price. It was a cash offer from an investor which I later found out was also someone that she worked with. (Clearly a Setup). After I reject her offer 3 months go by and she makes no contact with me concerning the house, whether to lower price, lack of interest, etc. I finally contact her to find out what I need to do to get this place sold. Then she replies with her thoughts on the price based on the ACTUAL COMPS and not a figure that she pulled out of her you know what. Now she wants to advise me to list 25-30k lower than the current list price. Which just so happens to be very close to the offer she initially got me. I know several things seem wrong here as far as her professional ability to guide this transaction, starting with her lack of communication and the fact that she never actually ran comps. I never even thought that the high price could have been intentional just for the listing. If it was, it backed fired in my opinion. I did lower the price 10k so far, but I am also looking for another listing agent with more knowledge about the current market. I will also walk away very angry and feeling betrayed because I trusted her professional advice and I based my renovations etc on the potential list price she gave. I could understand being a few grand off as you can't really predict the market, but 30k off. I guess a lesson learned. This was my first time attempting this type of investment, at least worst case if I drop it to rock bottom I still stand to break even and move on. Just sucks that I would have gotten the same return, with half the money and time I invested. If this is your practice please consider your client. I would much rather work with someone honest and upfront, than someone that is trying to get over. It did not benefit her at all. She will loose this listing and I am already seeking another realtor for future purchases.
0 votes Thank Flag Link Sat Sep 15, 2012
If you consider that our loyalty is to our clients, and it's not in the clients interest to overprice his property (because the property will end up selling for less due to longer DOM) - then it's unethical.

Does it happen? Absolutely. Are those agents suggesting higher prices to get the listings?
Some, but not all. Many are unsure of how to price a property - either due to limited experience,
or because the market is shifting (either up or down - depending on the area).

Also, there are seasonal fluctuations in the market place. Some agents project increases for a more popular season of the year... While price is based on numbers, it has an element of an art form,
because of "appeal" of each property.

Hope this helps,

Irina Karan
Beachfront Realty, Inc.
IrinaKaran@gmail.com
0 votes Thank Flag Link Sat Sep 15, 2012
No it isn't ethical. How can it possibly be ethical? You are placing yourself and your gain ahead of your clients interests. This is also a violation of your fiduciary duty as a licensee.

Some of the responses that place or share the blame on the client miss the point. Our duty is to be honest and to work for the principal. If we say the house is worth more than it is, so that we can for example, gain the market exposure, then we are violating our duty and the Code of Ethics that Realtors vow to adhear to. If on the other hand we state honestly the condition of the market and the principal decides to list high it is our duty to follow through with everything in our power to get that price.
0 votes Thank Flag Link Thu Sep 13, 2012
Jed Lane; Fog…, Real Estate Pro in San Francisco, CA
MVP'08
Contact
Wow, this seems to happen all the time! It is very frustrating for agents like myself who try to tell the truth. No, I don't think it is ethical, but it is something I run into.
0 votes Thank Flag Link Wed Sep 12, 2012
No. Code of Ethics. Homes that are priced high normally sit on the market and don't sell. Smart sellers that want to sell fast will listen to their realtor's pricing recommendation. I have taken higher priced listings at the sellers request and added to the contract that the price will be reduced to my recommended price if it does not sell in 90 days.
0 votes Thank Flag Link Wed Sep 12, 2012
Hello Alan,

It"s not ethical but, the seller's can take some of the blame for this type of growing practice among realtors. Seller's need to be honest and realistic when it comes to finding a fair market price for the sale of their home. When the seller is interviewing several agents to determine whom should be awarded the contract they in fact are setting themselves up to be mislead. Seller's often need or want to get a certain price for their home and will not stop until they get an agent to list the home for what they think it should be. As an agent, we must resist the temptation of saying yes just to get the seller to sign on the line even when you know that the next agent through the door may say yes. It's a risk but, your a saleperson/marketer, so sell yourself, be creative and make that seller believe in you and your ability to get the job done.
0 votes Thank Flag Link Wed Sep 12, 2012
Yes, but it happens. I would rather level with someone up front rather than let them down later.

Best.

Tap
0 votes Thank Flag Link Tue Sep 11, 2012
Yes, but it happens. I would rather level with someone up front rather than let them down later.

Best.

Tap
0 votes Thank Flag Link Tue Sep 11, 2012
I think we're talking about two different things here:

Thing 1...Buying the Listing. Wrong, wrong, wrong! Shame on those who do it. Pumping the sellers up that you can get them way too much money for their home. It's a crime against the sellers who are led to believe they are going to get more than they likely will.

Thing 2...Allowing a seller to insist on a price point higher than the market will bear. While you should try to dissuade them, it's their final decision. If they are inflexible, you probably don't want the listing because it's never going to sell if it's drastically over-priced. You might, however, be able to convince the seller over time that they need to reduce to a more reasonable price point, and then you're serving their interests in helping them come around to reality.
0 votes Thank Flag Link Tue Sep 11, 2012
Hi Alan

It is not ethical to mislead one's client.

We are governed by a Code of Ethics both professional and personal.

Perry

http://www.ruthandperry.com
0 votes Thank Flag Link Tue Sep 11, 2012
No it is not ethical and why would any real estate professional even consider attempting to do business that way - it only gives the seller false hope and the real estate industry a bad reputation!!!
0 votes Thank Flag Link Tue Sep 11, 2012
Taking a listing that is at a price that's more than what the market says it should be is completely different from knowingly misleading a seller to get a listing. There is no gray area here. If you can't do business without lying and/or cheating it is unethical and you shouldn't be doing it.
0 votes Thank Flag Link Tue Sep 11, 2012
It happens every day. It occurs between sellers want to hear what they want to hear. I've had sellers get angry with me when I tell them the truth about their value.

I don't know whether it's unethical or not...I don't do it. Knowing that there are folks with questionable ethics in every field and certainly in real estate - I just concern myself with what I'm doing and helping my clients in an open, honest way.
0 votes Thank Flag Link Tue Sep 11, 2012
I'm not saying that I haven't priced above market. Ive done it when my client has instructed me to do so, but they are well aware that that's the case. I'm reading this question as whether or not I've done my best to give information regarding comps to my client, and the answer to that should always be yes. We all know that pricing is an educated guess.
0 votes Thank Flag Link Tue Sep 11, 2012
Blah, blah, blah,
Blah, blah, blah.
Most are saying that "while this happens all the time", it's not ethical.
Have I ever taken a listing at a higher than market value? Yes.
Have I on occasion driven over the speed limit? Yes, that was me passing you in the left lane.
.
So, it's a case-by-case basis. Sometimes you can say yes; sometimes no.
And I have had more than a few overpriced listings that sold while "at or below market" listings just sat there..
.
So, Alan, proceed accordingly. If you think that getting the listing will help with down-line business, then sneak one in. We'll all survive.
0 votes Thank Flag Link Tue Sep 11, 2012
Totally unethical, just plain bad business practice, yet it happens every day in every city and town in the US. We all pay for this bad behavior. It skews the market, keeps properties on the market much too long, and worst of all sets up unrealistic price expectations for the seller.

Scott Miller
Realty Associates
Boca Raton, FL
0 votes Thank Flag Link Tue Sep 11, 2012
It is unfortunate that is happens in San Francisco. "Buying" a listing does not reflect well on any of us! The answer is that it is unethical and unprofessional and sadly, happens more than we wish.
0 votes Thank Flag Link Mon Sep 10, 2012
I provide a copy of our code of ethics at every listing presentation, pointing out Article 2 "Realtors refrain from exaggeration....." pertaining to the property. It helps me when the client (usually!) thinks their home is worth more than comps support.
0 votes Thank Flag Link Mon Sep 10, 2012
"In recognition and appreciation of their obligations to clients, customers, the public, and each other, REALTORS® continuously strive to become and remain informed on issues affecting real estate and, as knowledgeable professionals, they willingly share the fruit of their experience and study with others. They identify and take steps, through enforcement of this Code of Ethics and by assisting appropriate regulatory bodies, to eliminate practices which may damage the public or which might discredit or bring dishonor to the real estate profession."

-paragraph 3 from the Code of Ethics and Standards of Practice of the NATIONAL ASSOCIATION OF REALTORS ® Effective January 1, 2012

The full code of ethics you can read on realtor.org; it may be helpful.
0 votes Thank Flag Link Mon Sep 10, 2012
Unethical and unprofessional in every way. It's one way to assure that people will distrust real estate agents and bring us all down.
0 votes Thank Flag Link Mon Sep 10, 2012
Hi Alan,

Why would you do that? Why take a listing if it's not going to sell?

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
0 votes Thank Flag Link Mon Sep 10, 2012
Actually, the correct answer is that the listing price is rarely the selling price!
The selling price is... The Market Price.
Still, I like to suggest the low end of the comps to start with ( the listing price).
In a market like we have here in SF right now, it'll sell for much more if prepped and staged properly.
0 votes Thank Flag Link Mon Sep 10, 2012
No, that is unethical (and only hurts all parties involved in the long-run). In Realtor lingo, it's called "buying the listing."

It's unfortunate, but many agents employ such practice... which is why it's always best to interview three or more agents and not disclose to competing (listing) agents what the recommended list price was by other agents interviewed. My $0.02.

Best,
Dino Zuzic
http://www.dinozuzic.com
415-317-4546
0 votes Thank Flag Link Mon Sep 10, 2012
That you have to ask that is shocking. Unfortunately, this kind of thing goes on all the time and the big losers are the sellers because they get unethical agents handling their sale, and more importantly usually end up selling for less when they list too high. If you have to lie to get listings you're probably in the wrong business. You are supposed to be looking out for your clients.
0 votes Thank Flag Link Mon Sep 10, 2012
Hi Alan,
I'm in agreement with Pam that it's a violation from NAR's Code of Ethics and Standards of Practice to knowingly counsel a seller to believe that the home is worth more than what comparable sales suggest. The practice you mention is called "buying the listing" and can harm your reputation as an agent. I suggest not doing it.
Good luck to you!

Laura Feghali
Prudential Connecticut Realty
0 votes Thank Flag Link Mon Sep 10, 2012
If you are a realtor, check your code of Ethics, you will find the correct answer.
0 votes Thank Flag Link Mon Sep 10, 2012
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